Thailand is about to see a major surge in exploration by foreign companies the next 3 years.
With the tentative award of 33 petroleum concessions this summer, 17 companies are poised to spend at least $150 million for exploration during an initial 3 year obligation period, said Prakong Polahan, deputy director general of the Department of Mineral Resources
The 13th round of bidding resulted in a flurry of interest that contrasts with a slowing of the exploration pace in Thailand in recent years. Few new companies have tried to enter the Thai exploration scene in recent years, and most companies operating existing concessions had completed obligation work.
In other Thai upstream action:
- British Gas plc earmarked $110 million for gas exploration and development in Thailand during the next 5 years (see map, p. 15). At the same time, BG allocated $200 million for other projects, including gas distribution and cogeneration in Thailand and other countries in Southeast Asia.
- Unocal Thailand plans to install an early production system in Surat oil and gas field in the Gulf of Thailand for trial production beginning in December. Originally thought to be just a gas/condensate discovery, Surat also appears to hold the gulf's second producible oil reservoir.
- Unocal Bangkok, another Thai subsidiary of Unocal Corp., plans a major exploration program targeting gas on onshore concessions awarded it in the 13th licensing round. The company earmarked $30 million for an extensive campaign on four blocks covering 9,500 sq km in Northeast Thailand. It signed a concession agreement earlier this month.
- Thai Shell Exploration & Production Co. entered into a joint venture with Total's Thai unit and state owned PTT Exploration & Production (Pttep) to explore eight blocks in Northeast Thailand. Their outlays on the blocks are expected to total more than $30 million the next 3 years alone.
- Unocal Thailand also plans to resume exploration on the gas prone Block 12/27 in the central Gulf of Thailand.
- A group led by Total let two major contracts worth as much as $100 million for offshore facilities related to development of giant Bongkot gas field in the Gulf of Thailand.
- Unocal Thailand awarded a seventh contract, worth about $16 million, to Thai Nippon Steel (TNS), a joint venture of Nippon Steel of Japan and Thailand's Italian-Thai construction group, to construct four platforms for installation in the Gulf of Thailand.
- BP Exploration Operating Co. started production from the first of two small fields in Central Thailand.
NEW CONCESSIONS WORK
In the next 3 years, 13th round concessionaires are required to conduct at least a total of 40,000 line km of seismic surveys and drill 28 wildcats.
During the 3 years of a subsequent commitment period, operators are required to shoot a combined 23,000 line km of seismic surveys and drill 46 wells.
Most of that work will focus on blocks in the gas/condensate prone Gulf of Thailand and in the gas prone northeastern onshore region.
However, two groups of companies bid for acreage in sparsely drilled shallow waters of the Andaman Sea off Thailand's southwest tip.
The companies and their respective number of blocks (see map) are Ampol Exploration Ltd. one, Canadian Occidental Petroleum Ltd. one, Coho Resources Ltd. two, Croft Exploration Ltd. five, CTC Minerals Inc. two, Fina Exploration SA-Enterprise Oil plc two, Fina-Texaco Exploration Far East Regional Pathfinding Inc. one, Kirkland Resources (Holdings) plc-Aberdeen Petroleum plc one, Maersk Olie Og Gas ASPogo Producing Co.-Rutherford Moran Oil Corp. one, Nomeco Oil & Gas Co. one, Sun Oil International Inc. one, Texaco Exploration Thailand Inc. two, Total Exploration & Production Thailand Ltd. one, Thai Shell Ltd. three, Thai Shell Development Ltd. four, Thaitex Petroleum Co. one, and Unocal Bangkok Ltd, four.
A group led by Maersk was the first to sign a final concession agreement (OGJ, Apr. 29, P. 27). Royal Dutch/Shell, Total, and Unocal followed suit earlier this month.
Companies whose applications were rejected are Discovery International Inc., Hamilton Oil (Thailand) Corp., International Petroleum Corp., Texaco International Petroleum Co., and Cluff Oil plc. Those applications were disqualified for undisclosed reasons or lost out to more attractive offers, the ministry said.
The past 12 rounds of Thailand's petroleum licensing attracted a total of 32 concessionaires bidding for 57 exploration blocks.
Thai officials view the 13th round as a success, given sweetened bidding terms by the government. Nationwide, 104 tracts were offered for concession right holdings under the ministerial announcement of July 26, 1990. However, only 62 blocks were tendered for bidding (OGJ, Nov. 26, 1990, p. 30).
BRITISH GAS PLANS
About 60% of BG's $110 million upstream investment package will go to the $1.1 billion development of Bongkot gas field in the Gulf of Thailand.
