May 1, 2002
Unocal Corporation subsidiary Unocal Ganal Ltd. said it successfully tested an app-raisal well on the giant deepwater Gendalo-Gandang gas field complex offshore Indonesia in late March.

Big gas and condensates off Indonesia

Unocal Corporation subsidiary Unocal Ganal Ltd. said it successfully tested an app-raisal well on the giant deepwater Gendalo-Gandang gas field complex offshore Indonesia in late March.

The Gendalo-3 well, which is in the northern part of the field about two miles south of the Gandang-1 discovery well, was drilled in 5,082 ft water depth. Gandalo-3 flowed at 30 MMcf/d of gas and 2,200 b/d of condensate from a single interval between 11,559 ft and 11,638 ft. Production could exceed 90 MMcf/d of gas and 6,000 b/d of condensate.

Unocal's Gendalo-Gandang gas field offshore Kalimantan, Indonesia.
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The reservoirs for both of these appraisal wells are in pressure communication with pervious wells, which could mean significant resource potential. Unocal estimates that the complex could hold 2-2.5 tcf of gas in addition to 50-150 MMbbl of condensate.

Unocal Chairman and CEO Charles R. Williamson said the find demonstrates "this is a world-class, gas-condensate resource, which could supply gas to Pertamina's Bontang liquefied natural gas (LNG) facilities by the end of the decade, and more importantly, produce significant liquids even sooner." Work to certify this resource and plan development began early in the year.

Unocal Ganal operates the Ganal production sharing contract area with 80% interest. Eni subsidiary Lasmo Ganal Ltd. holds the remaining 20% interest.

In February, Unocal got a $350-million loan from the Overseas Private Investment Corp. (OPIC), a US government agency, for two Unocal oil and natural gas field developments in Indonesia. Both developments are being pursued with Pertamina, Indonesia's state oil company. The loan specifically targets two projects in the West Seno offshore oil and gas fields in the Makassar Straits off East Kalimantan.

West Seno I will see 20 new wells and construction of a deepwater platform, a floating processing unit, and two, 60-km oil and gas pipelines that will link the field to an existing terminal at Santan. The balance of the money will go to a second phase of development on the field. West Seno II will include construction of a second deepwater drilling platform and drilling of 20 additional wells. West Seno II will share processing and transportation facilities with the first project.

OPIC estimates the projects will generate $200 million of procurement in Indonesia and $66 million in the U.S. The agency said the loans for the Unocal-sponsored projects nearly fulfill a joint OPIC-US Trade Development Agency initiative launched last September to provide $400 million in financing for oil and gas investment in Indonesia.

Also in March, Malaysia's state-owned Petronas and Indonesia's Pertamina signed a memorandum of understanding with ExxonMobil Corp. for developing natural gas from the East Natuna Field. Negotiations are still in the early stages, and it could be some time before an agreement is in place. Because of the high carbon dioxide content, development is expected to be very costly.

Gas will be produced from D-Alpha Block, which holds an estimated 42-46 tcf of recoverable gas reserves. Petronas has expressed interest in purchasing as much as 1 bcf of gas from the block to help meet its increasing domestic gas need beginning in 2010.

ExxonMobil Indonesia Inc. operates D-Alpha Block with 74% interest. Pertamina holds the remaining 26%.

Looking to South China Sea for gas

Petronas is looking at potential gas sources in several areas of Southeast Asia, including the South China Sea. The company has joined forces with operator ExxonMobil to develop the Bintang Field.

The co-venturers recently addressed the issue of development, noting that technological advances will expedite the project. As part of the fast-track approach, the field will be developed using a minimum facility design to shorten construction and installation time and eventually to improve operating efficiency.

The Bintang Field will generate more gas for Malaysia. Plans are in place to produce 1 tcf, with peak production of 355 MMcf/d. Remotely operated platforms Bintang A and B will be installed in 3Q 2002. Drilling will begin in 4Q 2002, with gas production soon after. Plans are for gas to flow from the field along seven miles of new pipeline for processing, then to shore via existing pipelines. Design and production for the platforms will take place completely in Malaysia.

ExxonMobil is developing Bintang under a gas production sharing contract with 50/50 partner Petronas Carigali Sdn Bhd, a subsidiary of Malaysia's state-owned Petronas.

China National Offshore Oil Corp. (CNOOC) made significant gas discoveries of its own recently in the Western South China Sea. There were eight discoveries in all, with three in the Qiongdongnan Basin and five in the Yinggehai Basin. The five Yinggehai Basin wildcats (DF1-1S-1, 2, 3, and 4, and DF1-1N-1) are within 32 km of the DF1-1 gas field, owned 100% by CNOOC.

CNOOC intends to explore for and develop gas in the South China Sea as one of its primary objectives for 2002. The company plans to drill 40 offshore wells this year, most of them in the Bohai Bay, in search of oil, and in the South China Sea, in search of gas. The company has expressed interest in taking on foreign partners to move these projects forward.

Phillips Petroleum Company could be one of CNOOC's partners. The company recently announced its interest in pursuing offshore oil and gas projects in China. Phillips is already partnering with CNOOC on the Penglai 19-3 Field in the northern Bohai Sea, China's largest offshore oil field. Phillips is developing four blocks as part of this project: Hainan, Kuihuadao, Niuqing Deep, and Shuguang Deep.