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Friday, 30 November 2012

Units Begin The Story

Greek mythology has it that the immortal Titan Prometheus stole fire from his brothers, the gods on Mt. Olympos, and brought this to Man to dispel our darkness and suffering. Legend or not, Man has known how to generate fire and heat, using external tools and implements, for millennia. Our ability to generate, harness and channel increasing amounts of energy has marked our progress as a civilization since the dawn of time. Our ability to manipulate energy on a grand scale, is a unique human gift distinguishing us from any other species on the planet.

Prometheus (painting by F.H Fuger)

This blog is meant to serve as a quick-and-dirty refresher for those who do have such background, and as a primer for those who do not, but need to get up to speed relatively quickly.

For quick energy conversions, you can go directly HERE
Relevant Units for Solid Fuels

The British Thermal Unit (Btu)
One of the oldest and still most commonly used energy units is the BTU, or British Thermal Unit. The Btu is most used as a measure of the calorific (or heat energy) content of fuel sources such as coal, biomass etc.  

A Btu is defined as the amount of heat required to raise the temperature of one (1) pound (lb) of water by 1°F (one Fahrenheit, or 0.556°C) at atmospheric pressure. It is approximately the energy given out by 1 match, or the energy required to lift 1 pound of weight by 778 feet (hence also defined as 778 ft-lb). It can be written either as BTU, Btu, Btu, or Btu.

One million Btu’s (1,000,000) are described as 1 MMBTU (MM as an abbreviation for 1 million). Do not confuse that with 1 MBTU, which is one thousand (1,000) BTUs.

The Btu is still very important because most fuel sources are still described in terms of the amount of heat energy extractable per mass of the fuel. Most fuels are easily compared by looking at their MMBtu/MT – that is, the amount of Btu’s available in 1 metric ton of the fuel.

Quick side-note on tons: 1 MT or metric ton, is defined as 1000 kg, or 2205 pounds (lbs). This is different from a Long Ton (2240 lbs, 1016.05 kg), which is also known as an Imperial Ton. There is also the Short Ton (an American term) ton which is 2000 lbs (907.2 kg) and is frequently what is meant in the US when coal producers refer simply to “tons”.


Anthracite coal: Anthracite is the oldest type of coal, and has a very high carbon content. Typically has energy content of >28 MMBTU/MT, the highest of any coal type.

Coal upon mining

Bituminous Coal: This is the second highest-value type of coal. Coals of this type typically have energy content values of 24 – 28 MMBTU/MT.

Sub-Bituminous Coals: This is one grade of coal less energetically rich than bituminous coal and generally 18-24 MMBTU/MT.

Lignite: This is the youngest form of coal and its chemical structure is not yet as carbon-rich as the other forms – this type of coal typically has energy content values of 14 – 18 MMBTU/MT.

Quite often, energy content values, especially for coal are given as BTU/lb, and in order for best comparison must be converted into MMBTU/MT.

In order to convert to MMBTU/MT, we multiply the value if BTU/lb by the following fraction
BTU/lb à MMBTU/MT = Value in BTU/lb  X (2205/1,000,000)

Energy content of coal with specification of 11,000 BTU/lb in MMBTU/MT:
1 MT  = 2205 lbs

Hence energy contained therein= 2205 lbs/MT  X 11,000 Btu/lb = 24,255,000 BTUs in that 1 MT. This is equal to 24.26 MMBTU.

Hence 11,000BTU/lb = 24.26 MMBTU/MT.

Formula: To convert Btu/lb to MMBTU/MT: Multiply the Btu/lb by 0.002205.

One MJ is one million (1,000,000) Joules.
1 BTU is equivalent to 1055 Joules (or 1.055kJ)

Hence fuel source with calorific content of 15 MJ/kg:
15 MJ = 15,000,000 Joules  = 14,218 BTUs, or 0.01421801 MMBTU, contained in 0.001 MT.

Hence 15 MJ/kg = 14.22 MMBTU/MT.

Formula: To convert MJ/kg to MMBTU/MT: Multiply the MJ/kg by 0.95.

Relevant Units for Gas
Gas is typically not described in terms of MMBTU/MT, primarily because as a gas, it is easier to describe calorific content by volume vs by a one-ton mass. The typical measure of energy content in gas is by cubic feet.
1 cubic foot volume

M – represents 1,000. Hence Mcf means one thousand cubic feet (1000 cf).
MM – represents 1,000,000
MMBtu – is 1,000,000 Btus.

