Petronas upbeat on two LNG projects

Petroleum Nasional Bhd (Petronas) has announced successful gas production from the Berantai Field and the drilling and testing of the first well at the Balai Cluster, Malaysia’s first and second risk service contract (RSC) areas respectively.

Petronas also announced the discovery of gas in Block PM307.

Berantai’s Gas liquefied natural gas (LNG) production from the Berantai Field has come on stream on October 20.

The gas is currently being exported at a rate of 50 mmscfd from the field’s first three wells and is expected to achieve 80 mmscfd with the addition of two wells by year-end.

The gas is processed at the Berantai FPSO and exported to the existing onshore terminal at Kerteh.

The RSC for the Berantai Field, which is located offshore Terengganu, was awarded by Petronas in January last year to Petrofac Energy Developments Sdn Bhd and SapuraKencana Petroleum Bhd.

The Bentara-2 well, the first well to be drilled in the Balai Cluster RSC area, has been successfully tested, achieving a stable oil flow-rate that ranges between 1,600 and 2,200 barrels per day.

The well has achieved its target depth of 2,830 m and initial estimates show that it contains a reserve of 100m of hydrocarbon reservoirs. — Bernama

Dialog expects up to 20% return from US$1.2bil Bayan

Oil and gas services provider Dialog Group Bhd has projected an internal rate of return (IRR) for the Bayan oilfield project located offshore Bintulu to be around the mid-teens to 20% of the costs of US$1.2bil.

The company recently signed a 50:50 joint venture with Halliburton International Inc to redevelop the oilfield over a 24-year period, the second upstream venture after the development of the Balai marginal field cluster, a joint venture with Sydney-based Roc Oil Co Ltd and Petronas Carigali Sdn Bhd, the unit of Petroliam Nasional Bhd (Petronas) involved in exploration.

Dialog's executive chairman Ngau Boon Keat said at a media briefing following the company's AGM that the IRR would depend largely on how much of the oil could be recovered with the available technology.

“If we have the technology that can help push more oil out, then the IRR will be better,” he said, adding that visible growth in the company's upstream oil and gas business would take several years.

Ngau said the venture into the upstream business has been “very positive” for the company with the Balai marginal field (in which Dialog has a 32% stake) having produced first oil before Petronas' second-half 2013 deadline.

He declined to comment on how much barrels of oil equivalent still remained in the Bayan oilfield but said about 30% of the oil has been extracted from the 30-year-old field. Ngau was also cautious as to whether the Bayan project value could go up but expects the project to start contributing to revenue from financial year ending June 30, 2014 onwards.

“We're targeting to produce from the oilfield before the end of the year,” he said.

Ngau added that the income from the Balai marginal cluster, in which the company together with joint venture partners have a 15-year risk service contract with Petronas, would only start generating income in four to five years.

Analysts have been positive on the company's upstream venture, which they said would add to the company's recurring income stream.

The company plans to have equal 1/3 contributions to revenue from the upstream, terminal and specialist services from 2016 onwards from the two-thirds contribution coming from specialist services currently.

“This is our plan in terms of revenue contribution as the earnings grow bigger,” Ngau said, adding that the partnerships with companies such as Royal Vopak NV, Halliburton, Roc and Shell brought in the technology especially for enhance oil recovery projects.

Dialog also announced in September an expansion of the company's presense in Pengerang, Johor, where it would be part of a joint venture with Royal Vopak and the Johor state government in the building of a RM4.08bil liquefied natural gas storage terminal.

The company together with Royal Vopak is developing a RM5bil petroleum storage terminal in Pengerang. Both projects are part of Petronas' RM60bil integrated refinery and petrochemical complex expected to be commissioned by the end of 2016.

Shell Malaysia Signs New Exploration Contract

Shell Malaysia announced the signing of a new production sharing contract (PSC) with PETRONAS to explore for oil and gas offshore Sarawak.

The SK319 PSC will see Shell undertake an initial 3 year exploration program to comprehensively explore an area totalling 2727 square kilometres within block SK319 in Central Luconia, offshore Sarawak. Sarawak Shell Berhad is the operator and will partner PETRONAS Carigali with a 50:50 participating equity split.

The new PSC forms part of Shell’s Low Cost Exploration & Development (LCD) focus that will allow the company to carry out a multi-well exploration campaign to further explore and de-risk the mature carbonate pinnacle play in Central Luconia.

Iain Lo, Shell Malaysia Chairman and Managing Director of Sarawak Shell Berhad commented, “The successful execution of this new PSC and Joint Operating Agreement (JOA) marks another important milestone for Shell in Malaysia after the signing of the SK318 and 2B exploration contracts for offshore Sarawak earlier this year. This is the third operated exploration PSC that Shell Malaysia has signed in 2012 and adds to Shell’s growing exploration position in Malaysia."