BG holds a 20% interest in the 1 tcf field, under development by Total 30% and expected to go on stream in June 1993. Other interests are held by Pttep 40% and Norway's Den norske stats oljeselskap AS 10%.
The remainder is earmarked for exploration in offshore Block 5/27, where BG is operator and a 50-50 joint venture partner with Pttep. Plans call for the first of two wildcats to spud in March 1992 after seismic data processing and interpretation are complete. Halliburton Geophysical Service this year completed a 4,000 line km survey on the 15,554 sq km block off the southern isthmus province of Prachuab Khiri Khan.
BG has set up an office in Sattahip, about 180 km southeast of Bangkok, to provide logistical support for its offshore operations.
George Langshaw, managing director of BG unit Global Gas, did not disclose details of the countries or projects covered by the additional $200 million in outlays targeting Southeast Asia. However, he said the company wants to take part in development of gas reserves in the Gulf of Martaban off Myanmar (formerly Burma) for export to Yangon (formerly Rangoon). Pttep is pursuing that proposal with Myanmar's government.
At the same time, BG wants to see its current E&D projects in Thailand get off the ground before it commits to additional oil and gas exploration in that country, Langshaw said. BG's investment will not involve refining/marketing or petrochemicals, he said.
SURAT OIL PROJECT
Unocal's 9 month production test is designed to assess reserves and long term production potential of Surat's oil reservoir.
The company has spent $15 million for Surat exploration that includes drilling four wells. This summer it began installation of a four pile wellhead platform in Surat, and a tender barge was to spud the first of four development wells there shortly thereafter.
Rich Keller, Unocal Thailand vice-president, said it is premature to pinpoint extent of Surat's oil reserves, but Unocal engineers expect the reservoir to be able to sustain oil production of 1,500 b/d.
Although it has strong potential as a producer, Unocal remains uncertain about Surat's long term viability in view of the abrupt decline at Nang Nuan oil field. Thailand's first producing offshore oil field, operated by Thai Shell Exploration & Production, Nang Nuan was shut in 3 years ago because of water coning after 6 months of production.
Chuck Williamson, Unocal Thailand vice-president of exploration, contends Surat is a different type of structure.
The test period for Surat follows recent approval from the Thai Department of Mineral Resources, which recognized the need for a production test and agreed to relax technical terms to expedite the project. One of the relaxed conditions allows Unocal to export crude oil produced from Surat by mixing it with condensate produced from other nearby gas fields Unocal operates in the gulf.
At this stage, the company does not consider it economic to install separate facilities offshore to treat and store the oil, given the cost of maintaining floating storage. Instead, Surat crude will move through a 16 in., 9 km subsea pipeline to the central processing platform (CPP) in Platong gas field.
At the Platong CPP, oil will be processed and transported further by pipeline to the Erawan tanker, anchored near Erawan gas field, which stores condensate produced from all Unocal gas fields in the gulf.
Surat crude will be blended with Gulf of Thailand condensate in the tanker.
One Unocal official suggests a production level of 10,000 b/d from Surat may justify investment for a crude storage barge.
UNOCAL NORTHEAST CAMPAIGN
Unocal's campaign in Northeast Thailand the next 3 years calls for 1,300 line km of 2-D seismic survey and drilling of four wildcats. That would meet its concession commitments on its four blocks there.
Unocal Bangkok Pres Graydon Laughbaum said the seismic campaign will start later this year after formal signing of concession agreements with the Thai Industry Ministry.
Seismic surveys are to get under way this year, with drilling expected to commence in second half 1993, the second year of the first 3 year obligation period. In all, Unocal's plans 1,300 line km of surveys and four exploratory wells on its northeastern blocks.
Unocal's tracts are in the Isan region on the Khorat Plateau, generally believed to be gas prone. A number of dry gas fields have been discovered in the area, and Esso Exploration & Production Khorat is producing 65 MMcfd from Nam Phong gas field in the Thai province of Khon Kaen.
Meantime, Mitsui Oil Exploration Co. (Moeco) has agreed to acquire a farmout covering a 25% interest in Unocal's four northeastern blocks. Terms are not disclosed.
Acquisition of the blocks strengthens Unocal's dominant role in Thailand's gas producing operations and makes it the biggest foreign investor in Thailand's upstream petroleum industry. Unocal has spent about $2 billion for gas development in the Gulf of Thailand.
SHELL-TOTAL VENTURE
Blocks targeted by the Shell-Total venture cover a total of 23,263 sq km on the Khorat Plateau.
