National Energy Policy - Final Draft - 14 Nov 2013

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Both associated and non-associated gas may contain heavier hydrocarbons such as ethane,propane, and butane.3. Unconventional gas types include coal bed methane and shale gas. Methane produced fromcoal seams is called coal bed methane (CBM), coal seam methane, or coal seam gas (CSG).Once produced, it is transported and marketed like conventional natural gas.4. Gas contained within layers of fine-grain clay and siltstone rocks commonly known as ‘shale’ iscalled shale gas. Shale is the earth’s most common sedimentary rock, rich in organic carbonbut having very low permeability.5. Natural gas has the potential of meeting future energy needs of the country and offers a numberof significant environmental benefits over other fossil fuels mainly due to its chemical simplicityand burns cleaner than all other fossil fuels.6. Kenya had no known reserves of natural gas until September, 2012 when gas discoveries weremade offshore at Mbawa 1 near Malindi. The commercial viability is yet to be established.2.3.2 Natural Gas Exploration1. As of <strong>2013</strong>, Kenya has no infrastructure for exploitation of natural gas. If commercial quantitiesare found, field development will need to include drilling of production wells, installation ofoffshore and onshore production facilities, and LNG liquefaction plants for export. Drilling andconstruction activities, particularly in deep water developments, are highly capital intensive.2. With increased petroleum exploration being undertaken both on-shore and off-shore in thecountry’s four major sedimentary basins there is now the possibility that indigenous natural gasmay be discovered in commercial quantities. If natural gas is discovered in sufficient quantitiesthe country could harness some of the indigenous gas to meet the growing energy requirementsof the country and would seek to reduce reliance on imports.3. The monetization of natural gas is frequently more complex than the commercialization ofhydrocarbon liquid reserves. Frequently investments will be required in interrelated links in thesupply chain, including upstream, midstream, downstream and consumption facilities.2.3.3 Importation of Natural GasThe options available for importation are either through natural gas pipelines from producingfields in neighbouring countries or by Liquefied Natural Gas (LNG) ships supplying LNG toonshore regasification plants.2.3.4 UtilizationThe following options shall be explored upon discovery of commercial quantities of natural gasor importation of the same.2.3.4.1 Electric Power GenerationThe main use of natural gas is through gas-fired power generation, preferably Combined CycleGas Turbines (CCGT) to ensure maximum efficiency. Generation of power through gas fired34 NATIONAL ENERGY POLICY FINAL DRAFT NOVEMBER <strong>2013</strong>
plants has several advantages over other fossil fuelled power plants in that it has much lowerenvironmental impact. Natural gas pipeline would need to be constructed from the field to thepower plant or from the LNG import handling facility or import pipeline.2.3.4.2 IndustrialThe following industries are feasible when sufficient quantities of natural gas are available atreasonable cost:(a) Manufacture of ammonia for fertilizer production. More than 97% of the worlds strategicfertilizer is produced from synthetically produced ammonia derived from natural gas. Thenatural gas is both a feedstock and fuel.(b) Manufacture of fuel additives, plastics detergents, formaldehyde, among others.(c) Manufacture of steel through the modern Direct Reduced Iron method which directlyremoves oxygen by reacting the ore with a hydrogen-rich and CO-rich gas produced bycatalyzing methane derived from natural gas. The natural gas is both a feedstock and fuel.2.3.4.3 Gas to LiquidsThis application is used to produce diesel and other fuels. However the technology for Gas toLiquids (GTL) has not yet been commercially proven and therefore shall not be an option untilsuch technologies are well developed and available at reasonable cost.2.3.4.4 Transport (Compressed Natural Gas)Compressed Natural Gas (CNG) is methane pressured at 200 to 250 bars (2900 to 3,500 psi) atwhich it is stored and distributed. In this case, Methane is compressed to less than 1% of thevolume it occupies at standard atmospheric pressure. CNG technology shall be applied inKenya for transport.2.3.4.5 Commercial and Domestic useThe Government shall initiate pilot projects for residential domestic and commercial purposesfor space heating, water heating, cooking, and street lighting. Networks shall be developed forsupplying residential and commercial consumers with clean and reliable natural gas.2.3.5 Challenges2.3.6.1 Challenges in Upstream Gas Activities1. The lower wellhead price of natural gas, be it caused either by having to compete with lowercost alternative fuels in the domestic market or as a result of lower netback prices into theexport markets, and longer project lead times, makes it extremely challenging to economicallydevelop a natural gas industry based on oil-based fiscal terms. The government will recognizethese facts and offer more favourable fiscal terms for natural gas including more favourableprofit splits as an incentive for natural gas exploration and development.35 2.0 – FOSSIL FUELS
Page 1 and 2: NOVEMBER 2013 DRAFTREPUBLIC OF KENY
Page 3 and 4: 2.4.4.1 Challenges in Coal explorat
Page 5 and 6: 4.5.5 Policies and Strategies and I
Page 7 and 8: Table 10.1 Energy Generation Potent
Page 9 and 10: FOREWORD BY THE CABINET SECRETARY F
Page 11 and 12: EXECUTIVE SUMMARY1. This policy doc
Page 13 and 14: 14. To enhance exploitation of the
Page 15 and 16: 24. The Government shall establish
Page 17 and 18: 1.0 - INTRODUCTION1.1 THE ROLE OF E
Page 19 and 20: (k) Promote appropriate standards,
Page 21 and 22: (e) The Weights and Measures Act, C
Page 23 and 24: fund, mobilizing resources for rura
Page 25 and 26: 2.0 - FOSSIL FUELS2.1 BACKGROUND1.