As production sharing contract operator to PETRONAS, Shell is the largest gas producer in Malaysia, accounting for 60% of Malaysia’s gas production. Ninety percent of the gas produced is earmarked for the PETRONAS LNG complex in Bintulu.

Petronas makes major gas discoveries in Kuang and Tukau Timur

Petroleum Nasional Bhd (Petronas) has made two major gas discoveries at the Kuang North and Tukau Timur fields, offshore Sarawak with estimated gas-in-place of about 4.4 trillion std cu ft (tscf) net hydrocarbon.

The national oil company said the Kuang North field, located in Block SK316, was drilled last month via two exploration wells Kuang North-1 and Kuang North-2.

The Kuang North-2 well, which was drilled to a depth of 3,223m, penetrated 636m of gas column.

“Preliminary assessments indicated that gas-in-place for the Kuang North field is about 2.3 tscf net hydrocarbon,” it said in a statement yesterday.

It said other notable recent discoveries in Block SK316 are the Kasawari and NC8 gas fields.

Most importantly, Petronas said, unlike other previous carbonate gas discoveries, the gas at Kuang North was found in the older carbonate section, opening up a new exploration play-type with substantial hydrocarbon potential in the older carbonate reservoirs offshore Sarawak.

It said Tukau Timur Deep-1 is the first completed high pressure high temperature (HPHT) well in Sarawak and also the deepest vertical well to be drilled by Petronas.

“The well was drilled to a depth of 4,830m and discovered 12 gas bearing reservoirs with total net gas sand of 183m.

“Preliminary assessments indicate the total gas-in-place for TukauTimur Field to be about 2.1 tscf.

“Subsequent work will commence to estimate the range of recoverable resource volumes. Tukau Timur Deep-1 is located in Block SK307 which is equally operated by Petronas Carigali with Sarawak Shell Bhd as partners.

“The well was spudded in May and completed in November,” it said.

An oil and gas analyst anticipated this development would give a boost to the country's reserves that had been stagnant over the past decade.

As of January, Petronas has a reserve of about 21.4 billion barrels of oil equivalents.

Another sector analyst said that the newly-discovered gas were in shallow waters and quite sizeable.

“But, the actual development might only come in three to four years' time,” he said, adding that anything above a trillion tscf net hydrocarbon was usually worth developing.

In illustrating the price of gas, Japan pays about US$18 per mmbtu (million metric British thermal units) for liquified natural gas while in the United States, its is hovering around US$3 per mmbtu.

In Malaysia, the gas price is currently about RM14.05 per mmbtu.

Analysts recently noted that the demand for energy would rise on higher usage by households and businesses.

The gas supply of 1,250 million std cu ft per day (mmscfd) is essential to the power sector and the volume of 1,250 mmscfd of gas is critical to maintain the equilibrium of the power sector with respect to generation capacity plant-up, system security/reliability and sustainable customer tariffs.

Shell: Deepwater Gumusut-Kakap Field Commences Production

Shell Malaysia today announced the first oil production from the deepwater Gumusut-Kakap (GK) field, located about 120km offshore Sabah, Malaysia.

This early production, achieved on November 18th, 2012, is ahead of the completion of the GK's Floating Production System (FPS). This is made possible by an innovative linking or tie-back of two of GK's production wells to the Kikeh production facility, the country's first deepwater development also offshore Sabah, operated by Murphy Sabah Oil.

The GK field, located in waters up to 1,200 metres deep in Blocks J and K, is being developed using 19 subsea wells with oil to be exported via a pipeline to the Sabah Oil and Gas Terminal in Kimanis.

The project will eventually employ the FPS - the region's first deepwater FPS - once it is fully on stream. The GK Kikeh tie-back early production option is an interim measure that will produce 25,000 barrels of oil per day.

"We are delighted that we have started production from the Gumusut-Kakap field," said Iain Lo, Chairman of Shell Malaysia.

"The tie-back is an innovative solution that will allow us to produce from the GK field ahead of the completion of the FPS, currently being fabricated by Malaysia Marine and Heavy Engineering (MMHE) in Johor. We thank Murphy for their partnership and cooperation that has enabled this opportunity. We look forward to ramping up the production once the FPS goes on stream."

Projects such as GK are critical to the industry's long term sustainability in Malaysia as the country develops its deepwater resources. Shell is playing an active role in developing a deepwater service industry in Malaysia by bringing its technology and expertise into the country.

The company began deepwater exploration and production research in the 1960s and has been a global leader in deepwater exploration and production for the last 30 years.

