Murphy Oil Pursuing Development of Gas Block

Murphy Oil Corp will further develop Block H gas reserves offshore Sabah through a Petronas-led floating liquefied natural gas (LNG) project.

A spokesman with Murphy Oil said the front-end engineering design (FEED) is expected to be awarded later this year, with plans to sanction the project in 2013.

"This type of schedule would have us producing first gas in 2016 or 2017," the spokesman said in response to Business Times' email query.

FEED is basic engineering which comes after the conceptual design or feasibility study. The FEED design focuses the technical requirements as well as rough investment cost for the project.

Murphy Oil has an 80 percent interest in deepwater Block H offshore Sabah, with Petronas Carigali Sdn Bhd holding the remaining 20 percent.

In early 2007, Murphy Oil announced a significant natural gas discovery at the Rotan well in Block H, and in early 2008, the company followed up Rotan with a discovery at Biris.

In March 2008, the company renewed the contract for Block H at a 60 percent interest, while retaining 80 percent interest in the Rotan and Biris discoveries. And in 2010, another natural gas discovery was made in Block H at Dolfin and the latest at Buluh.

"In partnership with Petronas, Murphy Oil is actively pursuing a development plan for these Block H gas discoveries, and is optimistic that a floating LNG development could produce gas by 2016," Murphy Oil said in a statement posted on its website.

On June 4, Petronas announced plans to build the country's first floating LNG by 2015 to meet the increasing future demand.

It then awarded the contract for the engineering, procurement, construction, installation and commissioning of the project to a consortium of Technip France S.A, Technip Geoproduction (M) Sdn Bhd, and Korea's Daewoo Shipbuilding and Marine Engineering Co Ltd.

The first floating LNG will be moored about 180km off the coast of Bintulu, Sarawak, and is designed to produce 1.2 million tonnes per annum of LNG.

Once on stream, the facility will boost Malaysia's total LNG production capacity to 26.9 million tonnes per annum from 25.7 million tonnes per annum currently.

Plans are under way for a second floating LNG facility offshore Sabah.

Murphy Oil has been active in Malaysia since 1999 and employs over 400 staff in the country.

The company has majority interest and operates six separate production sharing contracts (PSCs), covering about 6.7 million gross acres.

It has an 85 percent interest in discoveries made in two shallow-water blocks, namely SK309 and SK311 offshore Sarawak.

It has also a gas sales contract for gross volumes up to 250 million cubic feet per day from the Sarawak area with Petronas, and has prepared a multi-phase development plan for several natural gas discoveries on these blocks.

Apart from Block H gas reserves, Murphy Oil also holds a 60 percent interest in a PSC covering Block P offshore Sabah.

The company also has a 75 percent interest in gas holding agreements for Kenarong and Pertang discoveries made in Block PM311, located offshore Peninsular Malaysia.