On September
10, 2024, Tanzania's Deputy Prime Minister and Minister of Energy handed over
the Ntorya Gas Field development license to the Tanzania Petroleum Development
Corporation (TPDC). This marks the fourth natural gas development license in
the country. The license will allow ARA Petroleum Tanzania Ltd. to begin gas
production in the Ntorya Gas Field starting at 60 million standard cubic feet
per day (mmscfd) from three wells.
The project, part of the Ruvuma Production Sharing Agreement (PSA), involves TPDC (15%), ARA (63.75%), and Ndovu Resources (21.25%). Initial production will start with three wells; full-scale production is expected after three years, reaching 140mmscfd.
The development of the discovered gas will support Tanzania’s power generation, industries, households, and vehicles, contributing to the country's GDP growth.
The Respondent Senior Reporter, Alfred Zacharia, recently had a Q&A with Patrick Kabwe, Senior Geologist and the Project Manager at the Tanzania Petroleum Development Corporation (TPDC). Here’s a brief overview of the discussion:
What specific steps will TPDC take to ensure the timely start of gas production at the Ntorya Gas Field by the second quarter of 2025?
To ensure
gas production at the Ntorya Gas Field begins by the second quarter of 2025,
TPDC will take several critical steps. We will first secure the land and
complete necessary civil works, including road construction, within the next
three months. By the end of September, we will announce a tender for a 14-inch
pipeline, with construction starting in November and expected to take a minimum
of six months to be completed. We will manage the project in collaboration with
ARA Petroleum and Ndovu Resources through a joint operating agreement
responsible for work and budget approvals. TPDC will deploy staff to oversee
daily operations and ensure the mobilization of Supersonic Gas Processing Units
(SGPUs) by November for well testing of Ntorya-2 well before commencement of
production. We expect to drill a third well in 2025 as part of the development
phase.
How will TPDC's 15% stake in the
Ntorya Gas Project be managed, and what financial or operational
responsibilities will this entail?
TPDC’s 15%
stake in the Ntorya Gas Project will be managed through a joint operating
agreement with ARA Petroleum and Ndovu Resources. This stake will involve
participation in a joint operating committee that will oversee the project's
execution, including work and budget approvals. TPDC fund the project costs
depending on the participating interests reflecting our significant financial
commitment to the project.
Operationally,
TPDC will deploy staff to oversee daily activities in collaboration with our
partners. This includes managing and monitoring the progress of drilling
operations, the installation of Supersonic Gas Processing Units (GPUs), and
production of gas. We will also ensure that all environmental and social
management plans are implemented effectively to mitigate potential impacts and
comply with regulations.
Through these responsibilities, TPDC will play a crucial role in the financial and operational aspects of the project, ensuring that our stake contributes to the successful development and production of gas at the Ntorya Gas Field.
What are the anticipated challenges
in scaling up gas production from 60 million cubic feet to 140 million cubic
feet per day, and how will TPDC address these challenges?
Scaling up
gas production from 60 million to 140 million cubic feet per day presents
several challenges. A primary issue is drilling additional successful wells to
meet the increased target. With each well capable of producing up to 20 million
cubic feet per day, successfully drilling enough wells to achieve this goal
involves significant technical and operational challenges which we need to
avoid in order to minimize impact both on the timeline and production capacity.
We will also closely monitor each well’s performance and make necessary
adjustments to optimize production.
To mitigate
potential risks associated with the previously acquired 2D seismic data, ARA
Petroleum and TPDC acquired 3D seismic data through a local company called AGS
which increased our understanding of underground formations. The next
exploration and development wells will be drilled based on this data which
increases the chances of success.
Another challenge is upgrading infrastructure, including expanding pipeline capacity and enhancing processing facilities. This requires meticulous planning to ensure the infrastructure can handle the increased gas volume efficiently. TPDC will coordinate closely with contractors and suppliers to adhere to timelines and maintain quality standards, with regular reviews to address potential delays or issues. Additionally, scaling up will demand significant investment and resources. TPDC will allocate the necessary financial and human resources and work with partners to secure the required funding and expertise, ensuring that the scaling process is well-supported and managed effectively.
Could TPDC provide more details on the construction of the 34.5-kilometer pipeline to Madimba and the timeline for its completion?
The construction of the 34.5-kilometer pipeline to Madimba is a crucial component of TPDC's gas development strategy. This pipeline will facilitate the transportation of gas from the Ntorya Gas Field to the Madimba gas facility, where it will be processed before being distributed.
The timeline for the pipeline's construction involves several key phases. First, we will announce a tender for the pipeline construction by the end of September. The selection of a contractor will follow, with the construction phase scheduled to commence in November. The contractor will be responsible for executing the pipeline construction per the project specifications and timeline.
The construction process is expected to take a minimum of six months. This timeframe includes not only the physical laying of the pipeline but also the necessary testing and commissioning to ensure the pipeline meets all safety and operational standards. We will monitor the progress closely to address any potential issues that could impact the schedule.
Once completed, the pipeline will be integral to transporting gas efficiently from the field to the processing facility, supporting the overall goal of increasing production capacity and meeting the demand for natural gas.
What are the expected environmental impacts of the Ntorya Gas Field development, and how does TPDC plan to mitigate these effects?
The development of the Ntorya Gas Field is expected to impact the environment through several key areas, including potential noise pollution, waste generation, and disruption to local habitats. To address these concerns, TPDC and ARA Petroleum has put in place a detailed environmental management plan.