Total will operate two blocks, 5743/32 and 5744/33, and Shell will operate the remaining two. Plans call for a combined 3,000 line km of seismic to be acquired on the new acreage the first 3 years. Seismic work is expected to get under way in November, with the first of four exploratory wells to spud in second half 1993.
Shell acquired seven of the blocks totaling 20,320 sq km and Total one covering 2,492 sq km in the 13th licensing round. The two offered a 20% interest to Pttep in all the onshore blocks.
The blocks lie south and east of Esso's gas production, and Shell believes there are good prospects for finding gas.
Shell did not disclose work commitments on the six tracts it will operate, but Total is obligated to shoot 500 line km of seismic on its two tracts and drill two wells on 5743/32 during the first 3 years.
Total has created another Thai subsidiary, Total Khorat Ltd., to conduct the onshore exploration program.
Meantime, Thai Shell Exploration & Production Co. has for the time being abandoned attempts to restart production from Nang Nuan.
Nang Nuan began producing at 1 0,000 b/d but production dropped to about 1,500 b/d within months as the water cut increased dramatically.
Shell said the A-03 appraisal well was disappointing and the field will remain shut in.
The latest appraisal well was drilled after Thai Shell had run 3-D seismic over the structure. Another exploration well, 1 Hong Fah, is being drilled elsewhere on the offshore concession.
BONGKOT CONTRACTS
The Total led European-Thai group let a contract worth about $40 million to the Swiss-Dutch company Blue Water for a 25,000 dwt storage tanker/offloading terminal to handle condensate produced from Bongkot field.
The storage vessel will be converted from an oil tanker and equipped with an integrated turret permanently moored near Bongkot's processing platform. It will have storage capacity of about 166,000 bbl of condensate.
Bongkot condensate flow is expected to start at about 1,400 b/d in 1993 when gas production begins, That will rise to 3,500 b/d in 1995 as gas production climbs to 250 MMcfd from 150 MMcfd. The 1.5 tcf reserve field is estimated to hold about 18 million bbl of condensate.
At the same time, Total Exploration & Production Thailand let contract to Smedvig Robray to drill about 20 development wells in Bongkot field.
Contract value could run to as much as $65 million during the life of the development project.
'The first wells are to spud during June-August 1992, and drilling is expected to take until third quarter 1993.
Fabrication of the first of three drilling platforms for Bongkot got under way this summer in McDermott Inc.'s Indonesia yard.
Total has run 4,900 line km of seismic surveys on the Bongkot block. That follows completion in the spring of a 3-D program, bringing total seismic surveys over the field to 10,200 line km. All data are being processed in Singapore.
In addition, the Total group has leased land in the southern province of Songkhgla to set up an onshore logistics base to support offshore work.
PLATFORM CONTRACT
The TNS contract calls for fabrication of four wellhead platforms, each with four piles and capable of accommodating 12 wells. Two of the platforms are destined for Satun field and one each for Erawan and Funan fields.
Fabrication will take place in the TNS yard near Bangkok, using Thai labor and equipment. Installation of the structures, to be carried out by Nippon Steel under a separate contract, is to begin in October this year for Satun, March 1992 for Erawan, and April 1992 for Funan.
Unocal Thailand and partner Mitsui Oil Exploration Co. have so far let contracts worth about $62 million to TNS to fabricate 28 wellhead platforms for gas development projects in the gulf.
BP FIELD START-UP
BP's Neung and Sawng onshore oil fields in the Ayutthaya area of Thailand's central plains are the first onshore oil fields to go on stream in Thailand since Thai Shell's Sirikit oil field started up in 1982.
The 300,000 bbl Neung started up at a rate of 600 b/d early last month, and the 3.7 million bbl Sawng field was to be commissioned at the same rate late last month.
Neung is in Nakhon Pathom about 70 km west of Bangkok, and Sawng is in Suphan Buri about 100 km northwest of Bangkok.
Plans call for BP to spud by yearend 1992 as many as five more wells to boost combined production from the 1,400 sq km tract to 2,500 b/d in 1993. A decision on future development won't occur until BP has had a chance to assess production data.
Crude from the two fields has a gravity of 33, and heating facilities are needed in the field because of its wax content. The oil moves to the Bangchak refinery by road,
The fields were discovered in 1987, but amendments to Thailand's petroleum law were needed to render development economic (OGJ, Apr. 2, 1990, p. 22).
Copyright 1991 Oil & Gas Journal. All Rights Reserved.
