To date, these exploration areas (or Licences) have been awarded by the government as follows:

EA-1: Heritage (50% Tullow);
EA-2: Tullow;
EA-3A: Heritage (50% Tullow);
EA-4B: Dominion Uganda Limited;
EA-5: Neptune Petroleum Uganda Ltd.

“What laws does Uganda have to control oil and gas company activities?”
The Ugandan government has introduced onto the national statute book a number of laws and legal frameworks to govern the activities of the oil and gas companies. These oil and gas laws and frameworks have themselves arisen out of a number of new national policies including: ‘The National Energy Policy – 2002’; ‘The Oil and Gas Policy – 2008’; ‘The National Environmental Management Policy – 1994’; and various other policies related to the exploitation of the country’s hydrocarbon resources and the management and conservation of the country’s wetlands, wildlife and water resources etc.

A particularly important piece of legislation is the ‘National Environment Act – Cap 153’ of 1995, which gave rise to the creation of the National Environmental Management Agency or NEMA. NEMA are the custodians of the country’s environment. Another important regulatory framework are the ‘Environmental Impact Assessment Regulations – 1998’, which commits the oil and gas companies to performing an Environmental Impact Assessment [EIA] prior to the commencement of any exploration and production activities.

Essentially an EIA, as performed by the oil companies must clearly identify any/all possible environmental and social impacts which could arise from a given project, and document the appropriate environmental management and control measures which must be implemented to mitigate these project activities. These ‘measures’ are collectively known as a project environmental management and monitoring plan or EMP.

“How do the oil companies know where to look?”
The oil companies (i.e. within the boundaries of their own exploration areas or EA’s) perform something called geophysical surveys using a number of well established survey techniques. These survey techniques fall mainly into the following three areas, namely ‘Gravimetric’, ‘Seismic’ and ‘Magnetic’. The results of these survey techniques are meant to identify and delineate (or differentiate from the rest of the underground strata) potential hydrocarbon rock bearing ‘formations’.

“What happens after the surveys?”
Once the oil companies have analysed the results of the geophysical surveys, they then have a reasonable idea of where and how deep the hydrocarbons (oil/gas) lie in the strata below ground. There is then a subsequent need to find out more about the exact locations of the oil and gas [hydrocarbon] reserves and the type, amount and quality of the oil within the suspected hydrocarbon formations or ‘prospects’? This is done by planning and expediting a campaign of ‘exploration’ wells using a drilling rig (see plate 1 – Photograph of the Tullow/Nabors 221 Land Drilling Rig).

The drilling process is quite simple in theory, but in practice involves a number of complicated and sophisticated engineering techniques. A drilling ‘spread’ is mainly composed of the following KEY pieces of equipment…..

Plate 1 – Photograph of the Tullow/Nabors 221 Land Rig.

þ The drilling rig or derrick (see plate 1);
þ Power generation units;
þ Drilling mud supply & handling units;
þ Cementing units;
þ Waste, drill cuttings & spillage management/handling systems;
þ Fuel and water storage and supply systems;
þ Accommodation, office and messing units; and
þ Communication systems.

The drilling rig is the ‘business end’ of the spread and is used to drill down below the surface and into the possible hydrocarbon bearing strata to detect the presence of oil and gas?

The drilled hole is lined with a number of steel tubes called ‘casings’. These casings, which are cemented in place, effectively protect the hole on the inside and the environment on the
outside. This protection is particularly important if there is a water aquifer on the outside of the hole! During drilling, the drill bit is kept cool by a special mixture of water, clays, polymers and various other additives which perform different drilling functions. This cooling medium which is fed or pumped into the hole is called ‘drilling mud’. This drilling mud is expensive and hence oil companies go to great lengths to recycle as much as possible of this valuable material!

When the hole is finished, the well is either abandoned (by plugging or capping) if no oil or gas is found, or completed by fitting something called a ‘Christmas Tree’ (a special arrangement of engineered valves) for later use if oil and gas is found?

“How can you tell how much and what type of oil has been found?”
The type and amount of oil discovered by drilling into a hydrocarbon ‘prospect’ can be determined by a process called ‘well testing’. The well testing process is again quite sophisticated and involves a number of procedures using special types of ‘down hole’ monitoring equipment, which measure properties such as well pressure, permeability (i.e. how well the hydrocarbons move from one point to another underground), temperature, and viscosity (i.e. how thick the oil is) etc.

Sometimes, the well testing process also involves flowing the oil to the surface in a controlled way where it is collected. This part of the testing process tells the oil companies how many barrels of oil can be expected over, for example, a 24 hour period. The gas portion of the oil/gas mixture that is separated from the oil at the surface is normally flared off (burnt) using special low pollution equipment.

“What are the oil companies doing for the local communities?”
All of the oil companies in Uganda have commenced initiatives to help their respective local communities i.e. the communities within their areas of operation. These initiatives are managed from within each oil company by a department known as Corporate Social Responsibility or CSR. Local community initiatives take many different forms, and examples of these ongoing initiatives are:

þ Construction and maintenance of local maternity clinics;
þ Partnering with the National Lake Rescue Institute (NLRI – Lake Albert);
þ Provision of funding for the local manufacture and distribution of life jackets (Lake Albert);
þ Partnership with HIPS (USAID and DED) focussing on VCT (voluntary counselling and testing for AIDS) initiatives;
þ Education, health and sanitation awareness campaigns, and clean water initiatives;
þ Local community small and medium enterprise (SME) development initiatives.

Many more local community initiatives have also commenced. These initiatives are normally identified via local community engagement to determine exactly what each community requires and thus, where company funding is best diverted.

“What will happen with the oil and gas in the future?”
Uganda will see a growth in the oil/gas industry over the coming years as and when more of the hydrocarbon prospects within the Albertine Graben are ‘proven’ by the oil companies, i.e. as the type, amount and quality of the Ugandan hydrocarbon reserves become better delineated (i.e. analysed).

Once the oil and gas reserves are better quantified, the next step will be to determine how best to utilise this oil and gas? With this in mind, the Ugandan government has deemed that an ‘early production system’ or EPS will be built to extract both diesel and kerosene from the oil mix which will be supplied from the early oil producing wells.

These two oil derivatives or ‘fractions’ as they are called, will be used to serve the domestic market so that Uganda can eventually become self sufficient in these types of fuel. The heavier fractions within the oil mix will be further processed and used as ‘fuel oil’ to serve a 50 megawatt power station. Again, the extra power generated by this facility will go a long way to resolving some of the power shortages that the country is currently experiencing!

As time further progresses, it may well prove viable for Uganda to commence exporting its oil to other countries, but this is obviously a decision that the government will make in the future?