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Kenya's first gas strike not commercially viable: Minister Discovery of oil off east African country's coast is promising, but not enough, says energy minister
Kenya's first offshore gas discovery is encouraging but not large enough for commercial production, the east African country's energy minister said on Tuesday. British exploration firm Tullow Oil and Australia's Pancontinental Oil & Gas announced on Monday their consortium's operator Apache had found gas in an offshore well known as Mbawa-1. Tullow also announced Kenya's first oil strike earlier this year, fuelling interest in the region's hydrocarbon potential. Neighbouring Tanzania estimates it has 28.74 trillion cubic feet of recoverable natural gas reserves. "The total amount of gas found is not sufficient in isolation to be commercial. We are however, encouraged that a reservoir containing hydrocarbons has been found," Kenya's Energy Minster Kiraitu Murungi told a news conference. U.S.-based Apache, which has a 50 percent stake in the L8 block where Mbawa-1 is located, said on Tuesday the well would have needed to contain at least around three trillion cubic feet (85 billion cubic metres) of natural gas to justify building the infrastructure to liquefy and distribute it. Even so, the managing director of Apache Kenya, Tim Gilblom, said the find would encourage other companies holding licenses in Kenya's other offshore blocks, including Anadarko and Britain's BG Group. "The fact that we've proven that there is a hydrocarbon source below these basins gives them a higher chance of success, I would believe. So it's got to be good news for them," Gilblom told journalists. Apache will spend the next year interpreting the data from Mbawa to determine if the gas was dry or the result of an oil formation. It will then drill a second well in the L8 block at the end of 2013. "The key to remember is that we've proven that there is hydrocarbon source below Lamu Basin offshore Kenya and now all we have to do is further characterize it to figure out where the best next place to drill is," Gilblom said.