Page 27 and 28: immense value through acquisition o
Page 29 and 30: and averaging at more than US$110 p
Page 31 and 32: town of Mombasa, through Nairobi to
Page 33 and 34: 3. The prices in Kenya as published
Page 35 and 36: 6. It is hoped that the discovery o
Page 37 and 38: (c) High sulphur levels have advers
Page 39 and 40: Policies and StrategiesPetroleum Ex
Page 41: Policies and StrategiesPetroleum Su
Page 45 and 46: Natural GasShort Term2014-2017Mediu
Page 47 and 48: 3. The introduction of clean coal t
Page 49 and 50: 6. Lack of a special purpose vehicl
Page 51 and 52: Policies and StrategiesFossil Fuels
Page 53 and 54: 4. Geothermal power plants use stea
Page 55 and 56: about 1,450MW remains unexploited.
Page 57 and 58: 8. Ownership of physical dam reserv
Page 59 and 60: (d) Competing interests between dev
Page 61 and 62: 3.4.2 Challenges1. Unsustainable us
Page 63 and 64: 4. Land will need to be set aside f
Page 65 and 66: Limited in Kilifi County generates
Page 67 and 68: high temperatures estimated at 4-6
Page 69 and 70: Policies and StrategiesSolar Energy
Page 71 and 72: 3. Inadequate wind regime data.4. L
Page 73 and 74: through co-generation and bioethano
Page 75 and 76: (d) 1 sea wave energy projects with
Page 77 and 78: 3.12.3 Policies and Strategies and
Page 79 and 80: 4.0 - ELECTRICITY4.1 BACKGROUND1. E
Page 81 and 82: 2. It is estimated that as at 2013,
Page 83 and 84: Figure 4.2 - Evolution of the Energ
Page 85 and 86: (e) Thermal power plants have a rel
Page 87 and 88: 6. Nuclear fuel can be recycled and
Page 89 and 90: Policies and StrategiesNuclear Elec
Page 91 and 92: Table 4.5 - Planned Regional Inter-
Page 93 and 94:
to this worsening situation leading
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4.5.5 Policies and Strategies and I
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Policies and StrategiesRural Electr
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Policies and StrategiesElectricity
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7. The energy policy and the Energy
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6.0 - LAND, ENVIRONMENT, HEALTH AND
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6.2.3 Renewable Energy1. Generally,
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causes indoor air pollution leading
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6.5 DISASTER PREPAREDNESS AND MITIG
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from the licensee.Policies and Stra
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Policies and StrategiesEnvironment,
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6.7.4.4 Nuclear ElectricityPolicies
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of the risk levels.Policies and Str
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6 It is a further requirement under
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Policies and StrategiesAccess to En
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Kenya.Policies and StrategiesEnergy
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15. Seek financing of clean energy
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Figure 8.1 - Pass-Through Costs in
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Table 8.1 - Energy Tariffs and Cost
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Policies and StrategiesEnergy Prici
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Policies and StrategiesCross Cuttin
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3. In 2009, ERC established a commi
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9.3.3 Policies and Strategies and I
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9.7 ENERGY RESOURCES BENEFITS SHARI
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10.0 - ANNEXURESAnnex 10.1 The PSC
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Table 10.3 Nuclear electricity gene
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Table 10.4 Summary of the Energy St
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County Population Area (km 2 ) Foss
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ACRONYMS AND GLOSSARY OF TERMS1. AC
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RD&DREAREPRMSSMRsSAPPToEVATWpResear
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Reticulation means the network used
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National Energy Policy - Final Draft - 14 Nov 2013

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