CNOOC Intensifies Oil Drilling As Ugandan Companies Win Contracts Worth Shs6.6 Trillion

CNOOC’s rig drilling an oil well. The land rig is soundproof and has capacity to drill 8 kilometers below the ground

CNOOC Uganda Ltd, the operator of the Kingfisher Development Project (KFDA), has intensified oil drilling in order to realize first oil in 2025.

The drilling of development wells commenced on January 24, 2023 after the spudding ceremony, with China Oilfield Services Limited (COSL) as the lead drilling contractor. However, drilling stopped for sometime because the waste management facility wasn’t yet ready.

The drilling waste management facility is now operational and run by Luwero Industries Ltd, and China Oil HBP Science and Technology Corporation Ltd.

Oil drilling is now ongoing, with CNOOC saying they’re within timelines to meet the 2025 target for first oil.

Ambrose Ogwang, a Drilling Engineer at CNOOC Uganda, says their drilling rig (land rig) has capacity to drill 8,000 meters below the ground (8 kilometers).

“Our reservoirs lie between 2,800 meters and the deepest is 7,000 meters (7 kilometers) below the ground. This means this drilling rig can reach the deepest reservoir and still have a window of one kilometer as a contingency,” Ogwang told journalists during a media tour of their operations on Thursday.

He added that the rig is the state-of-the-art, using the latest technology on the market.

He says it’s environmentally friendly because it’s fully automated and soundproof.

“Most of the wells are directional meaning as you drill, you can deviate as you access the oil. We shall be drilling in one spot,” he says.

The Kingfisher Development Project has four well pads and 31 oil wells (20 producers and 11 injectors).

He says after the drilling of the oil wells, they will hand over to the production team to produce the oil.

“We are sure we have the oil. We have drilled one oil well up to the target depth where the oil is and we can confirm yes, there’s oil,” he says.

He says on average, a well is drilled in 68 days but it varies on the depth of the well.

Proscovia Nakazinga, a Reservoir Engineer at the Petroleum Authority of Uganda (PAU), says drilling is now ongoing at well pad two.

“These wells are drilled in three phases to manage their stability. For this particular phase, we have prioritized three wells and those are mainly for data acquisition using wire line (technology). The data will help us refine our models and help us better understand our reservoirs so that we can be able to optimize the oil placements which is refining the targets in the reservoir,” she says.

To ensure the ongoing drilling doesn’t adversely affect the environment, Nakazinga says as they are drilling, they get some drilling waste which is transported to Luwero Industries Waste Management Facilities on the top of escarpment (a few kilometers from the oilfield).

“This is where oil residues are extracted to ensure the solids are free of any contamination. The solids are then released into a landfill while the oil is recycled and sent back and reused for the drilling process. The water which is also extracted from the drilling waste is treated and used in the cooling process in the Thermal Desorption Unit,” she says.

She reveals that the ongoing drilling is 24-hour because they work in shifts-a day and night shift.

CNOOC is expected to produce forty thousand (40,000) barrels of oil per day (bopd) at peak.

Meanwhile, the construction of a Central Processing Facility (CPF) is ongoing. A CPF is a key facility because it is used to clean the oil of any contamination before it is transported by a feeder pipeline to the main refinery in Kaabale, Hoima.

National Content Participation

Peter Kenneth Bintu, the Enterprise Development Officer at PAU, says as at the end of May 2023, Uganda’s oil and gas sector had approved and awarded contracts worth USD7bn (25.7 trillion) .

“Contracts worth USD1.8bn (UShs6.6 Trillion) have gone to Ugandan companies which is about 25% (of the USD7bn). The contracts that are very technical and high value have gone to the international companies because this is a new sector where the required skills are still limited, but Ugandans are upgrading and getting the required skills,” Bintu says.

Currently, he says, direct employment stands at 11,000 people and of these, 10,500 which is 95% are Ugandans.

He adds that all the unskilled labour is obtained from the communities in which the projects are ongoing.

“On the skilling side, we have trained over 11,000 people across the different skills of welding, civil engineering and heavy goods trucks driving among others..most of the technical skills which we felt we had gaps, we have tried to train people in those areas,” he says, adding that on the enterprise side, they have trained over 200 Ugandan companies in various aspects including business management, bidding and securing contracts, among other areas.

In regards to knowledge transfer, he says they are encouraging Joint Ventures (JVs) between international and Ugandan companies. He says according to the law, Ugandans companies should at least have 48% participating stake in JVs.

Gloria Sebikari, the Manager, Corporate Affairs & Public Relations at PAU, says 41 community-based companies (from districts that host oil and gas operations) have been contracted to supply goods and services to various oil and gas companies. They are basically in areas of civil works, supplies and agricultural produce.

She reveals that 41 community-based companies have been awarded contracts worth USD 2.3 million (UShs8.47bn).

Some Contractors and Subcontractors in oil & gas sector

Luwero Industries Ltd, and China Oil HBP Science and Technology Corporation Ltd (for Drilling Waste Management)
Newrest (Catering and Camp – Management)
GETLAB Limited (lGeological Investigation and Topographic Survey)
Olsen East Africa International Investment Co LTD (Earthworks)
Pyramid Security Group (Security)
Britam (Insurance)
Green Label Services Ltd (Solid Waste Treatment & Sewage Disposal)
Olsen East Africa International Investment Co LTD (Procurement, Construction and Installation for Safety Check Station)
Amaka Tours & Lodges Ltd (Catering and Camp Management)
ROHI Investment Limited (Procurement, Construction and Installation of Supply Base)
MUHICK Oil and Gas Services Limited (Procurement, Construction and Installation of Permanent Camp)