Orca Energy Group Provides Key Insights on SS-7 Operations

Operational Update on SS-7 from Orca Energy Group

Orca Energy Group Inc. has recently provided a comprehensive operational update regarding its well intervention efforts on the SS-7 site. This initiative aimed to improve the functionality of the well and enhance gas production efficiency. The company's commitment to addressing challenges in the energy sector demonstrates its proactive approach toward natural gas development.

Summary of SS-7 Well Intervention

The well intervention program for SS-7 has concluded after extensive operations. Orca Energy Group executed a complex mobilization strategy to reach Songo Songo Island, focusing on restoring the mechanical integrity of the well. The primary goal was to stop water production, which has been a significant barrier to gas extraction, particularly from the southern compartment of the gas field.

During the operation, efforts included managing the water flow and reperforating the Neocomian sands to facilitate gas extraction. Limited gas flows were noted, but unfortunately, the extraction was not sustainable. Orca, adhering to its contingency plans, decided to place a cement plug above the Neocomian interval while extending its focus to perforating shallower Cenomanian sands.

Cost Implications and Project Analysis

As the operational review progressed, it became apparent that the total cost for the project increased from the initial estimate of $22 million to $27 million. This change reflects the complexity of the operations required to address water control issues and the overall challenges faced during the well intervention.

Orca Energy Group is now shifting its efforts towards demobilizing the barge and jackup equipment from the SS-7 site. Following the demobilization, the company will conduct a thorough post-project analysis to evaluate the outcomes of these interventions and assess how they align with production expectations.

Understanding Orca Energy's Role and Objectives

Orca Energy Group is recognized for its role in the gas development sector, primarily through its subsidiary, PanAfrican Energy Tanzania Limited (PAET). The company is actively engaged in advancing natural gas supply within Tanzania, showing a strong commitment to local economies. Its trading activity on the TSX Venture Exchange under symbols ORC.A and ORC.B highlights its presence in the capital market.

The company's principal asset lies in its indirect interest in the Production Sharing Agreement (PSA) related to gas production in Tanzania, specifically from the Songo Songo gas field. This agreement defines aspects of gas marketing and ownership with the Government of Tanzania and the Tanzanian Petroleum Development Corporation (TPDC).

Shifts in the Gas Landscape

Recent developments indicate a shift in gas supply dynamics. Following the cessation of Protected Gas production, Orca's strategy has adapted to focus on producing Additional Gas, reflecting a significant transition in operations. Orca plans to maintain its commitment to providing gas supplies that support infrastructures, such as the processing plant on Songo Songo Island, ultimately benefiting consumers in Dar es Salaam.

Despite the challenges faced, Orca Energy continues to advocate for fair compensation for gas supplied under the new arrangements. The company is engaged in negotiations with TPDC, addressing disputes related to payments for gas supplied after the transition period.

Expectations Moving Forward

The company remains optimistic about its future prospects in enhancing natural gas production and distribution. With operations set to evolve, Orca is poised to adapt to the changing landscape of the gas sector in Tanzania. Although the current results from the SS-7 site did not meet initial expectations, the company’s strategic approach remains unwavering as it seeks to leverage its assets more effectively.

Additionally, Orca Energy Group’s management remains committed to transparency regarding its operations and will provide updates as necessary. Their ongoing efforts to navigate regulatory and operational challenges underline a determination to foster growth and sustainability within Tanzania's energy sector.

Frequently Asked Questions

What was the primary purpose of the SS-7 well intervention?

The SS-7 well intervention aimed to restore well integrity, ensuring the shutdown of water production and enabling effective gas extraction.

What challenges did Orca Energy face during the SS-7 operation?

Orca Energy encountered significant challenges in water control and achieving sustainable gas flows, leading to an increase in project costs.

How does Orca Energy contribute to Tanzania's energy sector?

Orca Energy, through its subsidiary PAET, actively develops and supplies natural gas, supporting local industries and ensuring a reliable power supply for Tanzania.

What compensation strategy is Orca Energy pursuing with TPDC?

Orca seeks compensation at commercial rates for gas supplied as Additional Gas, addressing disputes over payments after the cessation of Protected Gas.

What are Orca Energy's future plans following the SS-7 project?

The company plans to conduct a detailed product analysis and remain flexible in adjusting its strategies to enhance gas production from the Songo Songo gas field.

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