Petronas expects to see increased offshore activity and hand out numerous awards in the upstream sector during Q2 2013 as part of its spending plans, which will total $61.04 billion over the next five years.

According to Malaysia’s RHB Research Institute, the spending spree is expected to combat declining production rates. Exploration and production activity remains viable in the current oil price regime, it added.

Petronas registered 21 oil and gas discoveries in the last 12 months, with seven being made in Q3 2012: Bidara, Gambir RDR, Kurma Manis-1, Berangan-1, Tembakau-1, Kluang North-2 and Tukau Timur Deep-1.

Developments

Petronas is making progress with Swedish partner Lundin Petroleum. Following the completion of the Tembakau-1 well in Block PM307 offshore Peninsula Malaysia, the partners declared the prospect a gas discovery with the potential to be a standalone project. Work is currently ongoing to estimate the recoverable reserve range, said Lundin recently.

Ashley Heppenstall, president and CEO, said, “We are hopeful this discovery has the potential to be commercial on a standalone basis, given its close proximity to existing gas infrastructure and the strong demand for gas in Peninsular Malaysia.”

Meanwhile, Malaysia’s Dialog Group has signed an agreement with Halliburton for a contract worth $1.2 billion to increase oil production from the mature Bayan field offshore Sarawak, East Malaysia.

The deal will see Dialog taking a 50% stake in Halliburton Bayan Petroleum (HBP) through its wholly owned subsidiary Dialog D&P.

The Bayan field is located around 30 km (18 miles) south of the West Acis field, which is one of four marginal oil and gas fields that form the Balai Cluster.

Also in late 2012, Shell and Petronas produced first oil from the deepwater Gumusut-Kakap field offshore Sabah. Output was achieved from two wells on the field, which have been tied back to a floating, production, storage, and offloading vessel on the nearby Murphy Oil-operated Kikeh field in Block K.

In Sarawak, Germany’s Linde has won a contract worth around $300 million to build a mid-scale LNG plant for Petronas subsidiary Malaysia LNG (MLNG) at its facility in Bintulu.

The plant will have a maximum capacity of 1,840 metric tons and will reliquefy boil-off gases from ship loading and LNG storage. The new plant is expected to come into operation at the end of 2014 and will help MLNG to minimize flaring at the Petronas LNG complex, Linde said.

Exploration

In late November, Petronas unveiled two major oil discoveries offshore Sarawak.

First, the Kuang North gas discovery was made with two wells – Kuang North-1 and 2 – on the Kuang North field, located in Block SK316.

The Kuang North-2 well, which was drilled to a total depth of 3,223 m (10,575 ft), penetrated a 636-m (2,098-ft) gas column. Preliminary assessments indicated that gas-in-place for the Kuang North field is around 2.3 Tcf of net hydrocarbons.

Second, Petronas hit pay with its Tukau Timur Deep-1 well, the first completed HP/HT well in Sarawak. This is also the deepest vertical well to be drilled by the operator. The well was drilled to a depth of 4,830 m (15,847 ft) and discovered 12 gas-bearing reservoirs with total net gas sand of 183 m (600 ft).

Preliminary assessments indicate the total gas-in-place for the Tukau Timur field to be around 2.1 Tcf. Petronas is now carrying out work to evaluate the range of recoverable reserves for both discoveries.

Petronas is not the only company to have enjoyed success with the drill bit in Malaysia recently.

Australia’s Roc Oil encountered hydrocarbons across multiple zones in the Balai-2 well on the Balai Cluster Risk Service Contact (RSC). The well was drilled to a total depth of 2,266 m (7,435 ft) and intersected up to 87 m (285 ft) of hydrocarbon pay.

The appraisal wells are part of the pre-development phase for the Balai Cluster RSC, which covers four fields: Balai, Bentara, West Acis and Spaoh. The RSC is managed by BC Petroleum (BCP), a joint venture (JV) consisting of Roc (48%), Dialog Group (32%) and Petronas (20%).

Upon completion of the pre-development phase, the partners will make a decision on whether or not to move forward with full development, after which BCP will submit a field plan.

Licensing awards

In recent weeks, the Malaysian government has also awarded new acreage with Sarawak featuring heavily.

Shell and Petronas signed a production sharing contract (PSC) for Block SK 319 in the Central Luconia basin offshore Sarawak. Shell has committed to an initial three-year exploration program for the block, which covers 2,727 sq km (1,053 sq miles). Shell will operate the block with a 50% stake, while Petronas will have the other 50%. Earlier last year, Shell landed the SK 318 and 2B exploration contracts offshore Sarawak.

Also, Singapore’s RH Petrogas landed its first PSC in Malaysia with the award of Block SK 331 onshore Sarawak. The operator will hold an 80% stake in SK 331, while Petronas will have 20%.

In Sabah, Petronas awarded Block SB311 to its subsidiary Petronas Carigali, ConocoPhillips and Shell in late 2012

Strategic partnership

McDermott International and Malaysia’s TH Heavy Engineering (THHE) recently formed a joint venture to provide a range of offshore construction services, including engineering, procurement, construction, installation and commissioning (EPCIC) solutions to the Malaysian and Asia-Pacific offshore sector.

The JV also includes the formation of two local companies offering engineering, procurement and project management services in which McDermott and THHE will have 50:50 ownership.

Steven Hamlen, Special to E&P