Zim News Blog -NEWS NETWORK

Golden Sibanda Business News Editor

IN a landmark development likely to transform Zimbabwe’s economic landscape, Australian firm Invictus Energy and its local partner, One Gas Resources, have discovered the first of potentially many jumbo-size deposits of condensate gas at their Mukuyu-2 exploration well in Mbire, Mashonaland Central Province, in the north of the country.

The discovery is seen as a significant potential game-changer for Zimbabwe’s economic growth, energy security and opportunities for further investment in exploration for hydrocarbons, among several other potential benefits.

Once commercial extraction begins, the gas project will also bring significant inflows into the revenue coffers of the Government, which is contractually entitled to a significant share of the production.

Mines and Mining Development Minister Zhemu Soda announced the discovery yesterday, saying the gas finding was a major discovery and one of the most significant developments in the onshore oil and gas sector in the Southern African region.

Minister Soda said the successful discovery was a result of the long-term partnership between Invictus Energy, Geo Associates (the exploration licence holder) and the Government, which has been supportive through providing the appropriate mining title and a conducive regulatory and fiscal environment for the project.

Invictus Energy is the operator of the Special Grant 4571 permit through its 80 percent ownership of Geo Associates Zimbabwe, in which One Gas Resources holds the balance of 20 percent.

“Invictus Energy and Geo Associates have delivered an exceptional result from the first two wells drilled in Mukuyu, opening up substantial room in their large portfolio of prospects and leads for further discoveries.

“The results were shared with the Government, as should be the norm. The company has also proceeded to make this announcement at the Australian Stock Exchange as per the listing requirements,” said Minister Soda.

Government is proud of the cooperation that has led to the discovery of the gas and is confident that the efforts of investors would unlock the full potential of Zimbabwe’s oil and gas resources.

Minister Soda said they believe the gas discovery will have a positive impact on the economic and social development of Zimbabwe.

“Gas will also support diversification of Zimbabwe’s energy mix and enhance its energy security, creating jobs and opportunities for local communities.

“Both the Government and the investor would want to reiterate that this is a gas discovery. We have not yet confirmed the discovery of oil as further exploration tests and evaluations are still ongoing,” said Minister Soda.

The discovery marks one of the most successful exploration programmes in Africa given the companies managed to find the hydrocarbons at the first instance of exploration drilling compared to several attempts made elsewhere on the continent before moveable hydrocarbon deposits were confirmed.

A hydrocarbon is a compound of hydrogen and carbon, such as any of those which are the chief components of petroleum and natural gas.

Condensates are the vaporised liquid form of hydrocarbons that take their name from the process of removing them from the gas stream by processing with specific temperature and pressure.

Minister Soda said Zimbabwe’s discovery was the Triassic-aged hydrocarbon in Sub-Saharan Africa. It follows up on the basin opening drilling at Mukuyu-1, where preliminary findings also strongly supported the presence of hydrocarbons.

However, the company failed to recover a fluid sample, as per the listing requirements in Australia, to declare commercial discovery, forcing the company to undertake Mukyu-2 to fulfil the regulatory requirements of declaring discovery.

The successful discovery of moveable hydrocarbons in Zimbabwe could have a far-reaching positive impact on the company and economy in general.

Potential game-changing benefits include faster economic growth, increased export earnings, energy security for a country facing a crippling electricity deficit, massive job creation, and the development of completely new downstream industries.

Condensate gases are also used for power generation, manufacture of products such as petrol (gasoline), jet fuel, diesel and heating fuels. Some condensates, particularly those with a high paraffin content, are used for the manufacture of ethylene (feedstock for polymers and industrial chemicals).

Said Minister Soda: “A total of four hydrocarbon samples were recovered to the surface from two separate zones in the Upper Angwa using a wireline formation testing tool. The samples meet key international standards and gas and fluid properties will be confirmed following laboratory testing.

“Currently, the company is conducting further appraisal and evaluation work to confirm the size and quality of the gas reserves and to determine the optimal development plan.”

