Kenyan explorers look deeper offshore

BG Group used Odfjell's Deepsea Metro I drillship for the Sunbird-1 in Block L10A this year. Photo from BG Group. 

Offshore East Africa is among the newest frontier exploration regions, with results of wildcats eagerly awaited. The area still lacks infra- structure to support meaningful development and logistics remain a challenge to all comers. The activity has spread beyond the shores of Kenya, Tanzania, Mozambique, reaching Madagascar, the Comoros, and the Seychelles.

All of Kenya’s offshore blocks are in the Lamu basin, which formed during the separation of Madagascar from Africa and has Middle to Late Jurassic source rocks. The exploration focused in the Lamu basin follows a successful trend from Mozambique and Tanzania. Small independent operators are surrounded by majors, leading to interesting industry partnerships and strategic opportunities for companies large and small.

Years of activity

In 1964, BP and Shell drilled the onshore Dodori-1 well to 4311m TD very close to the coast. The well reached Campanian rocks in the late Cretaceous section, with oil and gas shows in Tertiary and Cretaceous. This well flowed at 3.1mcf/d.

In 1971, BP and Shell drilled the Pate-1 well south of the Dodori well, in the L5 area, to 4188m TD, reaching Eocene sediments with gas shows. It flowed at 12.7mcf/d.

In the same year, they drilled the Kipini well to the south, close to the coast in the nearby L-6 area, to 3663m TD. It reached the Campanian section, with fluorescence and gas shows in Tertiary and Cretaceous section.

In 1978, France’s Total drilled the offshore Simba-1 well to 3604m TD, with wet gas shows (C1-C5) in the Tertiary.

In 1982, a consortium of Cities Services, Marathon and Union drilled the offshore Maridadi-1 well to 4198m TD with gas shows in the Tertiary, and in 1985, drilled the offshore Kofia-1 well to 3629m TD, with oil and gas shows.

A Lamu basin study 1991- 1995 led Kenya to subdivide the Lamu embayment (both onshore and offshore) into 10 exploration blocks and then add two more after 2001.

Between 2000-2002, seven production sharing agreements were signed for offshore Lamu basin blocks L5, L6, L7, L8, L9, L10, and L11. In 2003, Australia’s Woodside Petroleum acquired 7884 km of 2D seismic data covering the seven licensed blocks as well as Block L12. Woodside then drilled the deepest offshore well in 2006.

Anadarko acquired 5000 line-km of 2D seismic data over offshore blocks L5, L7, L12, L11A and L11B, fol- lowed by 3D seismic.

By December 2009, Origin Energy acquired 900sq km of 3D seismic over Block L8, using M/V Seisquest to tow eight streamers, 5100m long.

Afren, through its subsidiary EAX, acquired 460km of shallow-water and transition-zone 2D seismic over Blocks L17 and L18, completed in October 2010.

In 2011-2012, Ophir Energy acquired Dominion Petroleum for £118m (US$186million).

In November 2011, BG began acquiring 3D seismic data in license areas L10A and L10B, followed by a 2D seismic sur- vey over the western area of the blocks (the Sunbird area).

In January 2012, Afren (EAX) completed acquisition of 1207km of 2D data in the deeper water portions of Blocks L17 and L18. In December 2012, it completed acquisition of 1006sq km of 3D data (in lieu of a well commitment), and the 3D was processed by July 2013.

In June 2012, Total signed a PSC for 100% of offshore license Block L22, with water depths of 2000m to 3500m. The first phase of exploration is 3D seismic acquisition.

In July 2012, PTT E&P Thailand agreed to a $1.93billion acquisition of Cove Energy, which had interests in several blocks offshore Kenya.

In 2012, Fugro-Geoteam AS completed the Kifaru 3D seismic survey including 778sq km over Block L6 for FAR Ltd. and Pancontinental. Fugro’s Geo Caribbean seismic vessel stopped in Cape Town in May 2012.


Working oil and gas systems were only recently proven offshore Kenya, beginning with the Mbawa-1 well on the western side of Block L8. The well reached 2553m in September 2012 and encountered 51.8m net gas pay in porous Cretaceous sandstones. It was then drilled further to 3275m TD. Apache Corp. operates the license (50%) on behalf of partners Origin Energy (20%), Pancontinental (15%), and Tullow (15%). Apache’s Exploration Director Angus McCoss said at the time: “A gas discovery on prognosis in the shallowest objective at Mbawa-1 is an encouraging start to our East African transform margin exploration campaign.” However, the find was not commercial, although Apache said it would keep the option to re-enter the well open.

In April 2013, Anadarko announced that its Kubwa well in Block L7 was not commercial. The company’s Senior Vice President for worldwide exploration Bob Daniels said, “The Kubwa well tested multiple play concepts and provided useful data regarding the prospectivity of our six-million-acre position offshore Kenya.”

In October 2013, Apache relinquished its 50% stake in the L8 block, saying that gas volumes were not commercially viable.

Likewise, in December 2013, Britain’s Premier Oil announced that it was with- drawing from Block L10A and relinquishing its 20% stake in the license. However, Premier retained its 25% share in neighboring Block L10B.

