Gurdip Singh, Contributing Editor
Thailand has launched an international campaign to build long-term oil and gas reserves, given the strong 13% energy demand growth recorded since 1981. The government regularly reviews energy policies and since the 1990s has built international reserves to serve the domestic market.
Natural gas is driving Thailand’s economic growth, with national demand projected to reach 5 bcf/d (142 MMcm/d) in 2012, up by 3.3 bcf/d (93 MMcm/d) currently and just 130 MMcf/d (3.7 MMcm/d) in 1981. The Thais have conservatively estimated a 10% annual growth in gas demand through to 2012, baring an unforeseen economic turn.
This drive to find and own a huge base of hydrocarbon reserves is reflected in PTT Exploration and Production Public Co. Ltd.’s (PTTEP) budget increases over 2008-2012.
The Bangkok-listed PTTEP, a 65.73% subsidiary of the Petroleum Authority of Thailand (PTT), has had a good level of success, having built 38 projects in 14 countries.
PTTEP President Maroot Mrigadat says the company successfully expanded into four countries last year – Egypt, Bahrain, New Zealand, and Australia. PTTEP signed a 30% farm-in agreement with Total E&P Bangladesh earlier this year.
“It gives us a chance to work with many oil firms from all over the world,” Maroot says. “These new partnerships will give us new connections which will in the end help us to further expand our business to new frontiers.”
PTTEP has become a partner in blocks 17 and 18 with Total E&P Bangledesh, marking its first venture in petroleum E&P in South Asia. The 13,724 sq km (5,299 sq ft) blocks 17 and 18, some 150 km (93 mi) away from Chittagong, contain a high gas potential.
Maroot also wants PTTEP to be a global player in the international gas market and is eyeing a number of concessions closer to European markets.
The global E&P focus is to secure acreage in Angola, Kazakhstan, Libya, Nigeria, Papua New Guinea, Qatar, Timor Leste, and Venezuela, adds PTTEP Vice President for International Assets Somporn Vongvuthipornchai.
PTTEP has expanded globally, building up from 12 projects in four countries in 2000 to 38 projects in 14 countries by the end of 2007.
PTTEP is involved in 17 projects in Thailand, 14 in Asia-Pacific/Australia, Bangladesh, Cambodia, Indonesia, Malaysia, Myanmar, New Zeal- and, and Vietnam.
It has four projects in Bahrain, Iran, and Oman, and three projects in Egypt and Algeria.
Elaborating on the status of the 38 projects, Somporn says 22 were in exploration phase, four in development stage, and 12 were producing hydrocarbons.
The Thai government, which has brushed aside all politics and taken Myanmar natural gas, is preparing the domestic market for pipeline gas from neighboring Malaysia and Indonesia, while Bangladesh is the next step.
In addition to huge demand from the local power generating sector, the Energy Ministry, PTT, and PTTEP are promoting the use of compressed natural gas (CNG) in the transportation sector.
The Gastech conference held March 10-13 in Bangkok saw the top level Thai force approaching the new ventures, represented by some 300 companies from around the world.
The country’s highest decision-makers, led by princess Maha Chakri Sirindhorn, attended. Deputy prime minister Sahas Bunditkul, energy minister lieutenant general Poonpirom Liptapanlop, and PTT CEO and president, Prasert Bunsumpun, studied the energy opportunities while hosting the event.
Poonpirom underlined the importance of imported energy and urged PTT to press on with its domestic projects, which include a series of pipelines from offshore gas fields to onshore processing plants.
Poonpirom expressed satisfaction with the progress of the country’s first liquefied natural gas (LNG) import terminal, which is being built in two phases, to import 10 million tons (9 million metric tons) of LNG per year, starting from 2010 onwards.
PTTEP’s proved reserves were approximately 946 MMboe at the end of last year, comprising about 196 MMbbl of crude oil and condensate, and 4,884 bcf (138 bcm) of natural gas. Based on a 220,000 boe/d projection, the reserves could last another 12 years, which industry analysts say were comparative to the average 10-15 year reserve life that international E&P companies expect.
