Australia prepares to license new areas

June 1, 2001
In April, Australia's Minister for Industry, Science, and Resources announced the release of 42 new offshore petroleum exploration areas.

In April, Australia's Minister for Industry, Science, and Resources announced the release of 42 new offshore petroleum exploration areas. These include: 26 areas off the Western Coast; 5 areas off the Northern Territory; 1 area in the Territory of Ashmore and Cartier Islands adjacent area; 4 areas off Victoria; 3 areas off South Australia; and 3 areas off northwest Tasmania.

A group of geoscientists from the Australian Geological Survey Organization and representatives from Australia's Federal Department of Industry, Science, and Resources began meeting with foreign investors in May and will continue holding meetings to provide detailed information on the release areas and exploration opportunities through this month.

India receives bids

The Indian government received bids for 16 offshore and seven onshore blocks in the second round of the new exploration licensing policy (NELP-II) in which state-owned Oil and Natural Gas Corp. (ONGC) bid heavily. ONGC bid on all eight shallow offshore blocks, acting as sole bidder on three of them. A partnership of Reliance Industries Ltd. and Hardy Exploration and Production India Ltd. dominated the offshore portion of the offering, bidding for all eight deepwater blocks and half of the eight shallow water blocks. It was sole bidder on three of the deepwater blocks.

Wrangling continues over Timor Gap

Ownership of the Timor Sea has been in dispute on and off since the 1970s. In April, East Timor negotiators threw a new wrench into the cogs by claiming rights to Laminaria-Corallina-Buffalo oil fields and part of the Sunrise-Troubadour gas fields, which have not yet been developed. These fields lie outside the Timor Gap Zone of Cooperation. The East Timorese are contesting what they call an invalid 1972 negotiation of part of the offshore boundary between Australia and Indonesia. In their statement in April, the East Timorese refused to recognize the 1989 Timor Gap Treaty between Australia and Indonesia.

Now, it appears that the dispute is about to be settled. Australia government officials indicated last month that the two countries might resolve the boundary issue soon. With the healthy E&P investment climate, both countries stand to benefit from an expedient resolution of the problem, which could bring in investors who might otherwise take their money elsewhere.

Laminaria enhancement

BHP Limited announced approval for a production enhancement project on the Laminaria oilfield offshore Northwestern Australia. This project will accelerate production and access undeveloped reserves, adding up to 21 million bbl of production to the field over the first two years following startup, scheduled for mid-2002. The development includes drilling, completion, and hook-up of two new subsea horizontal wells into the Northern Endeavour floating production system. BHP holds 32.6% of the Laminaria field with operator Woodside Energy Ltd (44.9%) and Shell Development (Australia) Pty Ltd (22.5%). The Laminaria and Corallina oilfields are in offshore production license AC/L5.

Indonesia receives MOgPU

Conoco's new moveable offshore gas production unit (MOgPU) left Hyundai Heavy Industries in Ulsan, Korea, and moved to Block B PSC (production sharing contract) in the West Natuna Sea for commissioning. The MOgPU Hang Tuah is Conoco's answer to Indonesia's inability to market and export its gas. Indonesia has known gas reserves exceeding 100 tcf, but has been unable to sell it because the country lacks a developed domestic market. Offshore platforms were ruled out as an infeasible solution on the basis of cost and immobility. The Hang Tuah was built less expensively because it was constructed onshore. Conoco's new MOgPU can be temporarily locked in place for the duration of production, then can be cost-effectively relocated when new fields are brought onstream within the block. Conoco Indonesia Inc. Ltd., operates Block B PSC with a 40% interest in partnership with Inpex, (35%) and Texaco (25%).

Kekwa production gets a boost

Lundin Oil AB, Petronas Carigali Sdn Bhd, and PetroVietnam Exploration and Production announced the completion of a production enhancement program that increased Kekwa Field production by 30% to approximately 18,000 b/d. The group is also commencing a new exploration well on Block PM-3 CAA, offshore Malaysia/Vietnam. The project included the drilling of two new development wells and the workover of four existing wells.

Phase 2 of the PM-3 CAA project is on schedule, with first production of 250 Mmcf/d of gas and 40,000 b/d of oil planned for the end of the 3rd quarter 2003.

Production up in Rang Dong

Conoco, the largest foreign acreage holder in Vietnam, announced the successful completion of development well 15P in Block 15-2 in the offshore Cuu Long Basin. This well increased production in the Rang Dong field by 10,000 b/d to a daily output of 55,000 bbl, a new production milestone for the field. Conoco plans to invest an additional $500 million in this region over the next several years. Japan Vietnam Petroleum Co. Ltd. operates the field with 46.5% interest. Conoco holds 36%, and PetroVietnam holds 17.5%.

Cai Nouc changes hands

Lundin Oil AB subsidiary Lundin Vietnam Limited, Petronas Carigali Overseas Sdn Bhd, and PetroVietnam E&P, have agreed to purchase the combined interest of TotalFinaElf subsidiary Fina Exploration Minh Hai B.V. and PTTEP International Limited in the Cai Nouc Development Area offshore Vietnam.

This area contains a unitized portion of the Cai Nuoc/Kekwa field; so the reserves within the area will be developed as part of Phase 2 of the PM-3 CAA development. Inclusion of this area in the project will probably increase production rates when a market has been established for the gas reserves. Because the same partners have an interest on both sides of the Malaysia/Vietnam border, the Kekwa/Cai Nuoc Field should see efficient development.

Chevron shifts to oil

Chevron Offshore (Thailand) Ltd. is changing its focus from natural gas to crude oil because of the limited demand for gas in the area. Gas usage is projected to grow no more than 8% in the next five years, and local demand for gas will be met by long-term contracts that are already in place.

Santa Fe moves into South China Sea

China National Offshore Oil Corporation announced the signing of a new production sharing contract with Santa Fe Energy Resources (China) Limited. The contract covers the exploration area of Block 27/10 in the Pearl River Mouth Basin of South China Sea about 160 km south of Hong Kong. Santa Fe is contractually obligated to invest at least $10 million for exploration in the block within the contract period.