SOUTHEAST ASIA Pertamina putting Indonesia's priority on development of Esso's Natuna Field
Dev George
Managing Editor
Rivaling even Qatar's enormous North Field, Indonesia's Natuna Field is undoubtedly one of the world's largest, if not the largest gasfield yet discovered. Some 10 miles wide by 15 miles long, the 120 sq mile, dome-shaped middle and late Miocene carbonate reservoir is nearly 5,100 ft thick at the center and lies 8,530 ft subsea and 470 ft below water.
Discovered in 1973, the field, about 800 miles from Jakarta, is in the D-Alpha production sharing block in the northeastern Natuna Sea near the Malaysian frontier. It was awarded to Esso by Pertamina in 1980.
The Natuna Field's reserves are estimated at 210 tcf, including about 60 tcf of methane and heavier hydrocarbons, thus when in full production, it will be able to produce about 2 bcf/d of gas for more than 30 years. Its LNG production will be more than 14 million tons a year.
Earlier this year, Pertamina and Esso Natuna finally signed their long-awaited agreement for the development of the Natuna Field as an LNG project. The $42 billion project will produce an estimated 45 tcf of recoverable gas, with Stage I delivery of the first LNG in 2004 or 2005 at a level of 4.8 million tons a year.
The hold-up had been Indonesia's PSC terms and tax regimen, but, after lengthy negotiation, it was determined that Exxon's Esso Natuna would bear all investment costs, more than $100 million a year during the first phase, and that Exxon and Pertamina would jointly market the gas over a 10-year period. In addition, Indonesian President Suharto signed a special decree late last year specifically for the Natuna project that established its withholding tax rate at 5% of profit after income taxes, compared with the 20% normally paid.
Pertamina currently holds a 50% share in the PS contract for Natuna, but is making every effort to reduce that holding to 11% in order to bring in other investors. President-director Faisal Abda'oe, in fact, has been leading the Indonesian state oil company in its campaign to find other investors and has been sending delegations to Houston, London, and other petroleum centers seeking partnerships and to spread the costs and risks of bringing the enormous play into full production by early in the next decade.
Among the suitors for a piece of the action are oil companies Mobil, Conoco, Inpex, JNOC, Japex, and Teikoku Oil. Mobil wants 26% interest, but Pertamina appears to be offering only 20% at this time. Conoco isn't talking about its negotiations, but it is a major player in the region and is known to be seeking a fitting percentage for itself. In addition to these known oil companies, nine Japanese trading companies are also believed to be attempting to iron out a joint venture to pick up a sizable slice of the Natuna pie themselves - Mitsubishi, Nissho Iwai, Sumitomo, Itochu, Mitsui, Marubeni, Tomen, Nichimen, and Kanematsu.
Japanese interest is high in the Natuna project since Japan is the primary potential market. Others, however, are South Korea, Taiwan, China, and India.
The project
Exxon (Esso) is sitting quietly on the side while all this financial finagling is going on. Spokesmen for the company say nothing of any consequence is being done at this time toward development of Natuna Field, nor will it, they said, until Pertamina has lined up customers for the enormous amount of gas it will produce.
Esso Natuna has drilled five exploratory wells in the field and conducted 15 production tests that indicate very little variation across the reservoir, which averages roughly 71% CO2, 28% methane and heavier hydrocarbons, and 0.5% of nitrogen and hydrogen sulfide (H2S). The recoverable hydrocarbons are estimated to be three times those of Indonesia's other major field, Arun, at 45 tcf.
Some 1,000 km of seismic data has been collected over Natuna Field, and Geco-Prakla is now surveying the most prospective sectors of the Natuna Sea, some 2,790 miles, tying in 50 wells, using the Geco Echo.
Exxon says Natuna may very well become the world's largest offshore gas development, involving approximately 18 fixed steel jacketed platforms with some 200 wells, producing and processing about 2 bcf/d of gas for more than 30 years. LNG production could amount to more than 14 million tons a year.
The cost of the project, high at $40 billion, is due to its gigantic size, its remote and relatively deepwater location, and the necessity of continuously extracting and disposing of large amounts of carbon dioxide.
