TSX-V: ORC.A, ORC.B
TORTOLA, British Virgin
Islands, July 27, 2017 /CNW/ - Orca Exploration Group
Inc. ("Orca" or the "Company") announces the approval of the
Second Additional Gas Plan ("AGP-2") by the Government of
Tanzania, more than doubling the
available volume of Additional Gas for sale from the Songo Songo
Field.
Under the Production Sharing Agreement for the Songo Songo gas
field, production is identified as "Protected Gas" or "Additional
Gas." Prior to being permitted to market and sell increased
volumes of Additional Gas from the Songo Songo Field, under its
Project Agreements the Company is required to prepare and submit
for approval an Additional Gas Plan that demonstrates how such
demand for Additional Gas can be met to the end of the existing
licence in 2026, while assuring the continued and reliable supply
of up to 45 MMscfd of Protected Gas to 2024. Preservation of
Protected Gas is vital to the economics of the overall Songo Songo
project. Protected Gas is supplied to the Tanzania Petroleum
Development Corporation ("TPDC"), for the state oil company's
onward sale to Songas Limited ("Songas") and the Tanzania Portland
Cement Company ("TPCC"), while volumes are also used for village
electrification along the Songas Pipeline route. Protected Gas
enables Songas to generate and sell electricity to TANESCO at
approximately US$0.05 per kWh, making
Songas the lowest cost supplier of gas-fired power generation in
Tanzania.
Additional Gas is produced by the Company's subsidiary,
PanAfrican Energy Tanzania Ltd. ("PAET") and TPDC, and is sold to
the Government's electricity company TANESCO, to TPCC above and
beyond their allocation of Protected Gas, and to 39 industrial
customers in Dar es Salaam. Approval of AGP-2 was initially
sought from the Company's partner, TPDC, and from Songas, prior to
seeking final approval by the Tanzania Ministry of Energy and
Minerals ("MEM"). After a rigorous preparation, review and
approvals process which lasted more than two years, AGP-2 was
ultimately approved by MEM last week.
Beyond ensuring the supply of Protected Gas to 2024, and the
increased sale of Additional Gas to 2026, AGP-2 also contemplates
additional field development to support and optimize the Songo
Songo production profile through the life of the field.
The Company completed Phase 1 of the Songo Songo Development
Program (the "Offshore Program") in February
2016 with the recompletion of SS-5, SS-7, and SS-9, together
with the drilling of SS-12, at a cost of US$80 million, and supported by a facility from
the World Bank International Finance Corporation ("IFC"),
productive capacity of the Songo Songo Field has been increased
significantly, to potentially more than 180 MMscfd. With
current average production of approximately 90 MMscfd, the Company
has a further 90 MMscfd behind pipe and available for sale.
Approval of AGP-2 by the Government has unlocked the potential to
market these already developed gas volumes, and presents the
opportunity to deliver significant new sales volumes by accessing
the substantial spare processing and transportation capacity,
assessed to be approximately 700 MMscfd, in the Government of
Tanzania's National Natural Gas
Infrastructure Programme ("NNGIP") commissioned in late
2015.
The Company is already in the final stages of negotiations with
TPDC regarding a Gas Sales Agreement for 15 MMscfd, which if
concluded would represent more than a 36% increase on average
Additional Gas sales for the first 6-months of 2017. The
Company has also identified and is developing additional markets
among existing industrial customers, new industry and Government
gas-fired power generation which, based on current forecasts, has
the potential to contract for sale all of the existing and
potential new productive capacity of the Songo Songo field to the
end of the license. Additional supply could be developed to
meet further demand, but such field development would be subject to
prevailing economics being suitable at the time.
PAET Managing Director David K.
Roberts stated, "approval of AGP-2 is a decisive milestone
in the already incredible story of the Songo Songo project.
The project, a Government of Tanzania initiative, in partnership with the
World Bank and the private sector developers, has been in the
vanguard of the burgeoning gas industry in East Africa for nearly a quarter of a century,
and has already delivered innumerable benefits and savings to the
Government and the people of Tanzania. Attaining
approval of AGP-2 has taken considerable effort by the management
and staff of TPDC, Songas and PAET, who have worked together as a
team to achieve this objective. It now takes the Songo Songo
partners to the next stage of the project. We are excited by the
future, and are very grateful to the Government of Tanzania for its cooperation and support of
this project.
