BHP and Phillips have been battling over the future of the Bayu-Undan gas condensate field in the Australia-Indonesia Zone of Cooperation Area (ZOCA) 91-12 and 91-13 in the Timor Sea for several years. However, it looks like the debate may have ended finally as BHP has decided to pull out of the field by selling its interest to Phillips.
BHP has sold its 23% interest in Bayu-Undan as well as its interests in the Elang/Kakatua/ Kakatua North oil field and interests in ZOCA 95-19, 96-20, NT/P55, and NT/RL2 to Phillips in a package deal. The sale will net BHP a profit of $69 million.
BHP said that the sale was part of the company's portfolio management strategy. The strategy is intended to allow the company to focus its Australian gas commercialization activities around its interests in the Northwest Shelf, Bass Strait, and ALNG. The new initiative will also allow an increased focus to adding new production from Laminaria, Corallina, and Buffalo off Western Australia, as well as Blackback in the Bass Strait.
Phillips has said that with the sale it expects that the development will now begin to move ahead much faster. The company is trying to secure approvals for the project, but several issues such as taxation from the Indonesian side have yet to be resolved.
The first stage of Phillips' plan involves a crude oil and liquefied petroleum gas liquids phase, expected to come onstream by 2003. The company has proposed an onshore natural gas plant near Darwin and the construction of a 500-km pipeline for delivery of the gas.
The sale of the interest is still subject to the approval of the government and the other companies with interests in the licenses. However, other Australian assets have also recently changed hands.
- British-Borneo has sold its 10% interest in the East Spar and 8.4% interest in the Harriet fields in the Carnarvon Basin to Apache for $80 million.
- Woodside has purchased New Corp's 10% interest in the Kipper Field and 23.53% interest in the Basker-Manta-Gummy fields in the Bass Strait for about $12 million.
Vietnam gas gets go-ahead
Development of the Lan Tay and Lan Do gas fields in Block 06.1 of the Nam Con Son basin off southern Vietnam can finally proceed. Three agreements have been signed between state-owned PetroVietnam and license-holders Oil Natural Gas Commission of India (45%), BP Amoco (26.67% and operator), Statoil (13.33%), and PetroVietnam (15%), which have cleared the regulatory hurdles concerning development.
As part of the licensing agreement on the block, development of the fields could not begin until the gas has been sold. The three agreements cover the sale of gas and condensate from the blocks, the transport solution and tariffs, and the approval from the authorities for the development, allowing the partners the security to continue work on detailed agreements for the development.
The gas will be delivered to shore via a 370-km pipeline to a receiving station at Dinh Co and will be used to fuel several power stations in the Phu My area.
The signing of the agreements mark the most extensive development project with foreign participation to date in Vietnam and ranks as one of the country's five top national projects. The potential value of the development is estimated to be $1.5 billion.
Negotiations for the development plan have been underway for the past four years, and, regardless of the agreements, still have a long way to go. The partners have said that there are 10-12 major outstanding issues that still need to be resolved before the project get the full go-ahead. This includes establishing a secure payment mechanism. Concerns have been expressed on securing a hard-currency return on the investment with the project.
However, development is expected to advance as fast as possible. "We've worked a ling time to come up with solutions for utilizing these proven gas resources and for making the project profitable," a Statoil representative said. "We're concerned to advance as fast possible in implementing the development."
The fields were discovered in 1992 and hold an estimated 58 Bcm of reserves.
Unocal's platform a record setter
Unocal has set two new records in drilling natural gas development wells at the Funan J platform in the Gulf of Thailand. The well, Funan J-13, broke the record for drilling speed in the Gulf of Thailand, and is believed to have broken the world record. The well was drilled at a rate of 5,145 ft per day, surpassing the previous Gulf of Thailand record of 4,720 ft/day set in 1997 on the Satun A-17 well. Funan J-13 was drilled to 9,862 ft (7,900 ft vertical depth) in only 46 hours.
The total Funan J platform development, which included 14 gas development or production wells, also broke the average penetration rate record for a drilling program on a platform, which averages about 14 wells. The average penetration rate of all 14 wells on Funan-J was 4,010 ft/day, 21% faster than the previous record of 3,300 ft/day set on the Satun-L platform in 1997. The total 14-well program was completed in only 61 days.
Tara Tiradnakorn, Vice President of Operations for Unocal Thailand, said, "The records achieved on the Funan J platform make it the most efficiently drilled development so far for Unocal Thailand."
The average cost per well for the 14-wells on the platform were $800,000 or $77.05/ft. The J-13 well cost $636,000 or $64.50/ft. Funan J is expected to produce about 46 Bcf of gas equivalent at a rate of 60 MMcf/d of gas.
Chevron to invest $150 million in Block B8/32
Chevron has upped the ante on its new oil and gas concessions in the Gulf of Thailand. The company has announced that it plans to invest up to $150 million annually over the next three to five years for its 743,000-acre Block B8/32.
Chevron has planned investment of $120 million in the block for this year, which will be upped to $150 million over the next three to five years. The company also hinted that if things pick up more rapidly, the investment could be increased. Chevron acquired the concession through the purchase of Rutherford Moran Oil. The company holds a 51.66% interest in the block and will assume operatorship on October 1 as part of a previous agreement with Thaipo, a subsidiary of Pogo Producing, who holds a 46.34% interest.
