Long drought on Timor Sea E & P nearing an end

The Australian-Indonesian Zone of Cooperation in the Timor Sea.

For more than 25 years, the Timor Sea, in particular, the Gap between Australia and Indonesia, has lured petroleum explorationists to try their luck with wildcats and some seismic, but these disputed frontier waters didn't divulge their resources until quite recently. Arco first drilled here, in the early 1970s, but without any significant success, then a five-year moratorium followed, before the 1990 Timor Gap Treaty was signed that launched the current period of exploration and development.

The Sea is shared by Indonesia and Australia, but only the Australian waters have been explored to any degree. These are divided between the Australian states of Western Australia and the Northern Territories, where it's called the Area of Ashmore and Cartier, after the spectacular Ashmore Coral Reef and the Cartier Islands. Separating these two sections of the Sea is the Zone of Cooperation (ZOC), a blunt wedge of waters that is jointly administered by Australia's and Indonesia's federal governments.

Just outside the ZOC in Ashmore Cartier, are Jabiru, Challis, and Skua, BHP's initial developments in the area, which are now nearing the end of their commercial lives. They were among the first to employ FPSO production systems, but these vessels are now moving on to more productive fields. To the north of these declining fields, in AC/P8, lies the massive Laminaria/Corallina complex, however.

Australia's oil self-sufficiency will be hiked more than 20% by the addition of some 170,000 b/d beginning in 1999 from the Laminaria and Corallina Fields in the Timor Sea. A production license has just been granted to Australia's own Woodside Petroleum, operator of the fields. Development of the 250 million bbl oilfields will cost US$821.5 million, but their production will have a total value of more than $5.3 billion. Woodside holds 50% of the project, while BHP and Royal Dutch Shell old 25% each.

Just across the line in the Zone of Cooperation, BHP Petroleum has received the go-ahead from the Australian-Indonesian Joint Development Authority for the development of the Kakatua and Elang Fields in Block 91-12 of Area A. It is the first development approved in the Zone since its establishment in 1989.

The $73 million project is set to go on production via the relocating FPSO Skua Venture this July with peak flow estimated at 33,000 b/d oil. BHP, with 42.4% is the operator, with Santos (21.4%), Ipex Sahul (21.2%), Petroz (13.3%), and Emet (1.5%) its partners.

The other ZOC fields awaiting further development are Petroz and partners' Undan and Bayu gas and condensate fields, also in 91-12. According to Petroz officials, an A$1 billion development project could have the fields onstream by 2000, and by 2005, they could be providing LNG to the expanding Asian market.

Between the Woodside Laminaria/ Corallina complex in AC/P8 and the ZOC Area A oil and gas fields Undan/Bayu and Elang/Kakatua, lies the Timor Sea's most prospective track, the WA260-P permit area, previously known as WA94-10, which is also being explored by BHP via an 11-well drilling program and an extensive 3D seismic survey. More than 40% of the Laminaria structure is believed to lie within the WA260-P permit area, and the four major oil fields of the ZOC are just across the line. Furthermore, a wide array of other prime drilling targets all make the area one of Australia's most exciting prospects.

Australia's Federal Minister for Resources and Energy, Senator Warwick Parer, and the Northern Territory Minister for Mines and Energy, Mike Reed, have announced additional awards in the Timor Sea as well. Area AC95-2 has been awarded to Woodside Petroleum, which operates the adjacent AC/P8 permit and its Laminaria/Corallina complex, while AC95-1 and AC95-3, near the older Jabiru and Challis oil fields, have been awarded to Parker & Parsley Australasia and Cultus Timor Sea, respectively. An estimated $167.15 million drilling program for some 17 exploration wells and seismic acquisition is to be spent over the next five years.

Although Indonesia's jurisdiction over the Timorese sector of the Timor Sea is contested by numerous nations and unrecognized by the United Nations - Indonesia invaded and occupied East Timor in 1976 - it has announced that frontier terms are now available on blocks in the Timorese sector of the Sea under its control. To date, there have been no awards, however.

Timor markets

Over 600 miles north of Broome, Western Australia, the Timor Sea washes the northwestern shores of Australia, putting it far from the industry and infrastructure of the southern half of the continent, but the sparsely populated, barely developed region has enormous potential that the Timor Sea's petroleum fields can awaken. And, in tandem with further fields in the Bonaparte, Browse, and Carnarvon Basins are capable of powering phenomenal industrialization of Australia's Northwest.

There are enormous mineral resources in this quarter of the continent, including one of the world's largest deposits of iron ore. With the ready source of low cost energy, a direct reduction plant is planned that will be the core industry for the region. And, of course, the energy-hungry markets of Southeast Asia and Japan are ready venues for Timor oil and gas.