About Orca Exploration Group Inc.
Orca is an international public company engaged in natural gas
exploration, development and supply in Tanzania through its wholly-owned subsidiary,
PAET. Orca trades on the TSX Venture Exchange under the trading
symbols ORC.A and ORC.B.
Neither the TSX Venture Exchange nor its Regulation Service
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Forward Looking Information
This news release contains forward-looking information. More
particularly, this news release contains statements and information
concerning, but not limited to, the anticipated effect of AGP-2 on
the Company's available volumes of Additional Gas for sale;
additional Songo Songo field developments contemplated in
connection with AGP-2; the current and potential production
capacity of the Songo Songo field; the Company's ability to access
new markets; the Company's ability to produce additional volumes;
the Company's ability to access additional processing and
transportation capacity; the status of ongoing negotiations with
TPDC; the potential increase in sales volumes associated with new
Gas Sales Agreements; the Company's ability to locate and bring
online additional supply in the future; and other matters. Although
management believes that the expectations reflected in the
forward-looking information are reasonable, it cannot guarantee
future agreement, levels of activity, access to resources and
infrastructure; performance or achievements since such expectations
are inherently subject to significant uncertainties and
contingencies. As a consequence, actual results may differ
materially from those anticipated in the forward-looking
information.
Forward-looking information involves substantial known and
unknown risks and uncertainties, certain of which are beyond Orca's
control, and many factors could cause the actual results to differ
materially from those expressed or implied in the forward-looking
information presented by Orca, including, but not limited to: risk
of a lack of access to Songas processing and transportation; risk
that Orca may be unable to complete additional field development to
support the Songo Songo production profie through the life of the
field; risk that Orca may be unable to develop additional supply or
increase production values; risks associated with Orca and PAET's
ability to complete sales of Additional Gas; risk that Orca will be
unable to access new markets; risks regarding the uncertain
evolution of Tanzanian legislation; risk that the Company may be
unable to replace production from declining reserves; risk that
Orca will be unable to negotiate additional Gas Sales Agreements;
inability to achieve full production capability due to
infrastructure constraints; the impact of general economic
conditions in the areas in which Orca operates; changes in laws and
regulations including changes in how they are interpreted and
enforced; the lack of availability of qualified personnel or
management; fluctuations in commodity prices, foreign exchange
and/or interest rates; obtaining certain required contractual
approvals and approvals of certain regulatory authorities; risks
associated with negotiating with foreign governments; risk that the
Company will be required to pay additional taxes and penalties;
delays in drilling plans; failure to obtain expected results from
drilling; inability to access sufficient capital; and risk that the
Company will not be able to fulfill its obligations. Actual
results, performance or achievements could differ materially from
those expressed in, or implied by, the forward-looking information
and, accordingly, no assurances can be given that any of the events
anticipated by the forward-looking information will transpire or
occur, or if any of them do so, what benefits Orca will derive
therefrom. Readers are cautioned that the foregoing list of factors
is not exhaustive.
Such forward-looking information is based on certain
assumptions made by Orca in light of its experience and current
knowledge of the circumstances, as well as other factors Orca
believes are appropriate in the circumstances, including, but not
limited to: that the Company will be able to negotiate Additional
Gas Sales contracts in relation to the approval of AGP-2; that the
Company will be able to complete additional developments and
increase its production capacity; that the Company and TPDC will
agree to the terms of a Gas Sales Agreement; infrastructure
capacity; the ability of Orca to obtain equipment and services in a
timely manner to carry out exploration, development and
exploitation activities; future capital expenditures; availability
of skilled labour; conditions in general economic and financial
markets; commodity prices will not further deteriorate
significantly; current or, where applicable, proposed industry
conditions, laws and regulations will continue in effect or as
anticipated; and other matters.
The forward-looking information contained in this news
release is made as of the date hereof and Orca undertakes no
obligation to update publicly or revise forward-looking
information, whether as a result of new information, future events
or otherwise, unless so required by applicable securities
laws.
SOURCE Orca Exploration Group Inc.