Tullow Oil finds gas in Uganda

Tullow Oil PLC reported the Nzizi-2 appraisal well, on Block 2 in Uganda's Lake Albert Rift basin, has tested 14 MMscfd of natural gas.

Uchenna Izundu
International Editor

LONDON, July 23 -- Tullow Oil PLC reported the Nzizi-2 appraisal well, on Block 2 in Uganda's Lake Albert Rift basin, has tested 14 MMscfd of natural gas. Tullow said the find was surprising, as the well originally was expected to test only the lateral extent of oil-bearing reservoir sands.

The company has secured a rig to drill another two wells, the Ngassa and Kingfisher 2, later this year in Uganda (OGJ Online, May 30, 2007).

According to Ugandan reports, the government hopes to use oil for power production by 2009 and wants Tullow to study the gas quality as well and look at development options. Uganda currently generates hydroelectric power from Lake Victoria.

Other African wells
Tullow added that recent technical work on the Mahogany light oil discovery on the deepwater West Cape Three Points Block off Ghana suggests there is "significant further upside potential above current market estimates and [that]a material proportion of the trap is within the deepwater Tano Block."

Anadarko is the technical operator of the Mahogany well with a 30.88% interest. Kosmos Energy is the block operator and holds a 30.875% stake. Tullow Ghana Ltd. holds 22.90%, Sabre Oil & Gas Ltd. 1.85%, and Ghanaian oil and gas company EO Group 3.5% (OGJ, June 25, 2007, Newsletter).

In Namibia, Tullow is drilling the Kudu-8 appraisal well, which has reached 2,652 m. and is expected to reach the reservoir target at the end of July and start testing in August. The reservoir has an upside potential of many trillion cu ft of gas, Tullo estimates (OGJ Apr. 23, 2007, p. 52).

The recent West Espoir (Ivory Coast) and Okume Complex (Equatorial Guinea) developments continue to deliver above expectation. Oil production from West Espoir is expected to plateau at 12,000 b/d and will peak at 10,000 boe/d in late 2007. Tullow has established a new wellhead tower, which is tied back via a 5.5 km pipeline to the Espoir FPSO where fluids produced from East and West Espoir are processed using the existing infrastructure. Together the two fields are producing more than 35,000 boe/d.

Oil production from the Okume complex, started at an initial rate of 4,000 b/d from a single well, has steadily increased during 2007 as more wells came on stream. Peak production of 60,000 b/d is expected in mid-2008.

Effect on North Sea
The company's success in finding hydrocarbons in Africa means that it will reduce its focus on exploration and development in the UK North Sea. Aidan Heavey, chief executive of Tullow said: "Future capital allocation will be focused on optimizing returns and accelerating activities on these high-impact projects leading to a reduction in near term UK programs and production."

Gas production from Thurne and Kelvin development projects in the UK are expected to start in the fourth quarter. Thurne will be developed by sidetracking the Deben well, which has ceased production, and reusing the existing pipeline and Thames platform reception infrastructure. Tullow expects to produce a gross plateau of 40 MMscfd of gas from Thurne.

Gas production from Kelvin field is expected to hit 80 MMscfd from a single well and platform tied back to the CMS infrastructure. Platform fabrication has begun, and the well is scheduled to spud in the third quarter. Tullow also is considering a number of other fields for potential development.

Tullow cut its production forecast of 78-80,000 boe/d for 2007 because of delays to drilling programs and the reallocation of capital, principally to Ghana and Uganda. Its current production is 75,000 boe/d and is expected to average 72-75,000 boe/d for 2007.

Contact Uchenna Izundu at uchennai@pennwell.com.

More in Exploration & Development