29 Nov 2011 07:00
29 November 2011
Victoria Oil & Gas Plc
('VOG' or 'the Company')
Logbaba Project Operational Update
Highlights:
·; The Company remains on schedule for first gas sales by the end of the year
·; Production Facilities mechanically complete and pre-commissioning substantially completed
·; Completion of pipeline installation to first customer hub on the Magzi Industrial Estate
·; Pre-commissioning underway on first 5km of pipeline
Victoria Oil & Gas Plc, the AIM quoted oil and gas exploration and development company with assets in Cameroon and the FSU, announces that the Production Facilities at the Logbaba site, which will treat the gas from the wellheads and separate the condensate, are now mechanically complete. Pre-commissioning of the Production Facilities has commenced and approximately 80 per cent. of all instrumentation loops have been tested. All power circuits are in place and have been tested. Other successful tests completed include the La-105 and La-106 hydraulic valves control, two de-sander units, the 10,000 psi high pressure pipework from the production valves on the christmas trees to the adjustable chokes, the high pressure coolers, the firewater water pumps and the plant back-up diesel generator.
Pre-commissioning of all the remaining vessels and equipment is expected to be completed within the next week. Full commissioning commences thereafter with product and gas being flared while all instrumentation and systems are verified ahead of first gas production.
Pipeline installation to the first customer hub located on the Magzi Industrial Estate ('Magzi') is now complete. The total length of pipeline installed and backfilled to and around Magzi is 5km, comprising 400mm, 250mm and 63mm diameter pipe sizes.
Specialist hydraulic and pneumatic testing equipment has been utilised for pipeline pre-commissioning, which includes stress testing of the entire existing network. This work is expected to be completed within the next two weeks. Radiographic examination of all the pipeline welds will also be completed within this period. On completion of this work programme, the pipeline will be purged with gas for several days as part of the network commissioning process ahead of first gas production.
Customer conversion work has commenced on a number of sites on Magzi. The scope of work includes installation of dual fuel burners and control panels as wells as individual pressure reduction and metering stations. The first customers are scheduled to accept gas before the end of December with additional customers progressively coming on stream thereafter. The Company anticipates steadily building sales to approximately 20 customers by the end of the first year of operations as the entire pipeline network, consisting of 34km, is completed.
The Logbaba gas and condensate field has proven and probable reserves of 212 billion cubic feet of gas (35.3 million barrels of oil equivalent ('boe')) and 4.2 million barrels of condensate. The Company has a 95 per cent interest in and is operator of the Logbaba field. VOG anticipates gross gas sales of 8 million standard cubic feet per day ('mmscf/d') by the end of the first year of operations, rising to 44 mmscf/d (7,300 boe) by the end of 2014. The pipeline has a capacity of 60 mmscf/d, which the Directors anticipate to be of sufficient size to satisfy the Douala industrial market over the medium term. Condensate separated from the gas at the process plant will be stabilised and trucked to the Sonara refinery at Limbe, located 60km away. Condensate sales are anticipated to be 160 barrels of condensate per day by the end of 2012, rising to 880 barrels by the end of 2014.
The Company remains on schedule for first gas sales by the end of the year. With regard to the Logbaba development and production operations, the Company has an excellent HSE record with over 20,000 thousand man days completed, no serious injury and just one lost time incident.
For further information, please contact:
Victoria Oil & Gas Plc - Tel: +44 (0) 20 7921 8820
Kevin Foo / Martin Devine
Macquarie Capital (Europe) Limited Tel: +44 (0) 20 3037 2000
Jeffrey Auld / Steve Baldwin / Nicholas Harland
Fox-Davies Capital - Tel: +44 (0) 20 3463 5010
Daniel Fox-Davies/ Richard Hail
Strand Hanson Limited - Tel: +44 (0) 20 7409 3494
Simon Raggett / Angela Peace
Tavistock Communications - Tel: +44 (0) 20 7920 3150
Ed Portman/ Paul Youens
Background Information on Victoria Oil & Gas Plc:
Victoria Oil & Gas is an independent oil and gas exploration and development company with projects in Africa and the FSU. The Company's principal assets are the Logbaba gas and condensate project in Cameroon and the West Medvezhye project in Siberia, Russia. Logbaba is located in Douala, the economic capital of Cameroon. The field was discovered in the 1950s and all four exploration wells encountered gas. The Company drilled two successful development wells in 2009/10 and is now installing production facilities and a pipeline to serve industrial consumers of gas in Douala, anticipated to be complete by the end of 2011. The Company received an Exploitation Licence for the development of the Logbaba Field by Presidential Decree on 29 April 2011.
The Company's Logbaba proved and probable reserves are sufficient to supply an average of 30mmscf/d for the next 20 years. In the longer term, as further reserves may be proven, gas may be supplied to large gas fired power stations connected to the grid, with either VOG investing in an independent power producer joint venture or selling the gas to third parties.
West Medvezhye is situated in the prolific Yamal-Nenetsk hydrocarbon region in Siberia. An independent audit, carried out by Mineral LLC in 2011, estimated prospective resources for the area of over 1.4 billion barrels of oil equivalent. The Company also has a discovery well, 103, with C1 and C2 reserves, independently assessed under the Russian classification convention of 14.4 million boe as approved by the Russian Ministry of Natural Resources.
Reprocessing of 845km of 2D seismic has recently been completed and geophysical/geological modelling is currently underway. In addition, development studies are in progress to commercialise the Well-103 discovery and prospective resources.