In January last year, Shell announced an investment of RM5.1 billion to further develop oil and gas facilities across the country. The major part of which were three projects that included a new diesel processing unit at Port Dickson refinery, a new solid wax plant at Shell Middle Distillate Synthesis (SMDS) in Bintulu, Sarawak and the GK deepwater development offshore Sabah.

The wax plant is now operational while the Port Dickson and GK projects are ongoing.

The Gumusut and Kakap fields were combined into a single development under a Unitisation and Unit Operating Agreement signed by co-ventures Shell Malaysia, Murphy Sabah Oil, PETRONAS Carigali and ConocoPhillips Sabah in 2006.

Shell Malaysia and ConocoPhillips Sabah each hold 33% interests in the development, PETRONAS Carigali has 20% and Murphy Sabah Oil has 14%. Shell Malaysia upstream company, Sabah Shell Petroleum Company, is the operator of the development.

Petronas announces successful gas production from Berantai Field

Petroliam Nasional Bhd (Petronas) has announced successful gas production from the Berantai Field offshore Terengganu and the drilling and testing of the first well at the Balai Cluster offshore Sarawak, respectively Malaysia's first and second risk Service Contract (RCS) areas.

Petronas also announced the discovery of gas in Block PM307.

It said natural gas production from the Berantai Field was successfully brought on stream on Oct 20, 2012.

"The gas is currently being exported at a rate of 50 mmscfd from the field's first three wells and is expected to achieve 80 mmscfd, with the addition of two wells by the end of this year," it said in a statement today.

The gas is processed at the Berantai production, storage and offloading (FPSO) facility and exported to the existing onshore terminal at Kerteh.

It said the RSC for the Berantai field, which is located offshore Terengganu, was awarded by Petronas in January 2011 to Petrofac Energy Developments Sdn Bhd and SapuraKencana Petroleum Bhd.

Meanwhile, Petronas said the Bentara-2 well -- the first well to be drilled in the Balai Cluster RSC area -- has been successfully tested, achieving a stable oil flow-rate that ranges between 1,600 and 2,200 barrels per day.

"The well achieved its target depth of 2,830m on Oct 20, 2012 and initial results indicate an estimated 100m of hydrocarbon net pay in stacked reservoirs in the Bentara Field," it said.

Petronas also said that the Balai Cluster RSC covers four fields offshore Sarawak, namely Balai, Bentara, Spaoh and West Acis.

The RSC was awarded to Roc Oil, Dialog Group and Petronas Carigali on Aug 16, 2011 and was later re-assigned to BC Petroleum Sdn Bhd, a joint venture company consisting of three shareholders. – Bernama

Gas find for Lundin offshore Malaysia : Tembakau-1

Offshore staff

STOCKHOLM, Sweden – Lundin Petroleum has discovered gas with the Tembakau-1 well in the PM307 block off Peninsula Malaysia.

The jackup West Courageous drilled the well vertically to a depth of 1,565 m (5,134 ft) in 67 m (220 ft) of water. It intersected a series of stacked gas pay sands in the Miocene objective.

Nearest oil and gas infrastructure is 30 km (18.6 mi) to the east.

Lundin and partner Petronas authorized extensive data acquisition, including rock and fluid samples, pressure profiles and mini-DSTs. Further studies will follow to assess recoverable resources.

Ashley Heppenstall, president and CEO of Lundin, said the find was “very encouraging given its location in an unexplored area of PM307. We are hopeful this discovery has the potential to be commercial on a stand-alone basis given its close proximity to existing gas infrastructure and the strong demand for gas in Peninsular Malaysia.

“The discovery paves the way to evaluate further follow-up potential in an area where Lundin Petroleum acquired a large 3D survey in 2011.”

West Courageous is heading south to drill the fifth and final well of Lundin’s 2012 exploration campaign, the Ara-1 well in the PM308A block.

Penghantaran tiba di Kuantan, dikawal ketat polis

Lebih 100 kontena yang disyaki mengandungi bijih nadir bumi telah tiba di Pelabuhan Kuantan hampir tengah malam semalam di bawah kawalan ketat luar biasa pihak polis.

Pengerusi Gabungan Stop Lynas, Andansura Rabu, yang berada di pelabuhan, memberitahu Malaysiakini bahawa sebilangan besar anggota polis dan kakitangan Lynas berada di dok malam tadi.

Menurutnya, kira-kira 102 kontainer tiba di Pelabuhan Kuantan pada kira-kira jam 11 malam, yang beliau syaki mengandungi bahan mentah untuk loji nadir bumi Lynas di Gebeng.