1 Therm – is 100,000 Btus

The average heat content of natural gas (pipeline-quality natural gas) is:
1 cf  (1 ft3)= 1023 Btu

1 cf  (1 ft3) ~ 1.08 MJ

1 Mcf = 1.023 MMBTU

Now, gas is also measured in cubic meters. 1 cubic meter of gas is the equivalent of 35.3 cubic feet of gas and has energy content of 36.1 MBTU

1 m3 = 35.31 ft3 = 36,126 BTU

For pricing/cost comparisons, to convert:

$ per Mcf divided by 1.023 = $ per MMBtu

$ per MMBTU multiplied by 1.023 = $ per Mcf

Relevant Units for liquid fuels
1 standard barrel  = 42 US gallons (vs British Imperial gallons) = 5,800,000 Btu, or 5.8MMBtu for crude.

Wine vs Oil Barrels

1 standard barrel = 158.984 liters
·       the 42-US gallon size of barrel as a unit of measure is largely confined to the American oil industry, since other sizes of barrel were used by other industries in the United States. Nearly all other countries use the metric system. Many oil producing countries use the American oil barrel.

·      Barrels per day (abbreviated BPD, BOPD, bbl/d, bpd, bd or b/d) is a measurement used to describe the rate of crude oil production or consumption by an entity. For example, an oil field might produce 100,000 bpd, and a country might consume 1 million bpd.

·       The abbreviations 1 Mbbl and 1 MMbbl have historically meant one thousand and one million barrels respectively.

·       For CRUDE OIL, 1 barrel = 5,800,000 Btu, or 5.8MMBtu (based on U.S. production, 2009)

o   NOTE: 1 barrel of Gasoline or Diesel will have a slightly different energy content

· For Gasoline, 1 gallon = 124,238 Btu, or 1 barrel Gasoline = 5,218,999 Btu

· For Diesel, 1 gallon = 138,690 Btu, or 1 barrel Diesel = 5,825,022 Btu

There are 3.785 liters in a US gallon and 4.55 liters in British gallon.

·       In 2011 for example, Ghana’s first full year of oil production, the average productivity was about 70,000 bpd. Other countries such as Nigeria produce close to 2.5 million barrels per day (2.5 MMbpd).

1 cubic meter of concrete
1 cubic meter (sometimes abbreviated to cu m, m3, CBM, (say of diesel, or crude oil) = 1000 liters exactly.

Therefore, 1 barrel, which is 42 US gallons, or 158.984 liters, is equal to 0.158 CBM
1 barrel = 0.158 m3, or 0.158 CBM

And, consequently, 1 CBM = 6.289 barrels of Oil

Various Energy Sources


Author: Victor K Mallet, Managing Partner, Arrakis Group -

Tuesday, 27 November 2012

Tullow Oil confirms 30m of net oil pay at second Kenya well

Yesterday, 26 November 2012 - Tullow Oil plc (Tullow) announced that the Twiga South-1 exploration well in Block 13T, onshore Kenya, has encountered 30 metres of net oil pay with further potential to be assessed on test and has also encountered a tight fractured rock section with hydrocarbon shows over a gross interval of 796 metres.

Twiga South-1 has been drilled to a total depth of 3,250 metres and has been successfully logged and sampled. Three sandstone reservoir zones, analogous to Ngamia-1, were encountered and moveable oil, with an API greater than 30 degrees, has been recovered to surface. Further potential exists up dip of the well and will be subsequently appraised.  

In addition to the net pay, the well also penetrated a thick section of tight fractured rock below 2,272 metres which had extensive hydrocarbon shows over a gross interval of 796 metres. Moveable oil with an API greater than 30 degrees was also successfully sampled from this section. This tight fractured rock section is a new play-type for the region that will require further evaluation to understand its extent and any productive potential.

The Twiga South structure is the second prospect to be tested in the Lokichar Basin as part of a multi-well drilling campaign in Kenya and Ethiopia and is the first oil discovery in Block 13T. It is located 22km to the north of the Ngamia-1A discovery and further de-risks a number of other similar features on the western margin of the basin.

A series of flow tests will now be conducted on the well over the next 4-8 weeks. Following completion of the testing programme, the rig will move back to flow test the Ngamia-1 well.

Elsewhere in Tullow’s East African Rift basin acreage, a result from the Paipai-1 well in Block 10A in Kenya is expected by the end of the year and the Sabisa-1 well in the South Omo Block in Ethiopia is expected to commence drilling by the end of December.

Tullow has a 50% operated interest in the Twiga South-1 well with Africa Oil holding the remaining 50% interest.