Detailed engineering, infrastructure development, and platform, pipeline, and LNG plant construction is to follow, with the project advancing in phases tied to market demand.
Although the Natuna project still doesn't have its market in place nor its financing complete, its development concept is essentially done. Based on three integrated activities: offshore production and gas treatment, onshore gas treatment and liquefaction, and offshore disposal of waste gas into nearfield subsurface formations, the project will, at full development include six offshore processing platforms, six drilling platforms with 36 well slots each, four injection platforms, and more than 565 miles of infield and transportation pipelines.
Market demand will determine the capacity levels for gas production and LNG, but preliminary plans call for first facilities to provide about 800 MMcf/d of gas to the LNG plant on Natuna Island. At this level, LNG production would be about 4.8 million tons a year. Further expansions would take place in 400 MMcf/d increments.
Offshore processing of up to 1.8 bcf/d of gas will be accomplished via ultra-large, specially designed processing platforms some 210x375 ft, weighing approximately 43,000 tons. Plans call for these enormous deck structures to be completed and tested onshore before installation.
These decks will have facilities for separation of the wellstream into methane and CO2, compression and extraction of the two gases, and removal of H2S from the methane.
The methane will then be warmed and further compressed for transmission to the Natuna Island liquefaction plant 140 miles to the west-southwest of the field. Waste gas removed offshore is sent by pipeline to other platforms for injection into several carbonate aquifers northwest of the field.
The Natuna Island LNG plant is to be constructed on the northern coast of the island, as are a port to accommodate LNG carriers, warehouses and support facilities, an airport, and a complete community for the plant's and the offshore installations' workers and their families.
West Natuna Basin
The spotlight has been on Exxon's Natuna Field in the northeastern quadrant of the Natuna Sea, but, elsewhere, considerable activity has quietly been taking place that firmly establish the whole region as a major hydrocarbon province. Chief among the plays, however, is the West Natuna Basin, where numerous discoveries have been made and major fields are being developed and brought onstream.
Marathon Petroleum, for example, has brought its first well in its KRA Field onstream at 5,700 b/d oil. Development drilling is now underway on the 20-slot KRA jacket. Production could reach 35,000 b/d this year. The KRA and the KG comprise a joint field development that was approved in December 1992, after discovery in 1978 and 1991, respectively. KG presently has a four-leg, six-slot jacket with three pre-drilled wells. The first of these was brought onstream in May of this year at 11,100 b/d, but the field is already producing over 25,000 b/d.
The two fields produce to the Kapap Natuna FPSO some 7.5 miles away. The KG platform is reportedly unmanned and controlled from the FPSO. When completed, the KRA installation will have an accommodation unit. Perhaps three development wells will be added to KG, along with 11 on KRA. The Kakap Block should eventually produce some 50,000 b/d. Marathon, with 37.5%, operates the Kakap PSC. Its partners are Lasmo, Oryx, LL&E, and Pertamina.
And, to end the year with even further successes, Marathon has had another discovery in the Kakap Block, the KKN oil field.
Nearby, in Block A, just five km south of Marathon's KRA Field, Amoseas, a Chevron-Texaco partnership, has spudded its first wildcat on the important Babar structure. The well has a planned total depth of 2,600 meters and is designed to test Lower Oligocene Benua/Lama Formation sands which, until the KRA-1X discovery in 1991, was a previously ignored horizon. Amoseas believes the Babar Field will prove to be an extension of the KRA Field southeastward into its acreage. The company plans another well on a second prospect near the boundary with Lasmo's Cumi Cumi Block.
The West Natuna Basin has seen considerable activity in 1995 and is expected to see even more next year. Primary among the actors are Marathon, which will continue its Kakap Block development with three to four more wells, Lasmo, with another well on its Cumi Cumi Block, and Conoco with additional wells for Stage 2 development of its 93,000 b/d Belida Field and on its East Torani Field in Block B's southeastern Natuna Sea sector. Enterprise, which shot a 1,000 km 2D program earlier this year, will undertake a drilling program in 1996 on its Block II PSC.
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