Commercializing Natural Gas from Mnazi Bay Concession
Mtwara-Lindi Corridor: “If we build it… They will come”
The combination of a deep water harbor at Mtwara, abundant natural resources, unexploited fishery, available land, and a large labour pool, make the Mtwara-Lindi Corridor a potentially significant industrial and commercial demand region for Tanzania. The missing ingredient to date has been a reliable and affordable energy source. Through commissioning of the Mtwara Energy Project (MEP), Artumas has introduced this final ingredient for sustained economic growth.
With reliable, affordable energy in place, Artumas is now actively marketing industrial activity to the region. Accelerated economic growth will in turn bring increases in residential, commercial and industrial electricity demand, strengthening the economics of the MEP. For example, Tanzania is the fifth-largest producer of raw cashew nuts in the world. However, it processes less than 10% of its production, shipping the remainder to India for processing and sale to large retail markets. Seven of the nine cashew processing factories in the Mtwara-Lindi region currently stand idle. Reliable, affordable electricity provided by the MEP will allow these cashew factories to re-open, employing thousands and further contributing to the socio-economic development of the area.
Interest in establishing operations to take advantage of the new power supply has been expressed by a diverse range of industries, including an iron ore smelter and ship breaking business, wood flooring industry, cassava processing, fertilizer plants, cement plants, fish processing, and cold storage facilities.
Looking Abroad: Off-Take Export Markets for Tanzania Natural Gas
In addition to expanded domestic gas use, Artumas has identified potential export markets for Tanzania gas. The most accessible market is in the harbor city of Mombasa, in neighboring Kenya.
Natural gas delivered to Mombasa would primarily displace high-cost fuel oil currently being consumed by power generation facilities supplying electricity to the Kenya power grid. The identified fuel purchasers include government-owned Kenya Electricity Generating Company Limited (KenGen) and independent power producer, Tsavo Power. Identified natural gas demand in Mombasa represents 35 – 50 MMcf/d of consumption, depending on the degree of market penetration.
To move natural gas from Mnazi Bay to Mombasa harbour—a distance of some 375 nautical miles—Artumas is looking to engage Compressed Natural Gas (CNG) technology. CNG is ideally suited to the particular distance and volume requirements of the Mombasa market.
To investigate the commercial application of CNG, Artumas has undertaken a US$1,000,000 Front-End Engineering & Design (FEED) study with TransCanada Pipelines (TCPL), based on analysis of the economics and logistics of employing TCPL’s proprietary CNG transportation technology, called GTM. Gas Transport Modules (GTMs) are pressure vessels that allow for the safe, economic transport of compressed natural gas. GTMs are constructed of an inner steel liner, hoop-wrapped with high-performance composite. Composite reinforcement allows gas to be carried at high pressure (3,000 psi) without the need for a thick, heavy steel pressure vessel. By mounting GTMs on ships, natural gas can be transported to market in situations where a conventional pipeline or Liquefied Natural Gas (LNG) project would be uneconomic.
The recent, positive results of Artumas’s Phase I drilling program has confirmed sufficient gas reserves to warrant moving forward on negotiation of agreements to export natural gas to the Mombasa, Kenya market. Once purchase commitments have been secured from off-take parties, Artumas will move forward on Phase II FEED analysis, determining the exact technology, configuration, and loading/offloading option best suited for serving the Mombasa market. Assuming initiation of Phase II FEED work in April 2007, the first CNG deliveries to Mombasa could be expected in 4Q:2008.
Artumas is continuing to investigate additional marine export options for Tanzania natural gas, targeting both Mozambique and South Africa.