FULL OF GAS

Tanzania 2014 | ENERGY | INTERVIEW

TBY talks to Knut Henrik Dalland, Country Manager of Statoil, on developing blocks 2 and 6, the regulatory environment, and the challenges of building an LNG plant.

Knut Henrik Dalland
BIOGRAPHY
Knut Henrik Dalland graduated from Trondheim University Norway as a Petroleum Engineer in 1978. He started work with Phillips Petroleum in Stavanger Norway, as a Drilling Engineer on the Ekofisk Field. He then joined Shell International and held the positions of Drilling Engineer, Operations Engineer, and Production Technologist in The Netherlands and Malaysia. From 2005 to 2008, he was in Angola as Deputy Project Manager for the Gimboa Field Development. He returned to Norway after the merger between Statoil and Hydro, and was Head of Snøhvit LNG for 3 years and later Vice-President of Production for the Oseberg field before joining Statoil Tanzania as Gas Project Representative in 2012. In May 2013, Dalland took over as Country Manager for Statoil Tanzania.

You very recently acquired a 12% stake in Block 6 with Shell and Petrobras pending Tanzania Petroleum Development Corporation (TPDC) approval. What are your expectations for this acquisition, assuming it is approved?

That acquisition should be seen in the context of our plans for Tanzania becoming a regional foothold. We have high expectations for the region, and our commitment in staying here is clear from this acquisition.

These developments are bringing Tanzania onto the world stage as an energy player. What will further discoveries mean for the country?

It will of course have a potentially positive contribution to national development, given its aspirations of becoming a medium-sized economy by 2025. I think that the energy sector could be a cornerstone in achieving this. I am not suggesting that oil and gas should dominate the economy, but it will at least be a key contributor. It is a matter of timing; the discoveries that we have made now, and those made in the blocks around us, will require several years before the country generates revenue. It will certainly require patience.

Given the experience you have in various regions, how does Tanzania's regulatory environment compare, particularly with regard to energy exploration and energy contracts?

I think Tanzania will benefit from the gas policy plans that have already been disclosed, which clearly state that the role of TPDC requires modification. The country foresees a split between the regulatory and operational components of the national oil company. I consider this an absolute must, where there is actually is a split between the regulatory body and the operational branch of the national oil company. I think that it is essential for that transition to be efficiently executed, and to ensure that gas is extracted, produced, and managed, to the benefit of the Tanzanian people, state, and nation. Thus far the right things are being said, but of course the proof will be in the doing when it comes to the execution of this policy, and when it takes the form of gas acts or other regulatory and legislative decisions.

Overall, 2012 and 2013 have seen some impressive results in Zafarani, Lavani, and Tangawizi in Block 2. What are your plans for the near future?

We recently reinitiated our drilling activities, whereupon the Discoverer Americas drill ship from Transocean entered Tanzanian waters recently and we have resumed operations, which we will continue for a further 12 months or possibly more, depending on the initial success levels. There will be a combined appraisal and exploration activities; appraisal of the already identified finds that we have as a means of framing the commercial part of the potential LNG development so that we have greater confidence in the resources, which we have already discovered. We are also planning additional exploration activities within the block. Based on our discoveries, we estimate that there could be about 15 to 17 tcf of resources or gas in-place volumes, or, depending on how you do the arithmetic; it could have a potential reserve base of 11 tcf. Basic rules of thumb from the LNG world mean you will probably end up with very close to sufficient resources for a two-train solution. Our neighbors are somewhere in the same order of magnitude so you can almost double up to reach the numbers. However, we are still in early days and haven't even reached our final conclusion for defined commerciality. That is one step that will follow very shortly, after which comes the concept selection, and then the detailed engineering, which will tell us whether a final investment is feasible. The final investment decision may emerge as late as 2017.