Toronto-listed Orca Exploration plans to raise daily natural gas production at the Songo Songo field in Tanzania by 60 percent by the end of 2012 amid growing domestic power demand, it said in a report.

The company's 2009 annual report said infrastructure constraints limited production capacity to 90 million cubic feet a day.

The report said a target for 2010 was to "assist ... in planning a permanent expansion of the infrastructure system to 144 million cubic feet ... with the intention that the extra capacity will become operational by the end of 2012."

The company said in November it saw capacity reaching 140 million cubic feel daily within two years.

Demand for power is surging in east Africa's second largest economy and Tanzania is expected to save billions of dollars over the next 20 years using natural gas instead of oil imports.

Orca said it planned this year to increase its gas processing and transportation capacity on a temporary basis to 105 million cubic feet per day.

"To increase the overall capacity of the infrastructure system to operate at 200 MMcfd, a twin onshore pipeline will need to be constructed. The timing of this will be dependent on the increase in gas demand, but it is forecast to be required by 2015/16," its report said.

GAS DEPOSITS

Orca operates the Tanzanian project via its wholly-owned subsidiary PanAfrican Energy and in cooperation with power company Songas, a consortium including state-run Tanzania Petroleum Development Corporation and Bermuda-based Globeleq.

It supplies the gas to 35 industrial customers and for power generation for the national grid by Songas and state-run Tanzania Electric Supply Company.

"Based on the current reserves and anticipated field deliverability profiles, Orca intends to develop gas markets that will utilise approximately 100 to 120 million cubic feet of additional gas on an average annual basis," said the report.

"To meet these sales levels, there is the need to drill two new development wells in the field."

The latest independent evaluation of reserves showed the Songo Songo field holding 490.2 billion cubic feet of proven and probable gas deposits, the company said. 

Orca said it was finalising long term power contracts that will underwrite the requirement for infrastructure development.

"Capacity constraints are expected to become more acute in 2010 as demand for gas increases in Dar es Salaam," it said.

Orca said it had completed the initial phase of a project that aims to produce compressed natural gas to fuel vehicles in energy-hungry Tanzania.

Songo Songo has been pumping gas since 2004.

The east African economy has proven natural gas deposits of about 3.3 trillion cubic feet and is trying to use it to blunt the effects of high international fuel prices.