Large oil, gas, NGL project growing in South Sumatra

G. Alan Petzet
Exploration Editor

Jabung block - Indonesia [88,211 bytes]
Jabung block - Betara complex, Indonesia [95,300 bytes]
A group led by Santa Fe Snyder Corp., Houston, has a large oil and gas exploration and production project taking shape in Indonesia's South Sumatra basin.

Exploration on the Jabung Block has identified 300-400 million bbl of crude oil, condensate, and liquified petroleum gases and approximately 1 tcf of salable methane in five fields.

Two of the fields are producing oil. The group will submit a plan to Pertamina shortly covering oil and gas development in the other three fields and expansion of one of the producing fields, said Hugh L. Boyt, Santa Fe's president-international.

Interests in the block are Santa Fe Energy Resources (Jabung) Ltd., Kerr-McGee Sumatra Ltd., and Amerada Hess (Indonesia-Jabung) each 30%, and Pertamina Exploration and Production 10%.

Santa Fe Snyder resulted from the merger, completed this month, of Santa Fe Energy Resources and Snyder Oil Corp. (OGJ, Feb. 1, 1999, p. 26).

Jabung exploration

Two major oil companies previously drilled 12 wells on Jabung during the 1970s-80s without success.

Santa Fe's production sharing contract dates to 1993. The company approached the block with an exploration model that relied on short range migration of oil, said Tim S. Parker, executive vice-president, exploration.

The Santa Fe group has drilled six wildcats, five of which are discoveries, and 40 total wells, 39 successful. The 40th well, a horizontal development well in North Geragai field, was tested recently at 1,200 b/d of oil.

"We shoot conventional 2D seismic, do our homework, get the interpretation right, and focus on being close to the kitchens," said Parker.

North Geragai (1995), the group's first find, is on an inverted structure in the middle of the South Sumatra basin. It has 11 producing horizons. Makmur field (1996) is similar.

North Geragai and Makmur reserves probably are 60 million bbl of condensate and 25 million bbl, respectively. Gas overlies the oil reservoir at North Geragai field. North Geragai's sweet gas endowment is much larger than Makmur's.

Northeast Betara and Gemah fields contain a combined 2 tcf of raw gas. The raw gas is 10-60% carbon dioxide, for which no market currently exists in the region.

The reserves are in Tertiary Middle and Lower Miocene zones. North Geragai and Makmur fields produce sweet crudes of 37-40° gravity. The two fields produce mainly from Gumai and a small amount from overlying Air Benakat. Gemah and the Betara fields produce almost exclusively from Lower Talang Akar.

Talang Akar is deposited atop basement, and the group has encountered no commercial pre-Tertiary zones so far. Drilling depths are 3,100-6,500 ft.

Development stages

The group's development plan calls for four phases, all of which could be implemented within 36 months of initial authorization, Boyt said.

Subject to partner and Indonesian government approval, they are:

Development of the oil rim in the three Betara Complex fields and laying a pipeline from there to Geragai and Makmur fields. Production could start as early as fourth quarter 2000.
Building an LPG plant in the Geragai area to strip liquids and reinject gas.
Building an LPG plant at Northeast Betara-Gemah.
Sales of dry gas.

The first two phases are not subject to negotiation of a gas sales agreement.

Fields and production

All five of the group's fields contain oil and gas.

The first field, North Geragai, started up 26 months after discovery and less than a year after approval of the development plan by Pertamina, said Duane C. Radtke, executive vice-president, production. It started up in August 1997, and Makmur field started up in January 1998.

No infrastructure existed on the block previously. The fast-track approval was accomplished due to cooperation, assistance, and close communications with Pertamina.

Cumulative production stands at about 6 million bbl.

Five Makmur wells and 17 North Geragai wells are producing. The oil is pipelined about 25 km to the Batang Hari river and shipped from the Batang Hari Marine Terminal to Pertamina's 109,155 b/d refinery at Plaju (Musi) in South Sumatra. Pertamina pays for the oil in U.S. dollars.

Four wells in Gemah field, delineated in late 1998-early 1999, "demonstrated a hydrocarbon column of nearly 660 ft and a structural trap significantly larger than originally anticipated," Santa Fe said.

For instance, the Gemah 4 well cut 180 net ft of gas pay and 40 net ft of oil pay. It flowed 1,590 b/d of oil from a 10 ft perforated interval.

Separately, it flowed 21.5 MMcfd of gas and 1,225 b/d of condensate from three perforated intervals totaling 38 ft thick.

The production sharing contract provides the group cost recovery for capital and expense dollars plus a profit sharing split.

The operating companies' pre-tax profit shares are 29% for oil and 35% for gas and LPGs.

Gas development, pipeline

The Jabung Block is also at the crossroads of a major gas development in South Sumatra.

Gas began flowing northward in late 1998 from the Corridor Block south of Jabung northward to the Duri field steamflood project in central Sumatra (OGJ, Oct. 12, 1998, p. 46).

Corridor gas developed by Gulf Indonesia Resources Ltd., Talisman Ltd., and Pertamina flows through a 544 km pipeline that crosses western Jabung. Volumes have topped 300 MMcfd and are to exceed that for the rest of 1999. The Corridor gas initially displaces crude formerly burned to generate steam at Duri, and a cogeneration plant at Duri is under negotiation.

Near-future plans call for that line to be looped from Corridor to just southwest of Jabung and for construction of a new gas line across Jabung.

The line will continue underwater in the Java Sea to industrial and population centers on Batam Island and Singapore.

The gas will be used mainly to generate power.

Ultimate gas customer is Singapore Power.

The Santa Fe group and Corridor Block companies signed a gas transportation letter of agreement in March 1999 with Pertamina and PGN, Indonesia's state gas distribution-transmission company.

The letter covers construction of the pipeline from Sumatra to Singapore and defines the method by which tariffs are to be calculated once throughput volumes and pipeline cost estimates are known.

The Asian Development Bank has agreed to fund the project, subject to finalization of all gas contracts. Gas sales are anticipated in 2002.

The future

With all work commitments achieved and only one remaining acreage relinquishment in spring 2000, the companies look forward to a lengthy tenure on the Jabung Block.

Full development of liquids and gas in the five fields will require about 90-100 wells in addition to the 40 drilled so far.

Exploring the remaining reaches of the block will take several years. The Betara Complex covers 55,000 acres of the nearly 2 million acre block, and the group has identified about 40 other prospects.

The group has found no reservoirs as deep as Talang Akar in the Geragai area and might attempt that later. Weathered basement reservoirs such as those on the Corridor Block have not been found on Jabung.

Subject to approval, the Santa Fe group will acquire 3D seismic data to facilitate development of Northeast Betara and Gemah fields. Horizontal drilling is on tap at Geragai and Makmur.