Introduction
Exploration offshore Namibia has been active since 1968. Only one discovery of any significance was made and this was the Kudu Gas Field. The Kudu Gas Field now lies within the block designated 2814A and is operated by Shell. There is no production as yet, but the Kudu Gas Field is planned for development and production by 2002.
Block 2414A (The Kudu Block)
Block 2814A, also known as the Kudu block, lies 130 km offshore southwest Namibia and is licensed to Shell Exploration and Production BV (75%), Energy Africa (10%) and Texaco Namibia Resources (15%). Prior to 1990, three wells had been drilled on the Kudu structure. The structure was successfully tested in September 1996 by well Kudu 4 which led to its being declared a petroleum field. Early plans were made to exploit the gas for use in electricity generation and supply in both Namibia and neighbouring South Africa. The prime objective for the Kudu gas is the securing of a market in the Western Cape.
Various reserve estimates have been made which range from the operator’s estimates of recoverable reserves of 3 trillion cubic feet (tcf) to news reports of reserves of 20 tcf. Estimates, however, show that the field could achieve gas flow rates in excess of 75 million cubic feet per day. Kudu 5 drilled in August 1998, tested successfully and according to the partners demonstrated a significant extension of the field. The results indicate very large reserve potential but reservoir complexity limits the categorisation of proven reserves. Another appraisal well is planned in the year 2000. According to state oil company Namcor, Namibia has sufficient gas deposits (20tcf) to meet electricity demand for the next century. This equates to 3.5 billion barrels of oil equivalent. Namcor also stated that proven reserves stand at 1.3 tcf, thereby justifying the plans for exploitation. Half of Namibia’s energy demands are currently met by South Africa.
Exploitation of the field requires long-term purchase contracts and regional cooperation since the major potential market for Kudu gas is in neighbouring South Africa.
Kudu Gas Project
A project that has been mooted is the US$ 1 billion Kudu Gas Fields Project or Kudu Power Project (KPP) which is aimed at making Namibia self sufficient in power in the foreseeable future. The project entails piping natural gas, over a distance of 700 kilometres, from the Kudu Gas Fields off the coast of Namibia to the Western Cape to be used in a gas-fired power station. Shell Exploration and Production, Nampower of Namibia, National Power of the United Kingdom and Eskom of South Africa were the original partners in the proposed project.
Phase I was planned to provide facilities to feed Kudu gas into a gas-fired power station at Oranjemund with half the power being exported to the Western Cape. This phase of the project would incorporate the development of offshore facilities and a pipeline to Oranjemund and would involve a capital investment of about US$400 million. The anticipated completion date for Phase I is 2002.
Phase II is planned to pipe the gas to a new power station in Cape Town and to the steel production industry in Saldanha Bay. This phase of the project would require the construction of a 750 MW power plant in Cape Town, including an associated power transmission connection to the existing Namibian system with an anticipated completion date of 2004 or 2005. The capital investment costs are of the order of $US 500 million. Gas is also planned to be piped for phase II of the coal based Corex plant in Saldanha, a joint venture between the Industrial Development Corporation and Iscor.
In early 1999, the project suffered a setback when Eskom confirmed its withdrawal from the venture on the basis of the high cost of power relative to its current power sources. Some sources indicate, however, that by the third quarter of 1999, Eskom was renegotiating for a stake in the gas plant near Oranjemund. According to news reports, the other partners still consider the project to be feasible and are looking for a replacement partner, preferably a strong regional partner with a black empowerment component from a country other than Namibia.
The project will require the production of some 100 MMcfpd of gas from reserves of approximately 700 bcf, a level for which the currently proved volumes of Kudu are more than adequate. Kudu 5 drilled in 1998 proved up reservoir outside of the area tested by the first four wells on the structure.
Studies have shown that a significant market for gas will develop in the Western Cape and that ultimately, Kudu is likely to contain sufficient reserves to support the large-scale export of gas to South Africa. A feasability study is being undertaken by independent consultants on behalf of the Cape Metropolitan Area Local Authorities and the Kudu Gas Group. The study is due to be completed by late 2000 and is expected to confirm the competitiveness of a gas fired power plant in the Western Cape.
