Total is on track to become Indonesia's leading gas exporter by the turn of the century.
Total's aggressive development of its Mahakam Delta acreage in East Kalimantan is intended to keep pace with growing liquefied natural gas demand, mainly from Japan but also increasingly from South Korea and Taiwan.
A frantic scramble is under way among natural gas suppliers in the Pacific Rim region, particularly those with current LNG export facilities, to accommodate projections of soaring natural gas demand in the region (OGJ, June 28, 1993, p. 23).
Accordingly, Total's Indonesian gas production goal is the centerpiece of a larger strategy to become a major player in the Far East Asia gas scene.
Its goals also fall in line with Indonesia's. Facing flat or declining oil production while domestic oil demand continues to soar along with a rapidly growing economy, Indonesia is heeding some studies that project the country could become a net oil importer by the turn of the century.
Thus Indonesia is targeting a shift to natural gas for domestic consumption and as a growing source of exports.
At the same time, Indonesia is sweetening incentives for foreign operators to press exploration and development in deepwater and other frontier regions (OGJ, Jan. 10, Newsletter). And it is emphasizing domestic conservation measures. According to the U.S. Embassy at Jakarta, government mandated fuel price hikes in August 1991 probably contributed to an overall 1991 fuel consumption growth of 6.5% compared with 14% in 1990.
The shift is crucial for Indonesia's economic development as well. Oil and gas play prominent if diminishing roles as generators of export receipts, the embassy noted, dropping to 40% in 1991 from 80% in 1981, and government revenues, falling to 30% in 1991 from 60% in 1981.
With that trend together with growing market expectations for lower oil prices, it behooves Indonesia's government to encourage foreign operators to develop natural gas for export.
TOTAL FAR EAST STRATEGY
From its major base in East Kalimantan, Total Indonesie forms the spearhead of Total's business development strategy in the Far East.
That strategy is not limited to natural gas production, but the company's other world class upstream project under way in Far East Asia also involves natural gas.
In July 1993, Total and partners started up production from Bongkot giant gas field in the Gulf of Thailand off Thailand. Bongkot production started at 150 MMcfd and is to reach 200 MMcfd this month and 250 MMcfd in January 1995.
Additional data acquired through development, 3D seismic, and further exploratory drilling are expected to double current reserves estimates of 9.5 tcf of gas. That could support an increase in production to 350 MMcfd or more after 1996. In addition, Bongkot produces 3,200 b/d of condensate.
Total also is pressing development of potential giant scale reserves in Viet Nam's Dai Hung offshore oil and gas field as well as world class natural gas potential in the Gulf of Martaban off Myanmar.
Total's strategy also involves Asia's downstream, notably refineries in China and Viet Nam as well as cogeneration projects, oil trading, and chemicals.
By 2000, Total expects as much as 15-20% of its operating profits to come from the Far East compared with 10-15% at present.
MAHAKAM ACREAGE
Total Indonesie is operator of Mahakam Delta acreage with interests held 50-50 with Japan's Indonesia Petroleum Ltd. (Inpex).
In mid-December, Total launched the second development stage of Tunu giant gas field in the Mahakam area off East Kalimantan.
Phase II coincided with start-up of the sixth train of PT Badak's LNG plant at Bontang, 150 km north along the East Kalimantan coast. It is the world's largest LNG complex. Tunu is providing about two thirds of the feedstock for the F train.
Tunu is one of the several oil and gas fields Total has discovered since the 1970s in the swampy and meandering channels of the Mahakam River Delta.
Discovery in 1972 of the 20 sq km, relatively complex Bekapai offshore oil field, then in 1973 of the even more complex 40 sq km Handil oil field in the delta swamps, put Total in the league of Indonesia's leading oil producers. At peak in 1977, Total Indonesian oil production reached 230,000 b/d.
Currently, 90% of commercial oil reserves in both fields have been produced, and production has declined sharply. At Bekapai, 45 out of the 73 wells drilled are still producing oil but at a rate of less than 8,000 b/d.
At Handil, more than 300 wells have been drilled. Of those, 200 produce oil, 40 are water injectors, and 13 produce gas. The field's current oil production hovers near 45,000 b/d but is expected to drop to 27,000 b/d despite enhanced recovery efforts. Tertiary recovery to date has boosted Handil reserves recovery by 22 million bbl beyond what had been forecast.
Bekapai and Handil offshore fields both produce from multilayer deltaic sand reservoirs. Oil production is piped to the Senipah terminal about 20 km south of Handil, after separation from produced gas at a Central Processing Area (CPA). The terminal was built during 1974-76 to store and export the oil because the delta is inaccessible to large crude carriers.
SHIFT TO GAS DEVELOPMENT
Gas production started taking the slack of depleting oil when in 1983 Total ceased flaring associated gas at Bekapai and Handil fields in line with Indonesia's national gas conservation policy.
Compressed at Handil's CPA, the gas is afterwards either delivered into the gas line that since 1977 has linked Virginia Indonesia Co.'s (VICO) adjoining Badak gas field to the Bontang LNG plant or supplied to the nearby Kaltim fertilizer complex.
The large associated gas reserves at Bekapai and Handil form the basis of Total Indonesie's current gas development in East Kalimantan, with their average 160 MMcfd of production sent to Bontang.
The two fields together have cumulative production of 1.1 tcf. Current gas treatment capacity in both fields is a combined 185 MMcfd.
