The 2016 work program was primarily focused on advancing development plans associated with the discovered South Lokichar Basin in Kenya. The Company's assessment of contingent resources in the South Lokichar Basin highlights the considerable resource potential within the Basin. The work program includes; continuing studies to support reservoir modelling, additional core analysis, petrophysical analysis, and advancement of the development plans associated with both upstream and midstream activities. AOC, with our joint venture partners is pleased to have recommenced exploration and appraisal drilling activities during the fourth quarter of 2016 in the South Lokichar Basin. One drilling rig is currently active and is undertaking an initial program of four wells with the potential to extend the program with an additional four wells. The first well in the drilling program, Erut-1 (Block 13T) resulted in a discovery (additional details below). Following Erut-1, the PR Marriott Rig-46 moved to Block 10BB, where it is currently drilling the Amosing-6 appraisal well. Additional prospects in the drilling program include Etete (an offset to the Etom-2 discovery) and further appraisal of the Ngamia and Amosing fields to target un-drilled volumes, with an aim of extending the size of these existing discoveries. In addition, the Kenya joint venture partners are undertaking an extensive water injection test program, which commenced in the fourth quarter of 2016, to collect data to optimize the field development plans. The Kenya joint venture partners continue to progress towards sanctioning Front End Engineering and Design ("FEED") for both Upstream and Mid-stream developments. Upstream FEED is expected to commence in the second half of 2017.
Tertiary Rift - Kenya
Late in 2015, the results of the Etom-2 well in the South Lokichar Basin (Block 13T) were announced. The Etom-2 well was drilled based on recently acquired and interpreted 3D seismic in a previously undrilled fault block adjacent to the Etom oil discovery. The well encountered 102 meters of net oil pay in two columns. Oil samples, sidewall cores and wire line logging all indicate the presence of high API oil in the best quality reservoir encountered in the South Lokichar Basin to date. Discovering this thick interval of high quality oil reservoirs at Etom-2 further underpins the development options and resource base in the South Lokichar Basin. The result follows careful evaluation of 3D seismic data which was shot after the Etom-1 well completed drilling and demonstrates how the partnership has improved its understanding of the Basin. This result also suggests significant potential in this underexplored part of the block, as at the time of drilling, it was the most northerly well drilled in the South Lokichar Basin and is located close to the axis of the Basin away from the Basin-bounding fault.
During January 2017, the Company announced that the Erut-1 well in Block 13T, Northern Kenya, discovered a gross oil interval of 55 meters with 25 meters of net oil pay at a depth of 700 meters. The overall oil column for the field is between 100 and 125 meters. Potential exists for additional pay but will need to be confirmed by laboratory analysis. The objective of the well was to test a structural trap at the northern limit of the South Lokichar Basin. The Erut-1 well was drilled ten kilometers north of the Etom-2 well and shares important characteristics. Fluid samples taken and wireline logging all indicate the presence of oil. Erut-1 successfully shows that oil has migrated to the northern limit of the South Lokichar Basin and has de-risked multiple prospects in this area which will now be considered as part of the Partnership's future exploration and appraisal drilling program.
In April 2016, the Governments of Uganda and Kenya announced that separate export pipelines would be developed for the export of production from the development of oil resources in their respective countries. The Kenya joint venture partners have signed an MoU with the Government of Kenya which confirms the intent of the parties to jointly progress the development of a Kenya crude oil pipeline which will run from South Lokichar to the port of Lamu. The pipeline Joint Development Agreement is currently in the final stages of negotiation and sets out a structure for the Government of Kenya and the South Lokichar joint venture partners to progress the development of the export pipeline. This agreement will ultimately enable important studies to commence such as FEED, ESIA, as well as studies on pipeline financing and ownership.
In addition to progressing the full field development work in Kenya, an Early Oil Pilot Scheme (EOPS) transporting oil from South Lokichar to Mombasa, utilizing road, has been approved by the joint venture partners. This will provide technical and non-technical information that will assist in full field development planning. The EOPS would utilize existing upstream wells and oil storage tanks to initially produce 2,000 bopd around mid-2017, subject to agreement with National and County governments.
In the first quarter of 2016, the Government of Kenya agreed to an 18-month extension to the first additional exploration period on Block 10BA, allowing the joint venture partners to fully integrate the learnings from activities on Blocks 13T and 10BB into decisions on activities to be undertaken on Block 10BA. In the third quarter of 2016, the Government of Kenya agreed to a three-year extension to the Second Additional Exploration Period in Blocks 10BB and 13T (now expiring 18 September 2020).
A draft field development plan for the discoveries in the South Lokichar Basin was submitted in December 2015 to the Kenyan authorities. Further refinement of the field development plan and engagement with the Government of Kenya is ongoing.
During the first quarter of 2016, the Cheptuket-1 well (Block 12A) completed drilling to a depth of 3,083 meters. The well encountered oil shows, seen in cuttings and rotary sidewall cores, across a large interval of over 700 meters. Cheptuket-1 was the first well to test the Kerio Valley Basin. While shows were encouraging, upon further technical and commercial review the Company elected to withdraw from the block during the first quarter of 2017.
Cretaceous Anza Rift - Kenya
In Block 9, the Company continues to assess the results of its 2014 drilling program. The Government of Kenya has granted an eighteen-month extension to the second additional exploration period, which will now expire in June 2017.
Tertiary Rift - Ethiopia
During the third quarter of 2015 in the Rift Basin Area Block, a 2D seismic program was completed, which consisted of approximately 600 kilometers of land and lake seismic. Source rock outcrops and oil slicks on the lakes have been identified in the block where there was previously no existing seismic or wells. The Government of Ethiopia has granted a twelve month extension to the initial exploration period, which will now expire in February 2017.