The Asia and Australia regions are enjoying the same kind of growth in offshore oil and gas activity as the rest of the world. And though they are facing the same challenges, the region will overcome those obstacles and continue to surge ahead.
Rig demand
Mobile offshore rig utilization in the Asia/Australia region (excluding India) is 95%, with 97 of 102 rigs under contract.
To simplify discussion, the region’s offshore markets can be divided into three broad areas: Southeast Asia, the Far East, and Australia/New Zealand.
Asia/Australia mobile offshore rig demand forecast by rig type.
The Southeast Asia market will see more fluctuation than other regions, experiencing both rig shortages and surpluses. At the region’s worst, Southeast Asia will be short as many as five jackups and two semisubmersibles. Drillship supply will continue to be a non-issue, as only two or three of the six to seven drillships in the region are likely to be working at any give time over the next year.
Rig supply in the Far East market should continue to slightly outpace demand throughout the first half of 2007. According to ODS-Petrodata’s World Rig Forecast - Short Term Trends, the supply deficit will not be as bad as in other rig markets since demand will likely exceed supply by only one or two rigs.
The Australia and New Zealand region also is likely to experience only slight shortages of no more than a rig or two. The bulk of these shortages will occur in the jackup market, but semis could incur a small deficit toward the end of 2007.
Active programs
Some companies recently began extensive drilling programs in the region, attempting to get as much work completed as possible while they can still get their hands on a rig. One such company is Australian Worldwide Exploration Ltd. (AWE). AWE began a drilling program offshore New Zealand comprising nine exploration and development wells, eight of which are being operated by AWE. Diamond Offshore’s semisubmersibleOcean Patriot is drilling the wells in water depths of 61-91 m (200-300 ft).
Operator Tap (New Zealand) Pty Ltd. completed Cutter-1, the first well in the program in November. The primary target was water wet; however, 73 m (240 ft) of natural gas shows were discovered in a shallow reservoir. Not considering the discovery commercial, Tap plugged and abandoned the well. Cutter-1 is in Canterbury basin PEP 38259, 23 km (14 mi) off the east coast of the South Island of New Zealand.
The remaining wells to be drilled, all operated by AWE, are the Tieke-1, Hector-1, Taranui-1, and West Cape-1 exploration wells and four development wells on the Tui field. Combined potential reserves for the nine fields are estimated at over 315 MMbbl of oil. Drilling operations should be completed by 2Q 2007.
Discoveries
From January through December of 2005, operators had reported 24 offshore discoveries in the region. So far this year, operators have reported 35 discoveries.
Australia led the way with 12 discoveries, followed by China with seven. China, Vietnam, and Indonesia have made the greatest improvements in the number of discoveries, with China boasting five more than in the previous year, Vietnam with four, and Indonesia with three. Nearly all of the discoveries in the region are in shallow water. Only three are deepwater fields. The Liwan 3-1-1 discovery, made by a subsidiary of Canada’s Husky Energy Inc., made history at 1,500 m (4,921 ft) water depth as the first deepwater discovery ever made offshore China.
Chevron Corp. made one of the largest discoveries in the region when it encountered a large natural gas reservoir with the Clio-1 exploration well 90 km (56 mi) offshore northwestern Australia in permit WA-205-P in the Exmouth Plateau. Transocean semisubmersibleJack Bates drilled Clio-1 in 960 m (3,150 ft) of water to a TD of 4,725 m (15,500 ft). The well intersected 190 m (623 ft) of net gas-bearing sands.
Chevron affiliates Chevron Australia Pty. Ltd. and Texaco Australia Pty. Ltd. operate permit WA-205-P with 67% interest. Partner Shell Development Australia holds the remaining 33%.
Indonesia saw two discoveries this year in the Sampang production sharing contract (PSC). Australia’s Santos Ltd. encountered a 141-m (463-ft) natural gas column with the Wortel-1 exploration well. Wortel-1 was drilled 7 km (4 mi) west of the Oyong oil and gas field. The well flowed gas at a rate of 18.5 MMcf/d, producing 4-5 bbl of gas condensate per 1 MMcf of gas produced.
Following the Wortel-1 discovery, Transocean semisubmersibleSedco 601 drilled the shallow-water Wortel-2 well to a TD of 1,421 m (4,662 ft). The second well failed to encounter hydrocarbons, but the operator plans to drill the Wortel-3 exploration well in the same region next year.
The Jeruk-3 appraisal well also was drilled on the Sampang PSC. Jeruk-3, which lies 1.8 km (1 mi) west of the Jeruk-1 discovery well, intersected a 108 m (354-ft) oil interval, producing 6,700 b/d of oil. Further appraisal work is planned.
