With the postponement the company will be banking on the hope that the Ministry of Energy will be extending their license that expires this year.

 

The delay could have arisen from the difficulty in raising money in the wake of the global oil prices dip that has seen either lenders seek higher rates with some companies forced to take the route of mergers and acquisitions.

 

Zarara Oil and Gas had earlier in 2012 been mentioned by the Ministry of Energy as among license holders that had fallen behind in meeting their work requirements although it had shown it was working to catch up.

 

To date Midway Resources International which owns Zarara has completed its 383 line kms 2D survey over the Pate Prospect a survey that covered Pate Island and surrounding transitional mangrove and sea channel areas and was undertaken  by BGP Kenya Limited.

 

Analysis of the survey data identified nine additional anomalies or leads on Blocks L4 & L13 which the company also has interest.

 

The seismic data was processed by Geokinetics, Inc., of Houston USA and interpreted by MRI.

 

The data was expected to enable MRI to identify the location of a drilling site (Pate-2) which would replicate the original discovery well (Pate-1).Pate- 1 intersected and flowed (uncontrolled) gas and was subsequently plugged and abandoned.

 

MRI had initially said it would commence planning for Pate-2 in Q3 2013 in a process it had expected to take up to 12 months before the well was spudded.

 

MRI initially had the intention to complete  Pate-2 as a producing well which would undergo  extended well testing to supply temporary electric power generating units.

 

“Assuming that Pate-2 confirms MRI’s current P50 resource estimate, this early gas production would represent  Phase 1 of a full-field development to be  based upon long term commercialization of the gas resources. Phase 2 would involve development of a 350-500MW power station connected to the Kenyan domestic electricity grid. The grid is currently being extended to the proposed new Lamu Port, located some 15-20kms from the site of the original Pate-1 well,” the company said in a statement in July 2013.

 

The Pate-2 well and regional seismic acquisition survey was initially planned to be funded through a combination of additional equity and a possible partial farm-out of MRI’s 75% working interest.

 

Kenya MRI owns a 75% working interest and operatorship (via its 100% subsidiary, Zarara Oil & Gas Limited) in two production sharing contracts over Blocks L4 and L13,

Source : OIL NEWS KENYA