DISCOVERIES ADD POTENTIAL
Total has carried out intensive drilling and delineation work in the Mahakam Delta area resulting in a succession of gas discoveries in what has turned out to be Indonesia's most prolific gas producing area.
Tambora, an extension of VICO's 1974 Nilan field discovery, covers 100 sq km in the delta north of Handil. Gas is to be found in more than 125 separate pay sands ranging 2,300-4,300 m in depth.
Tunu, discovered in 1977, is a giant field covering more than 400 sq km with reservoirs located at depths of 2,200-4,100 m in relatively shallow waters. Its initial reserves are estimated at 4.5-5 tcf, compared with Tambora's 1.5 tcf. Both fields were simultaneously put on stream in February 1990.
Development of Sisi, discovered in 1986, will be as a satellite of Tunu. Another giant gas field, Peciko, discovered in 1991, is estimated to hold more than 4.5 tcf of gas reserves - more likely 5 tcf when delineation is completed.
Sisi development is scheduled for 1997 but is linked to construction of a seventh LNG train at the Bontang complex. The Indonesian government has given its agreement in principle to that project.
The most recent discoveries are Nubi in 1992, south of Sisi, where Total gauged flow rates of 53.9 MMcfd of gas and 1,184 b/d of condensate, and Lereng, in 1993, north of Pecki and southwest of Tunu, where Total tested a discovery well at 32.3 MMcfd of gas and 524 b/d of condensate.
NEW LEASE ON LIFE
"Twenty-five years after signing its first production sharing agreement with the state oil company Pertamina, Total is enjoying a new lease on life in this country," said Bernard Vitry, General Manager of Total Indonesie. "Since 1985, we have been Indonesia's foremost gas discoverers" (see chart).
Currently Total is Indonesia's fourth ranking international operator after Caltex, Mobil, and VICO, producing as of November 1993, 61,000 b/d oil and condensate and 650 MMcfd gas. That breaks out as 453 MMcfd from Tambora and Tunu and 195 MMcfd from Bekapai and Handil.
With Phase II of Tunu now on stream, Total's Indonesian gas productive capacity is expected to reach 1 bcfd in 1994.
Condensate production from Tambora and Tunu also is growing apace with gas. However, the priority for Total is not to optimize oil production but to produce the gas needed under its contract with Pertamina. That contract extends to 2017 and involves long term planning in line with gas delivery contracts with Japan, South Korea, and Taiwan.
FUTURE DEVELOPMENT
Only one third of the Tunu field has been developed thus far. Phase Three is under way now, and there is to be a Phase Four. Tunu and Tambora are being developed with swamp barges.
Phase One Tunu/Tambora development involved installation of a gathering/testing satellite (GTS) and an initial separation unit.
Phase Two includes four GTSs, a trunk line manifold platform and a Central Processing Unit for separation and dehydration with a 700 MMcfd capacity together with a 32 in. gas line to deliver the gas to Bontang.
Phase Three will require 2 GTSs in 1996, and stage 4 a further GTS in the northern part of the field, as well as a compression unit. There is also a project to separate the oil from the condensate with dual phase flow.
PROJECT SPENDING
Total's overall 1993 budget for Mahakam area development totaled $370 million.
During the last 3 years, Mahakam exploration expenditures have been maintained at $72 million/year.
In 1994, Tunu development will require another $410 million, a level of spending that should wind down as Phase 2 gets under way.
Spending should soar again to $500 million in 1995 with the start of Peciko development.
Total has ordered the following equipment for Mahakam exploration and development projects during 1993-96:
- Three swamp barges, one of which is for only part of 1993.
- Three semisubmersibles - one to mid-1994, one from mid-1994 to mid-1996 for three exploratory wells plus three step-outs from three earlier discovery wells, and the third semisubmersible from mid-1994 to mid-1995 for three exploratory wells plus six step-outs from one earlier discovery well.
- One jack up required for exploration of deep pay zones at Peciko and a another jack up for Peciko development.
The cost of exploring deep Peciko pay is estimated at $20 million. Peciko deep exploration drilling is projected to cost $2,100/m and development $1,400/m. Full Peciko project development costs could reach $600-700 million the next few years.
LNG EXPORT CAPACITY
By 2000, Total Indonesie expects to be producing 245 bcf/year of natural gas from its Mahakam acreage, tripling its production within the next 10 years.
Main supplier will be Tunu, where production has tripled the last 3 years and should triple again the next 3 years, if current strong levels of gas demand are sustained.
Total's contribution to the Bontang LNG plant has grown gradually, from an initial 2.1% package through its share in VICO's Badak gas field (A and B trains), to 29% of package 2 (trains C and D) during 1980-83, to 45% of package 3 (train E built in 1987-89) when Bontang was extended to LPG production, to about 60% of package 4 with F train just started.
Total now has a 10% stake in the LNG plant owned by Pertamina and operated by PT Badak Natural Gas Liquefaction Co.
PT Badak interests are held by Pertamina 55% interest, 20% VICO, and 15% Japanese Indonesia LNG Co., which represents Japanese LNG buyers. Total acquired 10% of VICO's original 30% interest in PT Badak.
In addition to Total, the Bontang LNG plant is supplied by the other two East Kalimantan producers, VICO and Unocal Corp .
With the F train now on stream, Bontang's annual capacity is about 14.5 million metric tons of LNG.
Copyright 1994 Oil & Gas Journal. All Rights Reserved.