PTTEP increased its 2007 revenue by 6% to Bt96.77 billion ($3.1 billion) and net income improved to Bt28.46 billion ($903 million) from Bt28.05 billion ($890 million) in 2006 while expenses increased by 9% to Bt44.49 billion ($1.4 billion).
Investment
PTTEP is expected to make Bt59.8 billion ($1.9 billion) capex and Bt21.43 billion ($677 million) opex investments this year. Its 2009 capex and opex are budgeted at Bt50.05 billion ($1.6 billion) and Bt19.3 billion ($610 million).
PTTEP will invest Bt81.23 billion ($2.6 billion) on exploration, development, and production this year. Of this, Bt62.265 million ($2 million) will be used for projects in Thailand and overlapping areas with neighboring Malaysia; Bt7.77 billion ($245 million) will be invested in Myanmar; Bt6 billion ($190 million) will be used in the Middle East and Africa; Bt4.43 billion ($140 million) will be invested in Vietnam; while Bt765 million ($24 million) will be invested in Indonesia, Cambodia, and New Zealand.
PTTEP has increased its petroleum sales volumes target for this year by 24% to 223,334 boe/d. This is made possible by additional output from new projects including Arthit, Arthit North, Vietnam 9-2, and G4/43 fields, says Maroot.
PTTEP’s petroleum proved reserves as of Dec. 31, 2007, increased by 23 MMboe/d year-on-year to 946 MMboe/d. The increase came from the addition of Algeria 433a and 416b blocks, and projects under the Malaysia-Thailand Joint Development Authority (MTJDA) overlapping block B17.
The projects include the ongoing multi-billion dollar field development in MTJDA, Vietnam 9-2, Arthit, Oman, Yetagun, Yadana, B8/32 and 9A, S1, Pailin, and Bongkot.
Long-term plans are to further expand production from the Myanmar projects including Yetagun and Yadana, Phase II of the MTJDA-B17 block, Arthit Phase II, G9/43, Pailing Phase III, Oman 44 Phase II, Oman 58, Cambodia B, Iran Saveh, and Indonesian concessions.
Thailand has always maintained a strong interest in Indonesia’s D-Alpha field in the Natuna Sea, although it remains a big challenge for developers given its 70% carbon dioxide (CO2) content in the 444 tcf (12.5 tcm) of gas reserves. But the government wants PTTEP as one of the main players due to the large regional reserves being closer to home, which will come with a cheaper pipeline supply option. The D-Alpha has been on the drawing board for more than two decades.
Projects
PTTEP’s top priority is the Arthit project in the Gulf of Thailand, which started producing on March 26, 2008. PTTEP has invested about $1 billion in Arthit, one of the three big natural gas projects in the south of the Gulf of Thailand. The other two projects are Bongkot which produces 630 MMcf/d (17 MMcm/d) and the MTJDA-B17 Project which will start production in 2009 at 270 MMcf/d (7.6 MMcm/d). The three projects will have a combined production rate of 1.5 bcf/d (42 MMcm/d) by 2012.
PTTEP is operator with 80% interest in the 3,682-sq km (1,422-sq mi) Arthit Project, about 230 km (143 mi) from the shores of Songkhla Province in the Gulf of Thailand. The partners are: Chevron E&P with 16% and MOECO Thailand with 4%.
The $500 million platform will produce 330 MMcf/d (9 MMcm/d) of natural gas and condensate and 10,000-13,000 b/d of oil, starting from the first quarter of this year, and meeting about 10% of the domestic demand.
The 16,750-ton (15,195-metric ton) Arthit central processing platform is claimed to be the largest in the Asia-Pacific region. Built over about 30 months time, the platform has gone through many processes ranging from design, engineering, procurement, equipment, and fabrication of the topside, says Maroot. Other facilities in place at Arthit include 90 production wells, living quarters, six wellhead platforms, five gas pipelines, and a condensate pipeline.
The platform is highly automated and can be operated remotely in its Gulf of Thailand field which is part of Navamindra Petroleum Area, a royal name gives to the gas-rich basin by the Thai monarch.