Pancontinental announced a small gas discovery in Block L8 in December. Pancontinental’s finance director Ernest Myers said, “The well on its own may not currently be commercially viable, but could be when aggregated with other gas discoveries which may occur in the L8 or nearby blocks.” On 6 January 2014, Pancontinental and BG spud the Sunbird-1 well with the Deepsea Metro-I drillship in 723m water depth, Block L10A, and drilled to 2850m, penetrating the top of the Sunbird Miocene reef at 1583.7m subsea. It became Kenya’s first offshore oil discovery, confirmed in June 2014.

What’s ahead

Several major international oil companies—BG Group, Tullow, Total, ENI, and Anadarko— have aggressively pursued prospects off Kenya, and operators appear more willing to drill commercial- sized oil prospects now that source rocks and oil-generation timing has been proven.

Will Anadarko drill again off Kenya? Perth-based Pancontinental Oil & Gas NL said in a June 2014 presentation that it would potentially re-enter Kenya offshore Block L8 in the second half of this year. The Kenyan government also granted the company a 12-month extension for the initial exploration period of the L10B license area. Ophir Energy, which holds a 90% inter- est in Block L9, had said it would drill a well in 3Q 2014, but in a June 2014 investor presentation, announced that it was pushed to 1H 2015. This may be related to the farm-out to FAR of 30%, subject to government approval. The prospect has P50 reserves of 190MMboe gross and 171 MMboe net.

FAR anticipates drilling a well in Block L6 at the end of 1Q 2015.

Afrin (EAX) is preparing to drill two wells in 2015 in Blocks L17/L18.

Ultra-deepwater Block L26 is not currently under license. Edgo Energy, the exploration unit of Jordan’s Edgo, and joint venture partner Qatar First Bank relinquished the block in January 2013. Mazen Masri, managing director of Edgo, cited the technical and monetary challenges of drilling in water depths beyond 1500m, and also mentioned that the block is subject to a maritime border dispute, claimed by both Kenya and Somalia.


The National Oil Corp. of Kenya Ltd. (NOCK) is a state-owned company that was established in April 1981 to spearhead exploration.

A new Petroleum (Exploration & Production) Act was enacted in 1984, and revised in 1986, when royalties were replaced with production sharing con- tracts. Through 2012, most of Kenya’s PSCs gave NOCK a 10% stake in production, raised to 25% in 2013, along with higher fees and new capital gains tax rules. Kenya’s first competitive licensing round has been postponed to at least

4Q 2014, and GlobalData’s sub-Saharan upstream analyst John Sisa said in May that the delay could benefit the country if additional discoveries are made in the interim.


Adequate ports and docking facilities are still in short supply along the East African coast. The different types of vessels needed to support a robust exploration program require supply and repair yards and berthing options.

The Kenya Ports Authority manages the Port of Mombasa, named Africa’s fifth largest for container shipping in 2013, based on increased traffic after capacity expansion. In January, incoming KPA Chairman Danson Mungatana expressed his support for the development of small ports program and said the new commissioning of the standard gauge railway line would “revamp the transport sector port efficiency.”

Kenya is boosting existing port facilities with the construction of a $3.5billion Lamu port.

The Kenya Maritime Authority (KMA) was set up in June 2004 to provide regulatory oversight of the Kenyan marine industry. KMA implements international maritime conventions and promotes safety, security, maritime training, search and rescue, pollution prevention and the preservation of the marine environment. KMA’s mandate, as stipulated in Kenya’s KMA Act 2006, is “to regulate coordinate and oversee maritime affairs.”

Roads connecting ports, airports, and other supply routes need to be bolstered to support the heavy loads, as well as move personnel.

The oil and gas industry along with emerging sectors of the economy and a growing middle class have boosted civil aviation needs in the region. The country’s main airport is Jomo Kenyatta International (Nairobi), and there are smaller airports at Wilson, Mombasa, Eldoret, and Kisumu.

Bobby Bryan, Delta Airlines commer- cial manager for East Africa and West Africa, told the Discover Global Markets Conference in May that airports, aircraft, adequate fuel supplies and staff are nec- essary to service vessels and crews. Delta has an office in Nairobi and opened one in Dar es Salaam a year ago. It partners with KLM and Kenya Airways.

In a January 2013 report, Deloitte & Touche described Kenya’s economy as “energy starved” and that may hamper rapid infrastructure development.


Securing infrastructure, operations and personnel safety is a primary consideration. Given Kenya’s proximity to Somalia and shared, but porous, maritime border, critical infrastructure – electric, gas, telecoms, transportation, water and food supplies – supporting the offshore industry may be a constant target.

Increasingly frequent terrorist attacks, some of which the Kenya National Disaster Operation Centre attributes to Somali militant groups, may negatively influence investment investments and possibly forestall exploration activity in Kenya.

Earlier this year, bomb and grenade attacks in Nairobi and the coastal city of Mombasa led the UK, US, France and Australia to issue travel warnings. As this issue goes to press, Somali militants attacked hotels and killed dozens in Mpeketoni, a coastal town in Kenya’s Lamu County, another blow towards destabilizing the tourist economy.

With evolving threats, Kenyan govern- ment efforts to protect people and critical infrastructure must evolve as well, or the country risks losing petroleum investment.

The East Africa Oil & Gas Summit (EAOGS) will take place in Nairobi this October, and we’ll see what a few months more will bring.

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