Santos operates the Sampang PSC with 40.5% interest. Partners include Singapore Petroleum Sampang Ltd. with 36%, Cue Sampang Pty Ltd. with 13.5% interest and PT Petrogas Oyong Jatim with the remaining 10%.
Licensing
The Australian government opened 36 new offshore petroleum exploration areas last year, with the first bidding for licenses opening May 8 for all of the blocks. Closing dates vary, but bidding for the 20 areas off Western Australia and the two areas off the Ashmore and Cartier islands closed on Nov. 9. Bidding will close for the five areas off the Northern Territory, the five areas off Tasmania, and the four areas off Victoria on May 10, 2007. The initial term for the exploration permits is six years.
The Crown Minerals Group of New Zealand’s Ministry of Economic Development opened a bidding round on Aug. 1, 2006, for 40 exploration blocks in the Great South basin. Bidding on the blocks closes March 31, 2007.
Vietnam, Cambodia, Malaysia, and Myanmar do not hold traditional licensing rounds, but all have blocks available for bidding. South Korea, a country not typically known for exploration activity, currently has seven offshore blocks open for bidding through state-owned Korea National Oil Corp.
China National Offshore Oil Corp. has 27 offshore exploration blocks up for grabs all along the country’s coast. Water depths on the blocks range from very shallow to deepwater.
In Indonesia, 17 onshore and offshore production-sharing contracts from four previous bid rounds are available. The second phase of the fifth bid round closed on Dec. 26, 2006.
Field development
To date, 184 field development projects are under evaluation in the Asia/Australia region, 353 projects are in various stages of planning, and 115 projects are under construction.
One large project in the region is a planned pipeline in Indonesia connecting the Bontang gas field in East Kalimantan to East Java. Operator BP Migas contracted PT Bakrie & Brothers to install a 107-cm (42-in) 600-km (372 mi) pipeline. The project will cost $1.4-1.5 billion.
Australia-based BHP Billiton Petroleum Pty Ltd. awarded a number of contracts recently for the development of its Stybarrow field in permit WA-255-P(2) in the Southern Carnarvon basin 65 km (40 m) offshore northwest Australia. The development will consist of nine subsea trees and two manifolds, all of which will be tied back to an FPSO.
Japan-based Modec Inc. will supply the FPSO, which is under construction at Samsung Heavy Industries in South Korea, on a 10-year lease basis. When completed, the FPSO will be capable of receiving up to 80,000 b/d of oil and 45 MMcf/d of gas with a storage capacity of 900,000 bbl of oil.
Modec also will supply the turret mooring system for theStybarrow FPSO. The company will use the Sofec disconnectable internal turret mooring system, which includes 12 risers and umbilicals. Modec recently acquired the technology when it purchased FMC Technologies Floating Systems Inc. from Houston-based FMC Technologies.
Modec contracted Japan-based Toyo Engineering Corp. to supply the topsides for the FPSO. Toyo is responsible for engineering, procurement of equipment and materials, and module fabrication management for the topside units. This is Toyo’s first venture into the FPSO manufacturing industry.
BHP awarded a subsea installation contract for the Stybarrow field development project to Technip Oceania Pty Ltd. and Subsea 7 Australia Pty. Ltd., the Australian subsidiaries of Technip and Subsea 7. The joint venture contract is valued at just over $160 million.
The contract includes design, manufacturing, transportation, installation, and pre-commissioning of 48 km (30 mi) of flexible risers, flowlines, and jumpers. The equipment will be fabricated at Technip’s flexible manufacturing facilities in Le Trait, France.
The contract also includes transportation, installation, and pre-commissioning of 16 km (10 mi) of dynamic and static umbilicals and associated electrical and hydraulic flying leads, which will be provided by BHP. The company also will provide the spider buoy and mooring system, complete with anchors, for the FPSO that the joint venture will install.
The offshore program is scheduled to begin in early 2007 using Technip’s construction vesselDeep Pioneer. In 825 m (2,707 ft) of water off the North West shelf of Australia, Stybarrow will be the deepest subsea production system in Australia.
Japanese energy company INPEX and France-based Total soon will begin developing the Ichthys gas field, not far from Stybarrow. Ichthys was discovered in 2000 on block WA 285-P offshore northwestern Australia. Between 2000 and 2004, six appraisal wells drilled on the field confirmed the presence of natural gas and gas condensate.
The Ichthys field development plan calls for the gas and condensate to be used in an LNG project. The development plan includes a semisubmersible central processing unit tied to an integrated LNG facility that will probably be constructed on an island in the Kimberley region less than 200 km (125 mi) from the field. The facility is scheduled to come onstream around 2012 with a capacity of more than 6.6 million tons of LNG per year and 100,000 b/d of condensate. The production systems can be increased should additional reserves be found.
Inpex operates block WA 285-P with 76% interest. Total holds the remaining 24%.
Justin Smith
ODS-Petrodata