Maroot points out that the Thai government would earn more than Bt40 billion ($1.3 billion) income in the form of royalty, tax, and remuneration following its decision to give 10-year extension to the Bongkot field in the Gulf.
Operated by PTTEP, Bongkot is hoped to produce gas and condensate from block B15 until 2022 and from blocks B16 and B17 until 2023.
Maroot said that the extension, given last October, makes it possible for the company and its partners to make additional spending of more than Bt100 billion ($3.2 billion) in Greater Bongkot North (GBN) and Greater Bongkot South (GBS), which is a high potential area but not being developed. The first phase of GBS development will start next year and continue until 2011.
PTTEP plans to build a production platform, a living quarters platform, wellhead platforms, and drill development wells at GBS with the aim to increase the production volume by 300 MMcf/d (8.5 MMcm/d). PTTEP will further conduct exploration and appraisal programs and develop the discovered structures at GBN. More wellhead platforms and more development wells are needed for GBN, it said.
Bongkot currently produces about 600 MMcf/d (17 MMcm/d) of natural gas and 18,000 b/d of condensate, meeting about 20% of national gas consumption in the country. GBS development will push Bongkot production capacity to about 900 MMcf/d (25 MMcm/d).
Bongkot field has been in production since 1993. The field is operated by PTTEP with 44.4445% interest. The remaining stakes are owned by Total E&P Thailand Co. Ltd. (33.3333%) and BG Asia Pacific Pte Ltd. (22.2222%).
Other main projects
Pailin Project (PTTEP’s share 45%)
Average natural gas sales are expected to amount to 386 MMcf/d (11 MMcm/d) from the field in block G7/50 in the Gulf. The capex is mainly for the drilling of 67 development wells, nine appraisal wells, and the construction of platforms and pipelines in the Gulf of Thailand field. Last year, four wellhead platforms were installed while 49 development wells and five exploration wells were drilled. In 2007, production was 458 MMcf/d (13 MMcm/d) and 18,600 b/d of condensate.
B8/32 & 9A (PTTEP’s share 25%)
The total expected average crude oil sales are 44,987 b/d from the field in the Gulf. The capex is mainly for the drilling of 56 development wells, two exploration wells, and the construction of production platforms and pipeline. The field produced 49,500 b/d of crude and 210 MMcf/d (6 MMcm/d) of gas while seven wellhead platforms were installed and 63 development wells and one appraisal well were drilled.
MTJDA Project (PTTEP’s share 50%)
The current plan for the MTJDA Project is to start gas production in the second half of 2009. Total expected production rate will be at 270 MMcf/d (7.6 MMcm/d) and will increase to 335 MMcf/d (9.5 MMcm/d) in 2010 from the Gulf. The capex is mainly for the construction of a production platform, living quarters platform, wellhead platforms, and drilling of 18 production wells.
Arthit North Project (PTTEP’s share 100%)
The current plan for the Arthit North Project is to start up gas production, by using an FPSO in 2008. Total expected initial production rate will be at 120 MMcf/d (3.4 MMcm/d) from the Gulf field. The capex is mainly for the construction of three wellhead platforms and the drilling of 27 development wells.
Myanmar M9 & M11 Project (PTTEP’s share 100%)
The capex is mainly for the drilling of three exploration wells, two appraisal wells, and geological and geophysical studies including basic engineering, offshore Myanmar.
Myanmar M3 & M4 & M7 Project (PTTEP’s share 100%)
The capex is mainly for the drilling of two exploration wells plus geological and geophysical studies in the Gulf of Martaban.
Vietnam 9-2 Project (PTTEP’s share 25%)
The current plan for the Vietnam 9-2 Project is to start oil production in the second half of 2008. Total expected production rate will be at 20,000 b/d. The capex is mainly for the drilling of four development wells and the preparation of a production platform in the field, off Vung Tau City in Vietnamese waters.
Vietnam 16-1 Project (PTTEP’s share 28.5%)
The capex is mainly for the drilling of four appraisal wells and geological and geophysical studies in the field in Vietnamese waters.