Angus McCoss, Exploration Director, commented,
“Following the basin-opening Ngamia-1 well result earlier this year, I am pleased to announce that our second well in our onshore Kenya rift basins campaign has also discovered oil. This immediate follow on discovery reaffirms the considerable prospectivity of the Lokichar Basin. Having significantly expanded our plans in Kenya and Ethiopia, there is much to look forward to as the exploration campaign and testing programme move ahead.”


Given Tullow previously confirmed that the Twiga South-1 well was an oil discovery in its recent IMS statement, the level of net pay compared to Ngamia (c.100m) will be seen as a disappointment. However, the Twiga South-1 well was drilled further away from the basin bounding fault (4kms) than Ngamia (2kms), which suggests that incremental net pay should be encountered further updip in the Twiga South-1 structure. In addition, it should be remembered that this is the second discovery made in a frontier-basin (100% success rate). The Twiga South result also provides confidence of an active and highly generative source rock working in the region and we still believe that the sub-Lokichar basin could hold towards 1bn bbls of recoverable oil across the 10-15 prospects that have been mapped.

No net pay was encountered from the Lower Lokhone reservoir section, which provides uncertainty on the existence of any deeper reservoir potential across the Lokichar basin. The Twiga South well instead penetrated a thick section of tight fractured rock below 2,272 metres that had hydrocarbon shows over a gross interval of 796 metres. Tullow was able to sample moveable oil with more than 30 degree API from this section. Further evaluation will be required to understand the extent of the tight fractured rock, but we believe that any productive potential is likely to be limited.
A series of flow tests will now be conducted on the Twiga South-1 well over the next 4-8 weeks. Following completion of the testing programme, the rig will move back to flow test the Ngamia1 well. Both wells have encountered varied reservoir quality and the flow rates
Achieved will be important in understanding the  level of resources required to underpin a commercial development.
Given the reservoir quality encountered to date and the need for more development wells, we would expect a commercial threshold would be closer to 400m bbls.

The way forward:

Tullow plans an active exploration campaign across the region. The Paipai well targeting the Cretaceous rift play in Kenya is currently drilling and we expect a result by the end of the year. In addition, Tullow plans to spud the Sabisa prospect in early 2013, located in the South Omo area (Ethiopia). Once flow testing is complete on both Twiga South and Ngamia, we expect Tullow to accelerate drilling across Block 10BB and 13T in Kenya targeting follow-up wells to the Ngamia and Twiga South results

Monday, 19 November 2012

Daewoo International signed a deal to construct a US$1.3 billion power station in Kenya with the KENGEN.

South Korea's Daewoo International has signed a deal to construct a US$1.3 billion power station in Kilifi County, Kenya with the Kenyan Electricity Generating Company.(KENGEN).
Kilifi is a coastal town on the northern outskirts of the port city of Mombasa, in the vicinity of recent natural gas finds offshore Kenya.
The coal-fired power station will be the largest in East Africa, with two turbines each producing 300 megawatts, the Kenyan Prime Minister's office said in a statement.
Kenya's Prime Minister Raila Odinga, is in Asia for a muilti country tour and made a stop in Seoul, on Sunday, 18th November 2012, to sign the agreement. The new power station is seen playing a key role in the Kenyan government's objective to add 14,000 MW of new power capacity by 2030.
There are also recently discovered large deposits of coal in central eastern Kenya's, Mui basin, that should act as a feed stock for this new power plant when completed by 2019.

Sunday, 18 November 2012

Tanzania & Malawi agree to mediation over border dispute

Tanzania and Malawi yesterday agreed to appoint an international mediator to resolve a long-running border dispute over Lake Malawi, thought to rest on abundant oil and gas reserves.

The dispute has been ongoing for over 50 years but was escalated when Malawi issued exploration blocks on the lake. In 2011, Malawi, awarded oil exploration licences to UK-based Surestream Petroleum to explore for oil in Lake Malawi. Tanzania requested Surestream not to start drilling until the dispute had been resolved.

Malawi claims total sovereignty over the lake, the third largest in the world, while Tanzania claims 50% of the lake.

The stakes have been raised with eastern Africa showing the potential of being the last Oil and Gas frontier. with recent recoverable discoveries of gas in Tanzania & Mozambique, and oil in South Sudan, Uganda and Kenya. With high possibilities of further discoveries in Ethiopia and Somalia.

Last month Malawi pulled out of talks with Tanzania after it accused its neighbor of intimidating Malawi fishermen, an accusation denied by the Tanzanian government. Malawi also wants Tanzania to withdraw a map that shows the border line passing in the middle of the disputed lake.

The countries have decided to go to the African Forum of Former Presidents, which deals with conflict management and resolution in the SADC region. If mediation is not successful, the two countries would take their case to the International Court of Justice. A point to note is these two countries are some of the most stable countries on the continent of Africa, but oil and gas could bring them to conflict.

