US Awards $1m for Kenya Gas to Power Project

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Midway Resources International’s (‘MRI’) wholly owned Kenyan operating unit (Zarara Oil & Gas Limited or ‘Zarara’) is pleased to announce that it has been awarded a US$1 million grant to undertake a feasibility study (‘Feasibility Study’) for Phase 1 of MRI’s proposed Lamu Integrated Gas to Power Project (‘Project’) located near Port Lamu, in Lamu County, the Republic of Kenya (‘Host Country’). The grant was approved by the Board of the USTDA in June, 2016:

The objective of the Feasibility Study on the Project is to evaluate the technical, financial, environmental and other critical aspects of developing a natural gas-fired power plant in Lamu County, Kenya.  Zarara owns a 75 percent working interest in two onshore natural gas prone blocks (Blocks L4 and L13) and anticipates increasing its interest to 90 percent, with the Kenyan Government holding the balance 10 percent interest. MRI plans to further appraise the Pate-1 well gas discovery (1971 – Shell/BP) with a 2 well program (Pate-2 and 3 wells) starting in Q1, 2017; and then to develop the appraised gas and use it to generate electricity for distribution via the Kenyan grid.

The initial phase of the Project includes: the production and collection of natural gas from the proposed initial wells Pate-2 and 3; a gas pipeline; a gas treatment plant; gas storage facilities, as appropriate, a 50-200 megawatt (“MW”) gas-fired power plant; and an electricity transmission line connecting the power plant to Kenya’s national electricity grid at the existing Port Lamu grid terminus.

Subsequent phases of the Project include: the production and collection of additional natural gas resources from the Pate Field as it is further appraised and/or other, yet to-be-proved gas resources within Blocks L4 and L13; up to 1,000 MW of additional electricity generation capacity (depending on the volume of technically and economically recoverable gas resources discovered); and additional gas pipeline, gas treatment, gas storage, and/or electricity transmission capacity, as needed.

The USTDA grant is designed to fund delivery a feasibility study that will include, in outline:

Conceptual design of the gas and condensate production and collection systems and the gas treatment plant;

·    Technology selection, technical configuration, and conceptual design of power generation plant;

·   Interconnection studies for the transmission of electricity from the power generation plant to the Kenyan electricity grid;

·  Full environmental and social impact assessments that comply with local environmental and social requirements, as well as those of potential financiers;

·    Licensing, permitting, and other legal and regulatory requirements;

·    Definition and risk assessment of expansion phases subsequent to Phase 1; and

·   Implementation plan including technical design, implementation schedule, implementation ownership and management accountability arrangements, and budget costs (Capital and operating).

CEO Peter Worthington commented: “This grant from the USTDA as part of the Power Africa Initiative adds further momentum to MRI’s de-risking and acceleration of the proposed ‘gas to power’ commercialization route for its Pate Gas Project. Completion of the Feasibility Study should coincide with the successful drilling of the planned Pate-2 and 3 wells in the first half of 2017, and enable the company to immediately move into Phase 1 of the Lamu Integrated Gas to Power Project.”

Midway Resources International – a private company with active oil and gas interests in Kenya and Nigeria led by Mark Bristow, founder and CEO of Randgold Resources Limited (RIL: LSE and NASDAQ); 

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US Awards $1m for Kenya Gas to Power Project