Energy Policy & Regulation

Orca Energy Group Inc. recently provided an update on its operations, specifically regarding well intervention activities on its SS-7 well. The company reported that these operations have now concluded, following a complex mobilization to Songo Songo Island. The goal was to restore the mechanical integrity of the well and stop water production to enable gas production from the southern compartment of the gas field. While the initial efforts, including water shut-off and reperforation of the Neocomian sands, showed limited and unsustained gas flows, the company shifted its focus to the shallower Cenomanian sands. Despite attempts to produce gas from these sands, no sustained results were achieved.

As a result, Orca Energy has ceased the well intervention operations and began the demobilization of equipment, including the barge and jackup, from the SS-7 site. The overall cost of the project has risen to $27 million, up from the initial estimate of $22 million, largely due to the extensive efforts required to shut off water and restore the well’s functionality. The company has emphasized that a comprehensive post-project analysis will be conducted to evaluate the intervention’s results, which fell short of production expectations. Further updates will be provided as necessary.

Orca Energy’s primary focus remains on its natural gas development operations in Tanzania, through its subsidiary PanAfrican Energy Tanzania Limited (PAET). The company holds an indirect interest in the Production Sharing Agreement (PSA) with the Government of Tanzania and TPDC, which covers the production and marketing of natural gas from the Songo Songo license. However, the supply of Protected Gas to Songas and Tanzania Portland Cement PLC ceased on July 31, 2024, and all gas produced is now designated as Additional Gas. Orca has ongoing disputes with TPDC over compensation for the gas supplied after this date, with TPDC asserting that Protected Gas continues to be supplied.

In addition to the operational challenges, Orca Energy faces several risks and uncertainties related to its business operations in Tanzania. These include potential issues with payments for gas supplied, political and regulatory changes, and uncertainties related to legal systems and foreign operations. The company has acknowledged these risks but remains committed to its investments in Tanzania and supporting the country's power supply. As it moves forward, Orca plans to continue monitoring its operations and adapt to any changes in the local and global energy landscape.