Mtwara Energy Project Nears Commissioning

Artumas reports significant progress on key operations in the Mnazi Bay drilling program and Mtwara Energy Project. In recent months, Artumas has tied-in the initial MB-1 well, drilled and completed MB-2, and is currently drilling MB-3. This program will allow the Company to delineate and triangulate reserves of the Mnazi Bay Gas Field. Reserve estimates will be supported by an independent engineering report and released accordingly.

Further milestones have been reached with the completion of the productions facilities, laying of the 27 km terrestrial and marine pipeline, and the completion of the installation of six-2MW reciprocating gas engines at the Artumas power plant in the City of Mtwara.

Artumas has built on a history of strong relationships with the Tanzanian government, acting in partnership with the people of Tanzania to realize access to reliable energy. On Saturday, November 18, 2006, His Excellency Jakaya Kikwete, President of the United Republic of Tanzania, toured Artumas' facilities and laid a commemorative foundation stone at the power plant facility. On November 28th and 29th, the Right Honorable Mr. Edward N. Lowassa, Prime Minister of the United Republic of Tanzania, is the Guest of Honor and Speaker at the Natural Resources and African Economic Development Conference in Calgary, Canada. Artumas is one of the main sponsors and president, Mr. Stephen Mason, is also a keynote speaker.

The Mtwara Energy Project is scheduled for completion in mid-December. Artumas will generate initial power from the facility to the Mtwara grid on December 8th, contributing to the celebration of the 45th Anniversary of Tanzania Independence on December 9th. Transitional commissioning of the integrated production facilities will continue through year-end, with full commissioning of the integrated gas-to-power project targeted for early January. At this point, the Mtwara local and regional electricity demand will be disconnected from the existing Tanesco generation plant, thereby becoming the first privately supplied electricity franchise in Tanzania.

A summary of recently completed and imminent milestones in Artumas's Mnazi Bay Facilities and Mtwara Energy Project are as follows:

Operations Update: Highlights

  • Completed the tie-in of MB-1 (located 800 meters offshore in Mnazi Bay) to the gas processing facility on the Msimbati peninsula. The MB-1 well is dual-completed to the D-E and G Sands, and is capable of producing 20 MMscf/d.
  • Completed MB-2 in the "F" sand on October 29, 2006. The results of the MB-2 appraisal well extends the Mnazi Bay Field structure updip from MB-1. Preliminary drill stem testing results for this interval show an absolute open flow potential of 140 MMscf/day. The two wells are capable of a combined production of 50 MMscf/day with the present tubing configuration.
  • Commenced drilling program for the Mnazi Bay #3 (MB-3) exploration and appraisal well November 14, 2006. MB-3 is located approximately 1.5 km east of MB-2 and is being drilled to further extend the updip structure of the Lower Miocene and Oligocene sandstone formations of the Mnazi Bay Field, and to test a Lower Oligocene structure.
  • Exploration well Msimbati-1X (MS-1X) is planned to follow the drilling of well MB-3. The MS-1X exploration well will be located approximately 5 km east of MB-1, and will be drilled for multiple targets including the exploration target of sands in the early Miocene ("K" sands) and further extension of the Miocene and Oligocene gas zones tested in MB-1 and MB-2 and targeted in MB-3. The MS-1X well is scheduled to be drilled over the February - April 2007 period using the Nabors 221 drilling rig held under contract by Artumas.
  • Successfully completed and presently commissioning the gas processing facility on Msimbati Peninsula. This facility is capable of handling up to 25 MMscf/day gas and associated hydrocarbon liquids. The facility is designed for modular expansion and can accommodate future gas off-take volumes approaching 100 MMscf/d.
  • Completed and presently commissioning both the 22 km x 203 mm land pipeline from Kelindi to Mtwara and the 5.2 km x 203 mm marine pipeline from the gas processing facility, across Mnazi Bay to Kelindi. The marine pipe pull from the Msimbati Peninsula gas processing facilities to interconnect with the land pipeline was successfully executed, marking the first application of this technology in the region. The 203 mm pipeline has carrying capacity of approximately 80 MMscf/d and has been sized to accommodate both load growth and generation expansion at Artumas' Mtwara power plant.
  • Installation of the 12 MW gas fired power plant in Mtwara is scheduled for completion December 8th, 2006. Transitional commissioning of the integrated production facilities will continue through year end, with full commissioning of the integrated gas-to-power project targeted for early January.