Orca has signed an agreement with Songas Limited to increase the capacity of the Songo Songo gas field processing plant from 90 MMcfd to a potential of 110 MMcfd. This will increase the overall infrastructure capacity that processes and transports the gas to Dar es Salaam to 105 MMcfd.
With this higher system capacity the Company expects that Orca's Additional Gas sales will increase to an average of approximately 45 – 50 MMcfd from July 1, 2011 (compared with an average of 37 MMcfd in 2010) with a beneficial impact on cash flow.
This increase in Additional Gas production capacity is available for urgently needed power generation in Tanzania. The April and May long rains failed to replenish the reservoirs that the country depends on to generate up to 550 MWs of hydro power. As a consequence Tanzania's installed hydro power capacity is now dramatically reduced and an increase in reservoir levels is not expected until the advent of the short rains near the end of the year.
To address this shortfall, TANESCO recently re-commissioned a 112 MW gas fired power plant in Dar es Salaam (owned and operated by Symbion Power LLC). This will increase the total generation potentially consuming Additional Gas to 301 MWs (or approximately 66 MMcfd at peak load). Further additions to Tanzania's generating capacity are scheduled for next year. TANESCO has contracted Jacobsen Elektro to install a new 105 MW plant (maximum demand of 22 MMCfd) in Dar es Salaam and this is forecast to be operational by the end of 1Q 2012. In addition, Songas is making good progress with its Expansion Project to further increase Songo Songo infrastructure capacity to 140 MMcfd by 1 2013.
These increases in production capacity in Tanzania come at a time of growth and strengthening of Orca's management team and Board of Directors. Orca is now well positioned to fully utilize the breadth of experience and the proven skills of a team committed to take the Company to the next level.