BP regenerating Java Sea gas production through Kangean
Buying Britoil continues to pay off for BP. One of the company's overseas assets was a 40% stake in Arco's Kangean PSC in the East Java Sea: this has since matured into one of Indonesia's key offshore gas developments.
Pagerungan, in 55 metres of water, was the first commercial discovery in the block, in 1985, but according to UK analysts Wood Mackenzie, at least 20 other leads and prospects have since been identified within the concession. Depending on their commerciality, up to 6.5 tcf might be accessible within the Kangean block.
In 1988 PT Bimantara Citra farmed into the PSC, reducing BP's stake to 36% and Arco's to 54%. Most of the appraisal work on Pagerungan was by then complete. The partners then moved on to appraise another discovery, West Kangean, culminating in an extended production test to assess the production performance of the tight, low porosity reservoir.
According to Wood Mackenzie, the partners are still evaluating the reservoir quality rock encountered in two of the West Kangean wells.
Meantime, development of Pagerungan proceeded leading to first gas in January last year. Nine wells are currently producing, seven emanating from the PGA wellsite on Pagerungan Island, with two subsea tiebacks to the tiny island's processing facilities. These include two trains capable of processing up to 400 mcf/d in tandem; two condensate storage tanks (150,000b/d capacity combined); and an offshore loading and metering system.
To enable the development to go ahead, infrastructure had to be built up from scratch on the island, including an airstrip, harbor, communications facilities, accommodation and a mosque.
Gas output from Pagerungan last year was below expectations, on average 212 mcf/d: this was due to initial offtake problems. Forecast average for 1995 is 300 mcf/d, rising to a peak of nearly 400 mcf/d by 1997. Future plans include two new subsea well sites (PGC and PGD) west of Pagerungan Besar.
To sustain production levels long-term, a five-well development drilling programme should start next year, with up to five more wells possible around the turn of the century. Export compression facilities are also expected to be installed in 1998 at a cost of around $80 million.
Gas is sold to Indonesian electricity and gas utilities PGN and PLN: it is transported through a 28-in. diameter, 430 km long pipeline (360 km of this offshore) to Gresik. Current throughput capacity is 600 mcf/d, says Wood Mackenzie, although this could be pushed to 1 bcf/d through mid-point compression. Condensate is exported via a 2.5 km pipeline and a single point mooring system offloading to tankers.
Subsea shift
A much bigger subsea development is planned of the Terang/Sirasun accumulations located around 110 km southwest of Pagerungan. Terang was actually the first Kangean discovery, in 1982, but at the time infrastructure and buyers were lacking for the gas.
However, another gas discovery not far to the east in 1993, Sirasun-1, led to follow-up appraisal wells last year of this structure and Terang. Most were successful. Three wildcats were also drilled this year on flank prospects, two of which, Batur-1 and Kubu-1, tested gas at 19.5 mcf/d and 12.7 mcf/d respectively.
Arco also shot a further 18,750 line km of 3D seismic over the discovery areas last year, and more surveys are expected in 1996-7, including coverage of the north-east corner of the Kangean block.
Development of Terang and Sirasun is now under way, with first gas probable around early 1998. Thirty subsea development wells have been lined up: drilling of eight to 10 wells should start on Ternag in 197, followed by a similar number on Sirasun around 200, with the final batch due around 2002 on Sirasun East.
Reportedly, these wells (in water depths exceeding 350 metres) would be linked to a barge via umbilicals. The gas - Arco puts reserves at Terang and Sirasun at around 1.1 tcf - would head to Pagerungan Besar for processing through a 110 km pipeline, then for export through the existing infrastructure. Costs for Terang/Sirasun could be $600 million, including the new pipeline, with a 10-year gas sales contract currently being negotiated. West Kangean could also be a subsea development in the new decade.
Wood Mackenzie's latest rankings for Indonesian upstream players has BP unchanged from last year in 14th position, with assets valued at $272 million. BP also has 50% of one exploration block in the Java Sea, Sakala Timur, with the Indonesia upstream leader Mobil. No commercial discovery has yet been reported.
Six places higher than BP is Lasmo, despite selling its shares this year in two of its three offshore Indonesia interests. Most of its $600 valuation stems from its LNG projects onshore East Kalimantan.
This July, Lasmo sold its 23.4% operating share in the Malacca Strait PSC to Kondur Petroleum. Malacca Strait, a series of small of and onshore fields in central Sumatra, was Lasmo's first major overseas purchase in 1982.
In January, Lasmo also sold its 18.75% stake in the Kakap PSC in the West Natuna Sea (which contains four small, offshore oilfields) to Minora Resources. As part of the deal, Minora also took 50% of the adjacent Cumi-Cumi PSC from Lasmo: this is now the company's sole asset offshore Indonesia. Four wells have been drilled on this PSC so far, with one in 1992 encountering oil and gas shows.
More recent seismic revealed prospective features in the south-east of the block. A wildcat is now planned for a prospect labeled CH.
A third UK company active off Indonesia since August 1992 is British Gas, which holds 95% of the Muturi Concession off and onshore western Irian Jaya. Between September 1994 and January 1995, 304 line km of 2D seismic was acquired in the block, and a wildcat is planned early in 1996.
Copyright 1995 Offshore. All Rights Reserved.