Kingfisher oil field to recover 31% of its 635 million barrel reserve

State minister for minerals, Peter Lokeris

newvision

By Ibrahim Kasita

 

Uganda on Wednesday announced that the first oil production license to the China’s National Offshore Oil Corporation (CNOOC) to start the development of the Kingfisher Field in Lake Albert basin. This is in preparation for commercial production expected by 2018, according to Peter Lokeris, the state minister for minerals.

 

Uganda has 20 fields in the Lake Albert Basin, which is the most prospective area for petroleum production in Uganda. Kingfisher is the first and only field granted the production license.

 

Lake Albert rift has estimated 3.5 billion barrels of oil equivalent in place and 1.2 billion barrels are confirmed oil and gas recoverable.

 

Developing Kingfisher Field will cost over $2b to cover the project’s engineering, procurement and construction contract, construction of access roads, airstrips, permanent camps, pipelines, development wells.

 

A seven kilometre road from Ikamiro village to Buhuka Parish in Kyangwali Sub-County Hoima district will be constructed.

 

There will be need to transport the crude oil upon commencement of production. 

 

“The development plan provides for this evacuation to be done by a pipeline. This means that a 50 km crude oil pipeline will be constructed from Buhuka to Kabaale refinery area,” Lokeris said. 

 

A 60,000 barrels of oil per day refinery is expected be ready by 2017 coinciding with the completion of the Kingfisher development plan.

 

Uganda’s policy is to develop a refinery to process the crude oil and produce petroleum products. 

 

Acquisition of land for the refinery and procurement of a lead investor for the development of the refinery is ongoing.

 

The crude oil produced from this field (Kingfisher) can be refined to produce petroleum products for the country.

 

Kingfisher Field is assumed to hold an average of about 635 million barrels of crude oil in reserves. But only 31% of the reserves will be extracted when production starts in four years’ time. 

 

Only 196 million barrels is to be extracted in the 20 year life span of the field. The field will be developed in such a way that it produces between 30,000 and 40,000 barrels of oil per day.

 

However, extraction rate of 31% has raised concern over Uganda’s ability to optimally manage efficiently the petroleum assets. Petroleum experts claim this extraction rate is “very low.”

 

“How can you leave 69% of the crude oil in the ground? That is wastage,” said an international petroleum expert who preferred to be anonymous because she cannot speak on behalf of Uganda.

 

When asked about the low extraction rate, Ernest Rubondo, the commissioner in the petroleum exploration and production department, CNOOC Uganda has pledged and committed to enhance the extraction rates to higher levels.

 

“You are wrong and right. The average extraction rate globally is 30%. But you are right that there are very high extraction rates elsewhere,” he said.

 

“Our partners (CNOOC Uganda) will conduct studies to assess and evaluate how the extraction rates can be enhanced optimally. It could be by injecting water or other chemicals but we hope that the extraction rates will be higher.”

 

Last year at the Africa Union 19th Summit during the African Peer Review Mechanism, President Museveni observed that one of the many tricks oil firms apply is the under-declaring of the percentage that can be extracted from the ground.

 

Experts have called upon Uganda government to firmly control oil production if the petroleum resources are to be well managed rather than leaving the production decisions to the oil companies.

 

Immediate local benefits

The development of the Kingfisher field will be preceded by construction of an access road to Buhuka Parish in Hoima districts. 

 

This means that for the first time, the residents will have road access to the rest of the country leading to improvement in the value of their produce due to enhanced access to the market.

 

CNOOC Uganda is obligated to maximize the utilization of Ugandan companies, and human resources in supporting the development and production operations of the Kingfisher oil field.

 

Other foreign companies sub-contracted for the field development will use local goods and services by incorporating national content requirements into their tendering process as well as encouraging joint ventures or consortiums with local partners