Tullow Oil Share News (TLW)

Thu, 28th Jun 2012 17:24

* Oil explorer hits rock, to assess whether can dig further

* Tullow mulls moving rig to second well

* E. Africa a hotspot after new oil and gas finds



By Kelly Gilblom

June 28 (Reuters) - Tullow Oil has halted the drilling of its well in northwestern Kenya after hitting a geological formation and may soon start assessing the commercial viability of the well where it had announced the country's first oil discovery.

Tullow's country manager in Kenya, Martin Mbogo, said the company had hit an unexpected geological formation about 400 metres short of its original projected target depth of 2,700 metres in the Ngamia-1 well.

If it can't go further, then Tullow will start appraising the contents of the well and will move the drilling rig west to spud its second Kenyan well this year, the Africa-focused British firm said on Thursday.

Mbogo said it was still too soon to discuss whether the well, in the country's Turkana region, could ultimately lead Kenya into oil production.

He also declined to give a figure on how many barrels the well needs contain in order for it to be commercially viable.

'It depends a lot on the price of oil and infrastructure in place,' he said. 'We will release an operational update as soon as some tests are done, in about two weeks.'

In March, the explorer announced Ngamia-1 held Kenya's first oil discovery, one in a series of major hydrocarbon finds in east Africa that has made the region a hotspot in oil and gas exploration.

Some 30 km west of Ngamia-1, Tullow is prepping its next drill site, known as Twiga-1, to receive the rig.

'It's important to move the rig soon, since its production-sharing contract with the Kenyan government requires it to complete its work within a specific time frame,' Mbogo said.

He dismissed media reports of a protest by communities in the region, who are angry about Tullow's presence and the fact they have not been included in the income generated by oil activities.

This past weekend, Kenyan energy officials hosted two days of meetings with Turkana locals over their concerns that they would not receive a fair share of the benefits of the oil discovery.

Mbogo, who was in attendance, said about 300 people showed up each day to voice worries.

'In terms of the situation on the ground, it's absolutely calm,' he said. 'There's a lot of noise in the news, but operationally there's been no disruption at all,' he said.

'This was very big, government connecting with locals.'



(Editing by James Macharia and Jane Baird) Keywords: KENYA OIL/TULLOW

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