Shell's Malampaya oil may go to 50,000 b/d
The Philippines largest industrial undertaking in history may be getting even larger. Shell announced that the first of five new development wells on the company's Malampaya Field, 50 km northwest of Palawan, has indicated that reserves on the field may be much larger than anticipated.
According to reports, Shell Philippines Exploration Managing Director David Greer said that the first of the five planned development wells on the field indicated reserves of around 3 tcf of gas and over 200 million bbl oil-in-place of which 30 million bbl are estimated to be recoverable. These new results far surpass previous field potential estimates of 2.6 tcf of gas and 120 million bbl oil-in-place.
Greer added that the new find could translate to an initial production of 20,000-25,000 b/d by mid-2001 with the potential to increase to 50,000 b/d by 2003.
However, Greer did add the disclaimer that the presence of the new reserves must be confirmed after all data is evaluated and integrated across the field. Shell plans to drill an additional four development wells on the field by early next year. Shell operates the field and holds a 45% interest in the field with equal 45% partner Texaco. Shell also recently finalized an agreement giving the remaining 10% interest in the field to state-owned Philippine National Oil.
The Malampaya Project will provide gas to three new gas turbine power plants on Luzon Island. Production from the field is expected to satisfy up to 15% of the country's crude imports in 1999. Shell and Texaco are in charge of the installation and operation of deepwater gas wells, along with extensive onshore and offshore production facilities and a 500-km subsea pipeline. Development costs have been estimated at $2 billion for the project.
East Timor asking for midpoint division with Australia
First, they wanted independence, now they want the Timor Gap. East Timor is asking for more of the luscious Timor Gap, based on the fact that Australia is "enormously rich." The leader of the world's newest country, Jose Ramos-Horta, has asked Australia to renegotiate the Timor Gap Treaty which governs the exploitation rights to the area of the Timor Sea that lies between the two countries to help impoverished East Timor.
In an interview on ABC radio, Ramos-Horta said, "I believe that Australia is an enormously rich country and I am confident it is prepared to take the initiative itself so that the East Timorese can benefit much better from the treaty itself." This re-negotiation would change East Timor's share of royalties from 50% to what Ramos-Horta says the country is entitled - 90%.
The Timor Gap has been a hotbed of controversy between inhabitants of the area for almost 30 years. The boundary of the area was originally established following an agreement between Australia and Indonesia, but was challenged by Portuguese Timor in 1972. At the time, the Australians wanted the boundary between the two countries to constitute what lay on the Australian continental shelf, while the Portuguese wanted a midway point between the coastlines, which would give Timor the majority of the reserves - approximately 90%.
This debate became moot, however, in 1975 with Indonesia's occupation of Timor and a treaty was signed in 1989, equally splitting the area between the two countries 50-50.
The Treaty was once again brought center stage when East Timor claimed its independence. As the independence was being achieved, the future of the Treaty lay in doubt and left oil companies operating in the Gap unsure of their futures. This was soon laid to rest early this year when a new similar Treaty was signed between Australia and East Timor effectively removing Indonesia of any rights or rewards.
This new treaty as East Timor proposed, if signed, would see Australia waive rights to millions of dollars in oil royalties. Legal and industry analysts have speculated that due to the location of the reserves, East Timor may have a legitimate claim to the lion's share of the Gap.
But until the law steps in, Australia must decide which is more important - millions of dollars or international goodwill.
E. Kalimantan major deepwater play for Unocal
Unocal has added two new deepwater discoveries to its acreage off East Kalimantan, Indonesia. Shown are some of Unocal's deepwater discoveries over the past few years in the area.
Unocal is to Indonesia what Elf is to Angola - a deepwater giant. Since 1997, the company has notched multiple deepwater discoveries in its concessions off East Kalimantan, beginning with the Merah Besar discovery in the Makassar Strait PSC. Since that time, the company recorded another major discovery, Seno, in the Makassar Strait PSC and several discoveries in other PSCs in the area, including Aton, Bangka, and Janaka in the Rapak PSC and most recently Gandang and Gendalo in the Ganal PSC.
Now Unocal has struck again in Rapak with its third and fourth straight discoveries, Gula and Gada, in what is called the Central Delta Play. The Gula prospect is located 35 miles north of the Gendalo discovery. The company drilled the Gula #1 well to a TD of 16,182 ft in 6,051 ft water depths and cut over 260 ft of net gas pay in a gas sand.
Eight miles north of Gula #1 the company drilled Gada #2 on the Gada prospect. The well went to 15,223 ft in 6,224 ft water depths and encountered 70 ft of net gas pay.
According to Unocal, together the gross unrisked resource potential in the structures is estimated to be 2-3 tcf. The company plans additional drilling to test the deeper section in both structures.
Additionally the company drilled a successful appraisal well on the Gendalo prospect. The company contends that these discoveries confirm a world-class gas resource and that several large prospects are yet to be drilled.
Australia re-vamping bidding system
In an effort to remain competitive, Australia has made some significant changes to its Work Program Bidding System for offshore petro leum exploration permits. According to the Federal Minister for Industry Science and Resources, the policy had been under a great deal of pressure for some time due to the low oil price and companies experiencing trouble meeting permit commitments.
The new policy, which is already in effect, was brought about after a year of consultation between the Ministry and Commonwealth Government and industry, State, and Northern Territory Mines Departments in reviewing the policy. The new policy is aimed at keeping Australia competitive through streamlined, modern administration. The new, revised guide lines include changes such as:
- Updated criteria for assessing applications
- Added flexibility for administration of exploration permits
- Good standing arrangements for cancelled permittees and re-release of exploration areas.;