Pada Isnin, Lynas mengumumkan pemprosesan bahan mentah akan 
bermula bulan depan selepas memenangi kes mahkamah terhadap aktivis yang menentang kehadiran loji, yang bimbang bahaya sisa radioaktif.

Menurut Andansura, pengangkutan kontainer tersebut ke loji tersebut, sejauh kira-kira 7km jauhnya bermula antara jam 1 pagi hingga 2 pagi. Katanya, ia dipindahkan oleh trak kontena yang diiringi oleh pihak pollis dan proses itu masih berterusan pada 8 pagi.

Tiada gambar dibenarkan

Walaupun dokumen pelabuhan tidak menyatakan bahan yang disimpan di dalam kontena tersebut, Andansura berkata kehadiran ramai polis mendorongnya untuk mempercayai bahawa ia adalah bijih nadir bumi dari Australia.

Beliau juga mendakwa bahawa polis telah menutup jalan utama dari pelabuhan ke loji tersebut, dan menggunakan tiga kereta polis untuk mengiringi trak kontena itu. Terdapat dua lagi kenderaan polis yang diletakkan di pelabuhan.

Polis menghalang Andansura dan beberapa aktivis anti-Lynas yang lain daripada mengambil gambar dan mereka berulangkali dilarang dari menghampiri kawasan itu.

Para aktivis berkata mereka mengesan ramai kakitangan dalam pakaian seragam Lynas di pelabuhan itu. Malaysiakini sedang berusaha mendapatkan pengesahan mengenainya daripada Lynas dan polis Kuantan.

Kontena yang disyaki itu, tiba ketika gabungan anti-Lynas Himpunan Hijau sedang mengadakan perarakan sejauh 300km dari Kuantan ke Kuala Lumpur, manakala satu lagi kumpulan SMSL (Save Malaysia, Stop Lynas) berada di Australia untuk melobi menentang loji tersebut. - Malaysiakini

Lynas Expects Malaysian Plant To Begin Production In December

RARE earths miner Lynas expects production at its controversial plant in Malaysia to begin in December after long delays caused by environmental and political concerns.

After a drawn-out approval process and several legal challenges from locals and activists, Lynas' advanced materials plant in Gebeng, Malaysia, currently has a temporary operating licence.

However, opponents, arguing the mine will pollute nearby land, are still seeking an interim stay on the licence and have appealed to the Malaysian High Court.

The delays to first production also has forced Lynas to raise $200 million by issuing new shares recently.

Lynas' share price has suffered, recently hitting an all-time low of 55 cents, down from $1.165 a year ago.

"I know this has been a testing year for everyone," executive chairman Nicholas Curtis told the company's annual general meeting in Sydney on Tuesday

"It has been a year when the noise around the company has reached an amplitude that is, quite frankly, not sustainable and very negative for us all.

"But, I have to say that short-term share market performance is not our main focus as management of Lynas.

"One to two tough years to bring the business to life need to be put in the context of the long-term vision we are realising.

"By the second half of calendar 2013, we expect to be moving towards full production capacity and have a business that has the potential to deliver sustainable and predictable earnings."

Production revenue was set to flow from the first quarter of calendar 2013, Mr Curtis said.

After reaching unsustainable highs, prices for rare earths have now fallen and growth in demand is expected to resume, possibly as soon as the second half of 2013, he said.

Rare earths are metallic elements used in products ranging from digital televisions, mp3 players and fluorescent light bulbs.

Petronas submits modified bid for Progress Energy

Petronas has submitted a modified bid for Canada’s Progress Energy Resources, a company source with knowledge of the matter said, after the Canadian government blocked a US$5.2 billion (RM15.6 billion) deal last month.
The oil company’s chief negotiator is back in Kuala Lumpur after submitting the revised bid in Canada, the source told Reuters today. The source did not say what the changes were from the original bid.

A Petronas spokesman declined to comment on the matter.

Canada blocked Petronas’s bid for Progress in October, with Industry Minister Christian Paradis saying it was unlikely to bring a “net benefit” to the country. Petronas and Progress are planning a multibillion-dollar liquefied natural gas plant on Canada’s west coast.

Petronas had previously said it plans to make further submissions to win approval.

The firm’s chief executive, Tan Sri Shamsul Azhar Abbas, was reported as saying by the Financial Times this week that Petronas would add more independent directors to the board of Progress to sweeten the deal.

The Canadian government, sources have told Reuters, wanted to approve the deal but was afraid doing so would tie its hands when reviewing a much more controversial US$15.1 billion bid by China’s CNOOC Ltd for Nexen Inc.

Shares in Nexen and Progress jumped about 3 per cent yesterday after a report suggested Ottawa might speed up its decision on whether to allow the Nexen deal. — Reuters