We will implement measures to reduce noise levels and minimize disturbances to local communities. Waste management strategies will be enforced to handle and dispose of waste materials properly, preventing contamination and environmental damage. Additionally, we will take steps to protect local habitats by avoiding disruption to wildlife and natural landscapes. Regular environmental monitoring will be conducted to ensure compliance with regulatory standards and to swiftly address any unforeseen issues. By following these protocols, TPDC and ARA Petroleum aims to manage and mitigate the environmental impacts associated with the Ntorya Gas Field development effectively.
How will TPDC ensure local communities benefit from the Ntorya gas production, particularly in terms of employment and local business opportunities?
TPDC is committed to ensuring that local communities benefit from the Ntorya Gas Field development, in alignment with government vision and regulations. Following the Petroleum Act of 2015 and the Petroleum Local Content Regulations of 2017, we prioritize local involvement in the project. We will source goods and services from local providers and aim to fill 90-95% of job positions with Tanzanians, focusing first on Mtwara and then on other regions. Expatriates will be employed only for specialized roles.
We are dedicated to transferring technology to local businesses and SMEs, enhancing their skills and knowledge. As part of our CSR efforts, we conducted a community needs assessment in Mtwara in April 2024, including input from people with disabilities. A key initiative includes the establishment of a health center in Dihimba Ward, supported by a TZS 750 million investment, with an MoU signed with the Mtwara District Council during the handover ceremony. We will continue to address local social needs each financial year, ensuring lasting and impactful benefits for the community.
What are the immediate steps planned for the development of Temporary Production Facilities (SPGUs), and how will TPDC oversee their construction and operation?
We are currently planning to fast track the development of the Ntorya Gas Field through utilization of temporary Supersonic Gas Processing Units (SGPUs) while we are working on construction of permanent facilities, which will take approximately two years to be completed. Our team has inspected the SGPUs currently in China to analyze their conformance to the gas specifications in the Ntorya Gas Field before they are mobilized to Tanzania. We plan to mobilize these units by late November 2024 and assess their performance through testing of Ntorya-2 well to determine if they are suitable for starting production. TPDC will oversee this process, including reviewing the technical proposals to ensure everything operates as expected.
Given that production is expected to increase Tanzania’s gas supply for power generation and industries, how will TPDC ensure equitable distribution across various sectors?
Our strategy for natural gas distribution ensures equitable access across all sectors. We have successfully established systems for power generation, industrial use, and transportation. However, our primary focus is on meeting household energy needs. In alignment with President Samia's recent push for clean cooking energy, we are committed to prioritizing household demand while maintaining a balanced approach to gas distribution based on sectoral requirements.
Looking ahead, the Julius Nyerere Hydropower Project, alongside our gas initiatives, highlights a promising future for energy production. As we adapt to evolving energy needs, it's clear that while the demand for gas may fluctuate, we will continue to explore diverse energy sources. Collaborations, such as our MoU with the Essa Group from Indonesia, which requires approximately 100 million standard cubic feet per day, underscore the ongoing demand for gas. Additionally, gas-fired power plants and petrochemical industries will remain crucial, ensuring that we meet the various energy needs of the country effectively.
What is the current status of the exploration and drilling activities for the third well, and how critical is its completion to the overall production timeline?
The exploration and drilling activities for the third well are progressing steadily, with a well-defined drilling program in place. We have commenced drilling and procured essential materials, including casings, and are in the process of securing additional equipment such as the drilling rig. The drilling phase is expected to take three months to complete. The timely and successful completion of this well is crucial for our production goals. It is integral to reaching our target of 60 million standard cubic feet per day and is vital for scaling up to 140 million cubic feet per day. Despite the challenges, we are prioritizing this well to ensure it performs effectively and aligns with our overall production timeline. We anticipate finishing this drilling process by the end of 2025, which will position us to meet our production targets and integrate this well into our broader strategy seamlessly.
What strategic partnerships or investments does TPDC foresee for further development and expansion of Tanzania’s gas infrastructure beyond the Ntorya Project?
TPDC is actively pursuing strategic partnerships to expand its footprint in the energy sector. We hold a 40% stake in the Mnazi Bay project and are looking to increase our share beyond 15% in the Ntorya Project. These projects, including the current ongoing 2D seismic surveys in the Eyasi Wembere area, exploration in Mnazi Bay North & West Songosongo and the ongoing production at Songosongo gas field, represent significant short to medium-term opportunities for growth. In addition to these, we are exploring partnerships with International Energy Companies for deep offshore blocks such as Block 4/1 C and Lake Tanganyika which are capital-intensive. We are also continuing implementation of key projects such as EACOP and earmarking future projects such as construction of gas pipeline to Uganda and Kenya reflecting our commitment to regional energy development. Currently, TPDC operates two gas fields, Songosongo and Mnazi Bay, with a combined capacity of 230 to 250 million standard cubic feet per day. Over the next three years, with commencement of production in the Ntorya Project we aim to scale up production to reach 300 million standard cubic feet per day, with a target of about 400 million standard cubic feet per day when the Ntorya Project reaches its plateau. As we move forward, TPDC is dedicated to advancing our mandate to develop and produce gas, aligning with the Vision 2025 and 2050 goals. We are committed to playing a pivotal role in the oil and gas sector, driving progress, and ensuring energy security for the future.
What is the
Government’s Role in securing the Ntorya Development Licence?
H.E. Dr.
Samia Suluhu Hassan, the President of the United Republic of Tanzania visited
Oman in June 2022. This visit strengthened our ties with Oman and more
importantly ensured close relations between TPDC and ARA Petroleum which is an
Omani Company and established a footprint for a successful project. Moreover,
the Cabinet under the President approved the issuance of the Development
Licence which enabled the Deputy Prime Minister and Minister for Energy,
Honourable Doto Mashaka Biteko to grant the Licence to TPDC and ARA Petroleum
in order to commence the Development and later Production of gas in the Ntorya
Gas Field.