History of Kenya's Oil and Gas Industries

Kenya's Oil and Gas Industry 1950 - 2012

Kenya has a history of oil exploration dating back to the 1950s. However, most of the wells that were drilled in the past came up dry. After decades of disappointing results, investments in Kenyan hydrocarbon exploration waned until 2010 when offshore gas finds in Mozambique and Tanzania and onshore oil finds in Uganda attracted investors back to Kenya. According to Deloitte, of 33 wells drilled in the country prior to 2012, 16 showed signs of hydrocarbons, but none were considered commercial. Of these 33 wells only 4 had been drilled offshore and only 1 (in Block L5, drilled by Woodside in 2007) was in deep water.

1950s and 1960s

Petroleum exploration in Kenya began in the 1950s, and the first well was drilled in 1960. BP and Shell began exploring the Lamu Basin in 1954 where they drilled ten wells which were not considered commerical. In Mandera Basin, Frobisher Ltd., Adobe Oil and Gas and Burmah Oil conducted photo geological field geology, gravity, aeromagnetic and seismic surveys that did not result in drilling programmes.

1970s

In 1975, several consortia acquired land in the upper part of the Lamu Basin. Texas Pacific et al. drilled the Hargaso-1 well in 1975 and encountered oil and gas in Cretaceous rocks. In 1976 Chevron and Esso drilled the Anza-1 and Bahati-1 wells in the southern part of the Anza Basin. An interest in the offshore portion of the Lamu Basin also resulted in the drilling of three deep wells, Simba-1, Maridadi-1 and Kofia-1 in 1982 by a consortium of Cities Services, Marathon and Union. Seismic data revealed that salt diapiric structures were present along the Kenyan margin.

1980s

In 1986, the petroleum exploration and production legislation in Kenya was revised with the aim of attracting international exploration interest in the country. In 1986, the Kenyan government also entered into a joint venture exploration programme with Petro-Canada International Assistance Corporation. Seismic work was conducted and Kencan-1 was drilled to test deeper strata on the structure adjacent to Garissa-1 well. Between 1985 and 1990, a group of companies led by Amoco and Total drilled 10 wells, 8 of them in Anza Basin and 2 in Mandera Basin. The wells were dry but with indications of oil and gas. An exploration by Total led to the drilling of Ndovu-1, Duma-1 and Kaisut-1 in the North of the Anza Basin while Amoco drilled Sirius-1, Bellatrix-1 and Chalbi-3 in the Northwest of Anza Basin and Hothori-1 well in the South of the Anza Basin. Amoco farmed out 50 percent of its interest to Shell who drilled Eliye Springs-1 and Loperot-1 located west of Lake Turkana in a Tertiary Rift Basin. While none of these wells encountered commercial reserves, fluorescence and gas shows were reported in Hothori, Endela, and Ndovu wells.

1990s

In 1991, National Oil Corporation of Kenya (NOCK) initiated an in-house study of the Lamu Basin as part of a long-term strategy to re-evaluate the existing geological, geophysical and geochemical data relating to each of the sedimentary basins in Kenya. The Lamu Basin study was completed in 1995 and as a result the basin (both onshore and offshore) was subdivided into ten exploration blocks. Two more exploration blocks have been created since the year 2001. Promotion efforts generated new interests in the offshore Lamu Basin and resulted in the signing of seven Production Sharing Contracts (PSAs) covering blocks L5, L6, L7, L8, L9, L10 & L11 between 2000 and 2002. A total of 7884 km of 2D seismic data covering Blocks L5, L6, L7, L8, L9, L10, L11 & L12 of the offshore Lamu Basin was acquired by Woodside between August and October 2003.

In August 2000, the National Oil Corporation of Kenya (NOCK) commissioned the Tertiary Rift Study, which was completed in March 2001. The study led to quantification of potential source and reservoir rock units in the study area as well as the petroleum system at play in the sub-basins.

In 2004, CNOOC acquired explorations rights for six out of the country's 22 exploration blocks from Kibaki’s government, which had adopted a policy to look East for investments and aid. However, in 2010, the Chinese firm left the country as it failed to strike commercially viable oil or gas and turned instead to Kenya's neighbour Uganda.

In late 2010, Tullow Oil farmed into six blocks in the Turkana Rift Basin (five in Kenya and one in Ethiopia).

Kenya's Oil and Gas Industry from 2012

Exploration interest is picking up once again following the oil discoveries in Tanzania, Mozambique and Uganda. Kenya is under-explored and has enormous potential, making it attractive for investors. In the entire history of Kenya, only 50 wells have been drilled. In Texas, similar in area to Kenya, 500 000 wells have been drilled since 1960.

In 2012, Tullow Oil in partnership with Africa Oil and Marathon, drilled at Ngamia-1 in Block 10BB and Twiga South-1 in Block 13T in the onshore Tertiary Rift Basin. On 26 March, 2012, Tullow Oil announced an oil discovery in Block 10BB and a further discovery of oil in Block 13T in November 2012. The CEO of Africa Oil Keith Hill has announced that the find, estimated at 367 million barrels, passes the threshold of commercial viability. While it is widely claimed that Tullow Oil's 2013 half-year report announces commercial viability this is not in fact the case. Rather, it states that the discovery of an estimated 300 million barrels of oil equivalent resources is a crucial step towards establishing commercial viability.

Apache also discovered gas at the offshore Mbawa-1 well. However, the company has since plugged the well after failing to find commercial quantities of natural gas or crude oil and announced it would leave the country in October 2013.