FRANCE Total aiming for 1998 production from $1billion Myanmar development
Project partners to finance platforms and pipeline carrying Yadana gas to Thailand
Myanmar is developing into a major new offshore province for Total. The company is co-operator of the giant Yadana gasfield in the Gulf of Martaban: earlier this year it signed an agreement for long-term deliveries to Thailand, and potentially to Myanmar itself.
A pipeline will be constructed with spare capacity to tie in any further discoveries the Yadana partners might make. If the coming wave of operators in contiguous blocks, led by ARCO, find gas, they too could perhaps be accommodated in this line.
Discovery trail
A joint venture of JNOC/MOC discovered Yadana in 1982 with wildcat 3-DA-XA, which tested 15 MMcf/d in total from a single zone at around 2,000 meters depth. The following year a three km step-out, 3-DA-XC, tested gas at 19 MMcf/d.
Nearly ten years later, Total won the right to explore and appraise blocks M5 and M6 where these finds had been made, subsequently bringing in Unocal as a partner. Exploration began in December 1992, with a 3D seismic program of 6,000 sq km over the 3DA structure, followed in 1993 by four appraisal wells on the Yadana structure, all of which tested gas. Then in April 1994 a 2D seismic survey was shot covering 6,200 line km.
Edinburgh analysts Wood Mackenzie report that the Yadana reservoir is an Oligocene/Miocene platform carbonate structure, with excellent porosity and permeability features. And unlike producing reservoirs in the Gulf of Thailand, the structure is relatively simple and not heavily faulted. The gas is dry, with an H2S content of just 8-50 ppm, but it does contain up to 25% nitrogen.
Last year a memorandum of understanding was signed for gas supplies to Thailand between the two field operators, Myanmar Oil and Gas Enterprise (MOGE) and Petroleum Authority of Thailand Exploration and Production (PTTEP), with the latter taking a 25.5% interest in the project from Total and Unocal.
This January a sales contract was confirmed with the Petroleum Authority of Thailand (PTT). Conceptual/front end engineering for the development was due to finish by March: the most likely scenario is a central production and processing platform (CPP), bridge linked to an accommodation platform housing up to 50 people. A small number of satellites are possible, in the form of wellhead platforms or subsea completions.
The CPP would be a minimum processing facility, with its main function being dehydration. There are no plans, reportedly, to sweeten the gas offshore. No compression will be needed initially, but a compression platform is expected to be added later on.
Gas will be transported via a 36-in., 350-km submarine trunkline, landing near Zadi then continuing overland through a 60 km pipeline to the Thai border. From there, PTT will continue the line to the Ratchaburi region southwest of Bangkok to feed a new 2,800 MW power station.
Development drilling and platform costs are put at $700 million, with a further $60 million needed for the pipeline to the border. The project partners are expected to bear the full burden, with finance institutions apparently reluctant to channel investment funds into Myanmar owing to the country's economic and political situations.
MOGE is talking of financing a further 120 km spur line to Myanmar's capital Yangon, again to supply power stations. But doubts exist over where these funds would come from in such an impoverished nation. MOGE has an option to take a 15% stake in the Yadana project, which it is likely to do; however, this would have to be paid for in kind through its share of the gas production.
Production profile
The Yadana group is scheduled to supply PTT for 30 years, starting at 130 MMcf/d in mid-1998 and peaking at 525 MMcf/d in 2000 on current reckoning. Field reserves are put at 5.7tcf.
A separate gas transportation company will be formed to manage the pipeline, probably with the same participants. As stated earlier, spare capacity in this line could be used to move supplies from other fields. At the moment, Texaco's Yetagun fields in blocks M12, 13 and 14 are the only candidates.
Over a trillion cf of gas has already been discovered here, and Texaco was drilling on the blocks again last month. The second of a planned three-well program was known to have found gas shows. Texaco also signed up recently for a further block in the area, M10.
There are various options for Yetagun gas, which would include a 20-in. connector to the Yadana line. However, Total et al may decide to keep their line's spare capacity for themselves, says Wood Mackenzie analyst Declan Ryan, in case further finds are made on Yadana.
There are a number of other untested prospects on M5 and M6: neither Total nor Unocal, though, have mentioned any pending drilling exercises on these blocks.
Ryan believes, however, that given the extra pipeline capacity, the real value to Total of Yadana lies in supplying increased amounts of gas early on in the project, which can be achieved at little or no incremental cost, based on post-tax net present value calculations for Yadana.
Aside from financial institution skepticism, another hurdle the project partners are having to face is rebel opposition to Myanmar's rulers. The pipeline's proposed route crosses areas held by the Mon and Karen rebels.
Recently, attacks have been made on the pipeline's construction crews, with four Thai nationals thought to have been killed. However, Myanmar's army has launched a counter-assault on the Karen group which is understood to have been successfully suppressive.
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