Orca plans Songo Songo boost

Toronto-listed Orca Exploration says it plans to drill a new well next year to boost natural gas production at the Songo Songo field in Tanzania amid growing local energy demand.

Orca said in April it planned to raise daily natural gas production at the Songo Songo field - with 490.2bcf of proven and probable gas deposits - by 60 per cent by the end of 2012 to 144 mmcf.

The company's third quarter report said there was an urgent need to expand the infrastructure that processes and transports natural gas from Songo Songo island to Tanzania's port city, Dar es Salaam.

"During Q3 2010, gas sales from the field averaged 81.3 mmcfd against an installed infrastructure capacity of 90 mmcfpd," David Lyons, Orca's boss said in a letter to shareholders yesterday.

"We are on track with plans to drill the low risk, high potential Songo Songo West prospect in 2011," said Lyons.

The company said it has working capital of US$48mn following a fully-subscribed rights offering that raised US$18.92mn.

"The company intends to use the proceeds of the rights offering primarily to drill the Songo Songo West exploration prospect in Tanzania in the latter half of 2011," it said.

Orca said there was a possibility of boosting natural gas output by 40mmcfd through the expansion of existing wells.

Orca said in July it had created a new infrastructure unit called EastCoast Transmission and Marketing to help it build a natural gas pipeline network in East Africa.

The pipeline could ultimately be extended to the Kenyan port city of Mombasa and to the southern Tanzanian town of Mtwara.

Lyons said the state-run Tanzania Electric Supply Company (Tanesco) is expected to complete a US$500mn project by 2014 to strengthen the transmission grid in the country.

"This will lead to increased construction of gas fired generation as Tanesco connects significant industries and consumers around Lake Victoria," he said.

He said Tanesco was negotiating with a private power company to re-commission a 112 MW plant in Dar es Salaam, which would create a 24 mmcfd maximum demand for additional gas by Orca.

"Power demand continues to surge," Lyons said.

"There is increasing exploration activity offshore East Africa with four gas discoveries by Anadarko in Mozambique and by British Gas 65 km from Songo Songo island offshore Tanzania."

Tanzania has energy demand close to 900 MW capacity, but produces less than 800 MW. Only 14 per cent of its 40 mn people are hooked to the grid, while demand grows by 10 to 15 per cent annually.


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