Kampala- The government and French oil firm Total E&P, the lead joint venture partner on the proposed East African Crude Oil Pipeline (Eacop), are contemplating any “cheaper technology” that can be substituted electricity to facilitate transportation of Uganda’s waxy crude oil.
Uganda’s (Brent) crude oil has low sulphur content making it heavy, waxy and solidifies at room temperature, requiring the heating of the pipeline (to keep at above 50 degrees Celsius) for it to flow through.
The 1,445km pipeline running from Hoima, in mid-Western Uganda, to Tanga Port in Tanzania, at the Indian Ocean, was envisaged for an electric pipeline, to allow constant flow of oil.
Once, constructed, the pipeline will be the world’s longest electrically heated pipeline in the world.
However, senior presidential advisor on oil and gas Kabagambe Kaliisa and Energy minister Irene Muloni, separately, told key industry players gathered in Kampala last week for the 3rd International Oil and Gas Conference, that government was keen on other innovative and cost saving ways other than electricity.
“Various interested parties could help us with cheaper technology. I am told there are some elements that can be mixed with the crude to make it light but without affecting its chemistry,” said Ms Muloni. “It’s something we are looking at and will continue exploring.”
But for now, the main working concept is to heat the pipeline using electricity whose lines will have to zigzag around the project corridor from Hoima to Tanga.
The Tanga route was selected as the least cost route for Uganda to transport its crude to the international market.
This, among other grounds, convenient constructability (flat terrain), highest availability (fully functional), lowest environmental footprint, and provides the shortest schedule for Uganda to seeing first oil export - earliest mid-2020.
Total E&P says the technical, Front-End Engineering Designs (FEED), for Eacop are nearing completion, which could pave way for Final Investment Decision (FID) in early 2018.
Total Africa corporate affairs director Ahlem Friga-Noy told this newspaper that the Feed study is at the completion stage for submission.
The $11m (Shs36b) contract for Feed to study various technical aspects of the 1,445km crude oil export pipeline from Hoima in mid-western Uganda to Tanga port at the Indian Ocean in Tanzania, was awarded last December to US based Gulf Interstate Engineering and Danish consultancy, NIRAS Gruppen A/S, with a completion timeline of eight months.
Ms Muloni, speaking at the conference, further indicated that, the said feed report and environmental social impact assessment (ESIA) studies, expected to be completed next February, will lead to FID in the first quarter of 2018.
Already, Total has brought on board two London based transactional advisors, Clifford Chance to advise on legal matters and Sumitomo Mitsui Banking Corporation Europe Ltd, the Europe affiliate of the Sumitomo Mitsui Banking Corporation, the second largest bank in Japan by assets, to advice on sourcing of financing and assessing anticipated costs and benefits of funding options including valuation of the debt tenors (the length of time to maturity, or repayment, of debt).
Kingfisher good to go
Ms Muloni said the designs for the Kingfisher field together with that of the fields in the Kaiso-Tonya area, which she said are expected to complete by December.
Cnooc, is the main operator of Exploration area 3 (the Kingfisher field) in Hoima, which is expected to pump the first oil, once the required upstream and midstream infrastractures have been put in place.
Kingfisher’s production licence was the first to be granted in 2013. Oil reserves at the field are estimated around 800 million barrels but production in advanced stages will be running at 40,000 barrels per day (bpd).
Government has in total awarded nine production licences; one for Cnooc, three for Total E&P for the Ngiri, Jobi-Riii and Gunya fields in Exploration Area 1 (EA1) at the northern end of Lake Albert (in the Murchison Falls National Park), and five for Tullow for the Kasamene-Wahrindi, Kigogole-Ngara, Nsoga, Ngege and Mputa-Nzizi-Waranga fields in Exploration Area 2 (EA2), east of Lake Albert - also known as the Tilenga project.
Ms Muloni, revealed that feed for Total’s fields also known as the Tilenga project is “expected to be concluded in June 2018 after which, FID will be made.”
A consortium of firms including France’s Flour and Technip, China Petroleum Engineering and Construction Corporation (CPECC) from China and Chicago Bridge & Iron Company from US, were announced in February to be in lead for the Tilenga feed.
Total’s Friga, in an email said the FEED competitive contractual strategy is in two phases with the aim of inviting the two best performing companies to compete for EPC after completion of the FEED phase 1.
Ms Friga added that “each JV Partner will be investing in the upstream project in proportion of its participating interests through its equity.”
The feed study for Tilenga will detail among others layout of the 36 well pads, technology required for drilling the 400 wells, and estimated costs of required infrastructure to start production on EA1 and EA2.
The study will also entail engineering designs for the proposed 200,000 barrels Central Processing Facility (CPF) in Hoima. This will also include design studies for feeder pipelines that will evacuate crude oil from Exploration Area 3 (3A) - Kingfisher in Kaiso-Tonya and nearby oil wells to the planned CPF in Hoima.
A CPF is where oil will be stored first for stabilization and treatment before being fed into either the proposed refinery or crude oil export pipeline to Tanzania.
The CPF in Hoima is also expected to generate 35 megawatts of electricity that will run field operations from natural gas from fields. Another CPF will be constructed in Buliisa for oil fields in the area and in Nwoya (operated by Total) and is expected to generate 70 megawatts from gas reserves.