Kudu Gas ProjectFossil Fuel Foundation ColloquiumNatural Gas – Southern AfricaJohannesburg 20 September 2006
Kudu history – key milestones
– Discovered 1974 by Chevron/Regent/Soekor– Two wells drilled by Swakor 1987-88– Licence awarded 1993 – Shell (75%), Energy Africa (25%) – Energy Africa farm-out 15% to Texaco– Petroleum field declared 1997– Drilled four wells – Shell relinquished 2002 - ChevronTexaco (60% + operatorship), Energy Africa
(40%)– ChevronTexaco relinquished Nov 2003 – Energy Africa 100%– Dec 2003 - Energy Africa 90%, Namcor 10% – Tullow Oil acquires Energy Africa May 2004
What we set out to do……
– Retain our participation interest in the licence
– Transferred 10% to National Petroleum Corporation of Namibia (Namcor)
– Focussed development on proven GIIP only : de-linked Phase 1 from Phase 2 upside development opportunities
– Take advantage of current window of opportunity in power market
– Established “open book” co-operative approach with downstream parties to “fast-track” time to development
Kudu Field
Greater Kudu Area (Tscf)Tullow(2003) GCA
– Proved 1.38 1.45 – Probable 3.82 2.72– Possible 9.98 7.12
Phase 1 Gas to Power– Kudu Main Field area
– Required GIIP 1.3 Tscf– 22 year contract life
Further appraisal required to determine upside
Kudu Main Field
Kudu Upstream JV
Energy Africa Kudu Limited (90%)
Namcor (10%)
+ PartnersKudu Power Station Company
Nampower (100%)
+ Partners (?)
Gas SalesAgreement
Nampower
Power Purchase Agreement
Domestic sales in Namibia
Power Purchase Agreement
Eskom - export sales to RSA
KUDU - 800MW gas to power project
Kudu Field Location
Logistically remote area
– 170 km to Oranjemund– 800 km to Windhoek– 800km to Cape Town
Located within active diamond mining area
Upstream project status
FEED study completed November 2005– Outline Development comprises:
– 3 +1 production wells (4th well in Year 10)– Subsea development with umbilical control– Onshore processing terminal – Compression in year 13– ITT’s prepared and ready to issue
Production License– Approved 31st August 2005
Regulatory & Other Approvals– EIA and EMP approved– Namdeb agreement on pipeline route, site location, access
and security, township, etc
Onshore/Offshore Survey– Onshore and nearshore surveys complete – no critical
impacts identified– Offshore survey pending – conclusion of GSA HOT
Downstream project status
Technical– Power station EPC bid documentation ready to issue– Bidders pre-qualified– Bids ready subject to GSA Heads of Terms
Regulatory and other approvals– All EIA’s approved– Kudu Power Company (Pty) Ltd. Registered– Applications for various licences in process
Financing– Pre-qualification for lead arrangers issued
Schedule considerations
Nampower requires 13 months from HOT until project sanction– If HOT in Q4 2006 expected project sanction end 2007/early 2008– First gas Q4 2010/Q1 2011 (+3 months slack for weather window)– Full power output Q4 2011/Q1 2012 = GSA fully activated
Project in a critical phase
Commercial closure required soon
Determine development scenarios for 1, 2, 3 and 4 Tscf reserve threshold cases in addition, or as alternatives, to Phase 1 gas-to-power.
Options considered– Pipeline to RSA
– update Shell costs– LNG (Liquified Natural Gas)
– Conventional– “Niche LNG” – LNG Ltd.
– FLNG (Floating Liquified Natural Gas)– Confirm viability of FLNG specifically offloading
– CNG (Compressed Natural Gas)– Check viability of CNG technology– Onshore vs FPSO processing
– GTL (Gas to Liquids)high technical and commercial risk – excluded from further study
Phase 2 study context & options
Kudu Phase 2 Gas export to RSA
– Detailed Shell study – Costs updated by JPKenny– Identified alternative case with high pressure pipeline– 3 Major & 17 minor rivers & 20 road & rail crossings– Proven technology
Kudu Phase 2Marine study report by Global Maritime
FLNG– not feasible due to environment– Offloading systems technology – not
developed at this time– Excluded from further study
Harbour for LNG– New harbour construction along coast is very
expensive– Only natural harbour on Namibian coast is
Luderitz
Kudu Phase 2 – LNG (Liquified Natural Gas)
LNG conventional– LNG plants have vast range in size– Sheltered offloading required – Luderitz– Established system and markets– Kudu markets need to be identified/secured
LNG niche– LNG Limited offer small scale and modular units
for more remote areas– Claim higher efficiency with ammonia in lieu of
mixed gas– Scaled up from 200 ktpa for Kudu– Appears more cost effective
Kudu Phase 2 – CNG (Compressed Natural Gas)
– EnerSea have provisional class approval from ABS– Competitive between extended pipeline and
minimum economic LNG facility distance – Technology is new and technical evaluation required
mainly offshore loading system and construction risk
Conclusions
Development scenarios exist in addition, or as alternative to gas to power project
Several options feasible between 1 - 2 Tscf
Niche LNG may even be feasible with 1 Tscf
Geological insights– 93/96 3D seismic reprocessed – New geological model developed
Further appraisal required to test multi-Tscf play
At least two wells needed to test and confirm this model
Kudu field upside
Kudu East
Kudu Main Field
Schematic – new geological model
K3 reservoir• higher productivity
• restricted to main field area
• Preserved by lava
K1 reservoir• Lower productivity
• Aerially extensive transgressive shoreface sands
Kudu 2007 Drilling Overview & Field Location
Logistically remote area– 170 km to Oranjemund
– 250 km to Luderitz
– 800 km to Windhoek
– 800km to Cape Town
Kudu 2007 Drilling - planning progress
Rig contract and operations– Signed contract for Pride South Seas– 2 firm wells
Drilling planning– Luderitz port for logistics operations– Well design accommodates suspension for
production– EMPR approved– Expected spud date mid February to end March
2007– Drill and test 2 appraisal wells
• +- 90 days per well• Initial results in May and August 2007