OT: Asian dragons blaze new trail. Farm-out forum looks to muster big interest in diverse Far East acreage
Upstream, this week's issue
By Amanda Battersby
Roll up, roll up, ladies and gentlemen...exploration acreage, get your lovely exploration acreage here! It is perhaps not what you would expect to hear in your local market but this was very much the order of the day at the Seapex Farmout Forum in Singapore.
Operators, oil majors and minnows alike are looking for farm-in partners willing to share the risks - and hopefully also the rewards - of exploring a host of geologically and geographically different licences both onshore and offshore in the Asia Pacific region.
Acreage that is up for grabs includes tranches in countries as diverse as Australia, Burma, China, Indonesia, Papua New Guinea and the Philippines. Moreover, companies are not just offering the scraps from under their portfolio tables -- some of the prospects awaiting the drill bit are potential giants. The opportunities unveiled at the forum include these three temptations.
British independent Lasmo is seeking a farminee for its Malagot block on Irian Jaya (West Papua), Indonesia, to participate in the Siganoi exploration well that is to be drilled in May. Time, therefore, is of the essence. Up to half of Lasmo's 60% interest in Malagot is being offered.
Siganoi is similar to the giant Wiriagar and Vorwata gas fields, which are located about 80 kilometres to the south-east and are committed to BP's Tangguh project. It has mean potential recoverable reserves of 800 million barrels of oil or 3 trillion cubic feet of gas within the four-way closure with considerable upside potential if a stratigraphic element to the trap is developed, the operator says.
Lasmo -- whose business in Indonesia will form part of Eni's Far East portfolio once the company has been integrated into the Italian group -- has stumped up about $8 million on seismic, gravity and magnetic surveys since it entered the Malagot production sharing contract in June 1998.
The main focus of its 2001 exploration work will be the drilling next month of Siganoi. This well is expected to cost $6 million and the total anticipated exploration spend this year will be $7.3 million, which will fulfil the three-year commitment. The Malagot contract has two very important features that vary it from the standard Indonesian production sharing contract, the operator explains. The contract was signed as a joint operating body PSC with the participating interests negotiated by Lasmo to give a favourable revenue share.
More significantly, we were able to secure frontier incentive terms for all exploration within the contract area despite being close to major discoveries.
This means that the Malagot co-venturers will get a 35% share of revenues from oil production and 40% from gas compared to the standard 15% and 30% respectively. At the end of this, the third year of the exploration term, either 25% or the entire 100% of the licence will have to be relinquished.
YPF Malaysia, a subsidiary of the Spanish/Argentinean major Repsol-YPF, is inviting partners to come on board its block SK 301 production sharing contract off Sarawak. A significant portion of the operator's 75% net interest is being offered in this block, which lies in the virtually unexplored West Luconia delta. Only three wells have been sunk to date on block SK 301, which covers an area of 8164 square kilometres.
Two exploration and one delineation well have been drilled on the PSC where water depths range from 100 metres to 150 metres. One of two drilled by Shell in 1970, L4-1x, is a proven gas discovery with reserves estimated to be in the order of several hundred billion cubic feet, YPF says.
The third well, Idemitsu's 1988 Hibiskus-1, was drilled 1.6 kilometres down-dip of the Shell find seeking an oil leg. Although good oil and gas shows were again encountered within the objective Cycle V sand, RFT tests recovered only water with small amounts of gas, the operator adds.
The $13 million exploration commitments for the five-year exploration term on SK 301, which expires on 29 November 2003, include the acquisition of 3000 kilometres of new 2D seismic and the reprocessing of 1500 kilometres of existing data -- this was satisfied in 1999.
Still outstanding is the drilling of two wells with an aggregate depth of 6000 metres and the operator has already lined up the semisub Hakuryu III for December.
SK 301 has high potential for the discovery of significant hydrocarbons. Although the area has been very lightly explored indeed, the only two exploration wells have encountered both oil and gas.
The West Luconia delta petroleum system appears to be analogous with the Baram delta, with similar trapping potential in growth fault traps, hanging wall rollovers and faulted anticlines. The block has the potential for an early discovery within a relatively short cycle time, YPF says.
Approximately 14 leads have been identified as potential prospects in the block, which corresponds to the northern half of Shell's former SK1 block. This was relinquished in 1976 and subsequently acquired by Idemitsu, which itself withdrew in 1990 after its unsuccessful search for an oil leg with the Hibiskus well.
YPF's sole existing partner is Mitsubishi, which has 25% participating interest, although Malaysian upstream company Petronas Carigali has the option to acquire 15% net when the commitment is satisfied.
Indonesian private operator Medco's subsidiary Exspan Myanmar Labuan is in the meantime hoping to find a farminee for its two exploration permits onshore Burma -- MOGE-3 and RSF-5.
Exspan, which has reached the end of the third year of its exploration term on the licence says it has secured a verbal agreement from the Burma government to allow it a nine-month moratorium in which to attract farm-in partners. Exspan has already spent $16 million on exploration in the two blocks, which exceeds the $13 million minimum commitment during the four years.
Since Exspan signed the production sharing contracts in July 1997 it has acquired 250 kilometres of seismic and sunk two exploration wells that tested non-commercial gas.
The operator says it has identified at least two untested prospects and six structural leads in both blocks that are located onshore central Burma about 400 kilometres to 500 kilometres north-west of the capital Yangon.
The most mature one is the Pun Shi prospect located in the north-eastern part of the MOGE-3 block, having mean potential reserves of 8 million barrels of oil with an upside potential of 18 million barrels. The second prospect and seven leads are estimated to contain at least 10 million barrels of oil and 100 billion cubic feet of gas, Exspan says.
The operator's proposed terms allow a farminee to earn up to a 75% working interest in the blocks in return for drilling one well in MOGE-3 and conducting a 200-kilometre 2D seismic programme in both blocks at an estimated total cost of $5 million. The two blocks have a combined area of 2510 square kilometres.
Operationally the blocks are easily accessible by road as well as by river. They are located near the Irawaddy River, which would facilitate the transportation of equipment and crude oil in the early phase of development, Jakarta-based Exspan adds. Burma offers a ready market for any oil found as domestic production has slumped from around 35,000 barrels per day in the 1970s to some 10,000 bpd. |