Wednesday, 7 November 2012

My impressions: Tanzania Mining, Energy/Oil & Gas and Infrastructure Indaba 2012.

I had the pleasure of attending the Tanzania Mining, Energy/Oil & Gas and Infrastructure Indaba from the 24th to 26th of October 2012 in Arusha. An Indaba is a term used in Southern Africa for a major meeting or gathering. Though, the word has its origins among the Zulu, Xhosa & Swazi peoples of South Africa, where Indaba describes an important meeting among principal men of the community.

The Theme was:  “Turning Tanzania’s latent Mining and Energy Resources into wealth for the benefit of Tanzania and its future generations”

The event was endorsed by the Tanzania Ministry of Minerals and Energy and the Tanzania Chamber of Minerals and Energy.

Present were top officials in the Mining, Energy & Infrastructure sectors from senior government officials to CEOs and top executives at companies in these sectors in Tanzania. Also in attendance were key personnel from top audit, consulting firms, legal, Logistics, HSSE, Geo seismic mapping, CSR and other support services to these sectors.

I presented a 15 minutes presentation on: Operational Challenges & Opportunities: Mining, Energy & Infrastructure in Africa. My presentation was themed around Operational challenges and opportunities for operational improvements to grow resource based companies.

My personal impressions of Tanzania and the industries covered by the Indaba is that Tanzania is an extremely mineral wealthy country with mineral wealth in all corners of the country. Despite the country having this numerous wealth, a lot of it is under-exploited due to a weak regulatory environment (though the government is working very hard to remedy this and it’s in fact ahead of the other eastern Africa countries in this respect), Poor infrastructure to the remote areas where these minerals could be found also hurts these industries and a lack of relevant skills in its labour force cannot be overstated.

This has led to many Tanzanians constantly commenting that “We have a lot of wealth underground which is being mined by foreigners and we do not benefit from it”. A middle aged gentleman attending the Indaba summed it up for me “We were not ready to begin exploring this wealth, our policies were not mature enough and our government wasn’t ready”, this lead to many developed world miners converging on Tanzania in the late 1990s/ early 2000s. Their contract terms are skewed towards them because of the lack policy and regulation when they came into the market, leading to the comments made above.

The main aim of the Indaba was to address some of these issues.

Looking at the key highlights from the speech of the Deputy Minister of Energy and Minerals key note speech.

Tanzania has 6 large scale gold mines in north eastern Tanzania around the shores of Lake Victoria and one medium sized gold mine in the same area.
Tanzania has 2 diamond mines (one large scale and the other medium).
It has a medium scale Tanzanite mine. (Tanzanite is a rare gemstone only naturally found in Tanzania, in the areas to the north of the country around Mt Kilimanjaro and Mt. Meru)

Minerals contribute 3.3% of GDP which is very low. The target is 10% of GDP by 2025. Currently value addition is only 49% but they hope to increase this. 96% of Tanzania’s minerals are not exploited so there is potential for exploration and mining. Gemstone mining is only permitted to Tanzanians.

In terms of oil and gas, 25,000m square feet is under exploration with 62 wells having been drilled, 10 have been successful and are moving towards development. There are 18 oil and gas explorers in Tanzania 5 of them local, while 8 of them exploring offshore.

33 billion cubic feet of natural gas has been discovered offshore. Conservative estimates say 28 billion cubic feet. The arrangement is exploration and development under production share agreements especially with Majors.

In terms of railway infrastructure this is lagging behind as Tanzania has an old metre gauge railway line laid by the German colonialists in the early 1900s. There is also a cape gauge line  famously known as the TAZARA railway that was constructed by socialist China in the 1980s to connect Zambia and Southern Tanzania to the port of Dar es salam. An interesting thing to note is that these two railway systems are mutually exclusively and do not interface.

The government hopes increased revenue will lead to increased profit for mining companies which will lead to higher taxation income.

All in all the Indaba was a success with companies such as Africa Barrick Gold which runs 4 gold mines in the country saying they are bullish about the Tanzania. Having recently acquired gold mining rites in Kenya around the Lake Victoria, in the same geological makeup as their Tanzanian assets.

The Tanzania Ministry of Energy was in the news in September 2012 saying that it was reviewing all its energy and mining contracts, looking to increase taxation especially capital gains taxes. This has caused jitters in the Tanzania energy and mining industry.

For Tanzania to better explore its mineral and energy wealth, it has to improve infrastructure, crystallize a mining policy and regulatory framework and improve the local education policy to train future generations with relevant skills for these sectors.