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Although oil production at the Sakhalin-II integrated oil and gas project is expected to fall nearly 33% this year during the Molikpaq platform modernization, the far-reaching project is moving forward. Construction of prod-uction sites, a central complex, and a second platform are going ahead, with ExxonMobil announcing its plans to invest about $10 billion in development.

More investment in Sakhalin

Although oil production at the Sakhalin-II integrated oil and gas project is expected to fall nearly 33% this year during the Molikpaq platform modernization, the far-reaching project is moving forward. Construction of prod-uction sites, a central complex, and a second platform are going ahead, with ExxonMobil announcing its plans to invest about $10 billion in development. The schedule calls for completion of the site, including a central complex and a second platform, by 2006. Partners expect to begin year-round oil production late in 2006.

Meanwhile, bidding for Sakhalin-5 Block was to conclude by the end of 1Q 2002, according to the country's Ministry of Natural Resources. The Sakhalin Block was to be divided into four sub-blocks that would be put out for separate bids. This region off Russia's southeastern coast is reported to have probable reserves of 3.7 bbl oil and 600 tcf.

There has been some skepticism about the validity of reserves estimates put forward by the Former Soviet Union (FSU). Western analysts speculate that because Russia benefits from inflating its reserves estimates, the country intentionally overstates the extent of its hydrocarbon resources. However, Mikhail Khodorkovsky, CEO of Yukos, the largest fully privatized company in Russia, went on record at the Cambridge Energy Research Associates' annual meeting in Houston last month with assurances that Russian reserves are at least as high as the published numbers. "Oil reserves in the FSU are vastly underestimated by the Western experts," he said.

Woodside finds new oil province

In late January, Woodside Petroleum Ltd. announced that its Enfield-4 appraisal well in permit area WA-271-P offshore northwest Western Australia had found oil. A month later, Woodside announced that the discovery shores up the company's belief that the find could open up a new region.

Woodside Energy Managing Director, John Akehurst, said the appraisal well "supports Woodside's view that the WA-271-P permit can become a significant new oil province."

Combined estimated reserves have been placed at about 300 MMbbl. Now, the question is whether to develop the field alone or as a hub linked to the company's nearby Vincent and Laverda discoveries. The latter scenario, which is technically more challenging, would likely require agreement of joint venturers in the neighboring permit because Vincent straddles the boundary of WA-271-P and WA-155-P, Akehurst said. The tie-in approach also will delay field start-up by about a year. Woodside has 100% interest in the block.

Meanwhile, the North West Shelf Venture - in which Woodside is an equal partner with BHP Billiton Petroleum (North West Shelf) Pty Ltd.; BP Developments Australia Pty Ltd.; Chevron Australia Pty Ltd.; Japan Australia LNG (MIMI) Pty Ltd.; and Shell Development (Australia) Proprietary Limited - is moving forward. In March of last year, the six joint venture (JV) participants announced, in principle, to support the second trunkline. In December, the group announced that a second trunkline would be built from its offshore facilities, about 130 km northwest of Karratha, to its onshore plant on the Burrup Peninsula in Western Australia. The second trunkline will provide extra capacity to supply existing customers.

The JV announced the award for the second gas supply trunkline to Saipem subsidiary Saipem Comercio Maritimo in early February. The installation contract will involve the use of two state-of-the-art specialist installation barges, including the semisubmersible Semac 1, and includes:

  • Dredging a 20-km offshore section of the pipeline route,
  • Collecting and delivering the 12-meter-long weight coated pipe section from Batam Island, Indonesia,
  • Welding and laying the 134 km of pipeline, with anodes attached,
  • Flooding and pressure testing the completed trunkline.

The 42-in. diameter trunkline will provide sufficient capacity to feed LNG Trains Four and Five and allow for considerable growth in gas supply demand. Trains Four and Five will more than double the current LNG plant capacity from 7.3 to 16 MMt/y. Construction of the trunkline is scheduled for completion in April 2004 to coincide with completion of Train Four. First LNG production from Train Four is scheduled for mid-2004.

Exploration wells for deepwater Malaysia

Royal Dutch/Shell Group and Murphy Oil Corp. are planning to drill ten deepwater wells offshore Malaysia this year out of the 35 exploration wells that are planned for the region. Shell Malaysia will continue exploration drilling with one well in Block E offshore Sarawak and four wells in Block G offshore Sabah. The extent of reserves in these blocks has not yet been determined. Drilling could begin as early as April. Shell Malaysia plans to invest $5.25 billion in the region in the next five years. Of this, half will go toward upstream oil and gas projects. The company will spend about $264 million on E&P projects in 2002.

In late January, Murphy Oil reported positive results from its fifth appraisal well on the West Patricia oil prospect in Block SK309 offshore Sarawak in east Malaysia. Murphy planned a four-well program offshore Sabah beginning this month, with first oil expected in April. The company will use the Ocean Baroness, being upgraded in Singapore, for the program.

Murphy Oil encountered mostly gas with an exploration well at the South Acis site in Block SK311 offshore Sarawak, about 25 km from the West Patricia site late last year. Since the primary objective was oil, the company will evaluate this region later.

Murphy Oil submitted a development plan to Petronas for the offshore Sarawak West Patricia and expects to announce a development program this month. If this program moves forward, it will be Murphy Oil's first oil production in Malaysia.

Firsts for China

China National Offshore Oil Corp.'s (CNOOC) jackup, Bohai IX, left Dalian Port the first of the year en route to West Africa, where it will be under contract for a year. This marks CNOOC's first contract for overseas service as an independent contractor in the international drilling market.

The rig was converted in 1996 from a domestically designed accommodation platform into a multi-functional platform.

Another CNOOC first is the drilling of the Dongfang 1-1 well, the first in the offshore Dongfang oil field. The well will be in the Yingge Sea area, which has an estimated 1.08 MMcm of natural gas reserves. This first phase of a two-phase program will include a central offshore platform, an offshore mining platform, two under-sea pipelines, an underwater electric cable, and a land terminal.

In early February, ExxonMobil E&P Malaysia Bhd., a unit of Exxon Mobil Corp., had its first crude oil production from the Larut Field offshore Terengganu, in the South China Sea. This project is part of ExxonMobil's plan to develop marginal fields in an effort to offset production declines elsewhere.

Larut is an eight-leg steel jacket platform with a capacity for 36 wells. Oil and gas from Larut will flow through the Guntong D platform into the existing Tapis oil and gas system via 125 miles of new pipeline. The company said total cost for the project will reach $925 million.

ExxonMobil is field operator under a 50/50 production-sharing contract with Petronas Carigali Sdn. Bhd., a unit of Malaysian state-owned Petronas.

ExxonMobil E&P Malaysia's production accounts for about 50% of the country's total crude output and 70% of the gas consumption of the Malaysian peninsula.

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