Minister Soda said the discovery boded well for other prospects and leads in the remainder of Zimbabwe’s larger Cabora Bassa Basin, where Invictus already had rights to explore for oil and gas over an expansive piece of prospective land.

Geo Associates director Paul Chimbodza said the discovery was a potential game-changer for Zimbabwe in terms of export generation and energy security.

“We have made a gas discovery and it’s a significant discovery; the first of its kind in Sub-Saharan Africa for a very long time.

“It is the start of a very long journey; you recall we drilled Mukuyu-1 and Mukuyu-2, which are only 7km apart. We still have to cover an area of about 100km by 50km in extent, so because of Invictus listing requirements, any material information that we come across, we are mandated to release it to the public. We hope this is the start of more positive news to come.

“We are still drilling at Mukuyu-2, these results that we have just released are coming from a part of that, we still have another 400m to 500m of Mukuyu-2 to drill and we expect more positive results,” said Mr Chimbodza.

“You will recall last year the main failure for us to recover the fluid sample (from Mukuyu-2), which we have successfully recovered now, which is a precondition for you (to be allowed) to declare a discovery.”

Mr Chimbodza said that based on earlier studies, the company expected to discover about 20 trillion cubic feet of gas condensate from the Mukuyu field, which has so far confirmed interpretations of earlier seismic (underground vibration) studies.

“This discovery that we are announcing to the public is a gas discovery. We have recovered condensate, which is a mixture of oil, gas, water and all that and we are still processing that through our laboratory externally.

“It’s only when we have got results that give us the constituent minerals with that condensate that we can be certain about announcing what we have got,” he said.

In a sign of confidence about the potential of the company’s prospective area that covers extensive swathes of land in Mbire and Muzarabani districts of Mashonaland Central Province, Mr Chimbodza said exploration drilling will continue after the company extended the contract for the hired Exalo drilling rig by another two years.

“But we are also looking at early monetisation opportunities. As we continue with the exploration, we want to see if we can monetise whatever resource that we have discovered now and we are looking at what potential low-hanging fruits can be used for early monetisation, but also as a proof of concept, for example, gas to power,” he said.

Mr Chimbodza said the company wishes to start some form of production immediately following the discovery, albeit at a small scale, which can be increased over time.

“The technology and modular manner in the gas to power equipment comes these days; it is very quick to monetise, you can set up a gas to power plant within 9 to 12 months, and you are up and running.

“So, we want to do things, not the conventional way, but the exploration will continue for a long time to come until we cover the whole of the basin,” he said.

Natural gas condensate, also called natural gas liquid, is a low-density mixture of hydrocarbon liquids that are present as gaseous components in the raw natural gas produced from many natural gas fields.

However, exploration continues at Mukuyu-2 to explore the full extent of the gas deposits, amid expectations further tests could also confirm the presence of some oil.

Invictus’ special grant exploration area covers an expansive land that will also be explored or tested shortly.

Invictus Energy managing director Mr Scott MacMillan said the company was thrilled with the discovery of gas at Mukuyu-2 via a side-track borehole drilled after the original channel faced technical challenges that made recovery of fluid samples difficult.

“The discovery represents one of the most significant developments in the Southern Africa oil and gas industry for many decades.

“The company has delivered an exceptional result from the first two wells drilled in Mukuyu, opening up substantial running room in our large portfolio of prospects and leads for further discoveries in our acreage,” he said.

Mr McMillan said the Mukuyu-2 discovery, 7km away and 450 metres up-dip of Mukuyu-1, which can subsequently be classified as a discovery, confirmed the large potential of the Mukuyu field, which has a closure of 200 square kilometres.

He said with additional hydrocarbon-bearing reservoirs ahead, the focus was now to complete the drilling and evaluation programme and obtain further wireline data, including fluids, to declare an additional discovery.

According to Invictus, the latest discovery sits in the Upper Angwa geological formation, which has been drilled to a depth of 2 987m, while the target is to burrow the ground down to 3 400m to recover more samples from reservoirs observed to be sitting in the Lower Angwa.