Statoil Makes Tanzania Discovery

Norwegian operator Statoil has made a new gas discovery in the Lavani well on Block 2, off the coast of Tanzania.
Statoil said the well had intersected 95 metres of excellent quality reservoir sandstone with high porosity and high permeability, adding logging results confirmed the discovery which has a preliminary resource estimate of 3 trillion cubic feet of gas in place.

The well was drilled in a water depth of 2400 metres, using the drillship Ocean Rig Poseidon, about 16 kilometres south of the company’s recent Zafarani discovery.

Statoil encountered 120 metres of excellent quality reservoir with high porosity and high permeability in the Zafarani well earlier this year and, at the time, estimated the discovery to hold up to 5 Tcf of gas in place.

On Thursday Statoil’s executive vice president for exploration, Tim Dodson, announced the recently drilled Zafarani sidetrack added another 1 Tcf of gas in place to the discovery.

“The results so far mark an important step towards a possible natural gas development in Tanzania,” he added.

Lavani is the seventh high-impact discovery made by Statoil over the past 14 months, in addition to Zafarani, Peregrino South and Pao de Acucar off Brazil, Skrugard and Havis in the Barents Sea and Johan Sverdrup in the North Sea.

Accumulated resources from the Block 2 discoveries, including the Lavani find, give Statoil a total of 9 Tcf and put it within reach of the volumes needed for a commercial development.

“We would need another Lavani to feel comfortable we have the gas for commercial development. I expected more gas,” Dodson told Reuters.

He said the company would almost certainly opt for some sort of liquefied natural gas solution for the licence, while declining to give a cost estimate for the project, adding that the Tanzanian government’s expectation of a start-up in seven years is “not completely unreasonable”.

Arctic Securities analyst Trond Omdal estimated it would cost at least $10 billion to develop the field.

Dodson said: “Developing this will be quite a challenge given that in East Africa, in Tanzania and Mozambique, there is limited infrastructure in place. So it’s going to take a little bit longer than if we had the infrastructure in place.”

A key advantage for the company is that commercial terms for LNG exports in Tanzania are already set up, facilitating a faster track development, according to analyst RBC Capital Markets analyst Peter Hutton.

The US Geological Survey estimates that the emerging gas play off East Africa, located close to Asia’s lucrative LNG markets, could hold as much as 253 Tcf.

Anadarko Petroleum has estimated its gas reserves off northern Mozambique at 50 Tcf while Eni’s neighbouring block may hold 52 Tcf.

Statoil operates Block 2 on behalf of Tanzania Petroleum Development Corporation and has a 65% working interest, with US supermajor ExxonMobil holding the remaining 35%.

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