The pace of foreign operators' exploration and development campaigns in Thailand continues to pick up speed.
A rapidly growing economy is spurring sharp growth in oil and gas demand in Thailand. Correspondingly, the Thai government recently embarked on an ambitious energy program that focuses on increasing oil and gas production, expanding gas utilization, and building gas supply ties with neighboring countries (OGJ, Oct. 22, 1990, p. 21).
Key to the success of the domestic E&D push has been the government's ability to attract foreign investment in Thai E&D. Although progress is sometimes slow in coming amid tough negotiations, efforts to improve contract terms are yielding green lights for key projects.
UPSTREAM ROUNDUP
Among current upstream activity by foreign operators in Thailand:
- Unocal Thailand and partners plan a strong E&D campaign in the central Gulf of Thailand in 1991, although planned outlays of $170 million are down from 1990 spending.
- Total Cie. Francaise des Petroles awarded four major contracts worth about $100 million to McDermott Inc. to design, fabricate, and install five platforms and lay field pipelines in giant Bongkot gas field, previously known as B structure, in the southern Gulf of Thailand. Total has advanced start-up date for the $1.1 billion development project to June 1993 from the original December 1993.
- British Gas plc has moved swiftly to evaluate hydrocarbon potential of Block B-5/27 in the Gulf of Thailand after acquiring a 50% stake and operatorship of the concession from state owned Petroleum Authority of Thailand's (PTT's) upstream arm PTT Exploration & Production (Pttep) last fall.
- The Thai unit of Royal Dutch/Shell Group will resume drilling this year on its concession in the Gulf of Thailand after a 3 year hiatus following shutin of Nang Nuan oil field, Thailand's first producing offshore oil field.
- British Petroleum Co. plc's Thai unit has renegotiated easier terms with Thailand's Department of Mineral Resources (DMR), enabling it to declare commercial a marginal oil development project in the country's central plains. The agreement makes BP the first foreign oil concessionaire in Thailand to operate under the amended petroleum law known as Thailand III.
- A group led by North Central International Inc. (NCII), a unit of North Central Oil Corp., Houston, plans to place a marginal oil field on its northern Thailand concession on stream by midyear. Meanwhile, the group is offering a farmout covering a 10% interest in the concession, which covers 2,753 sq km in Sukhotahi and Kamphaeng Phet provinces, to Thai companies.
- Nam Phong, the only major onshore gas field in Northeast Thailand, is now on stream (OGJ, July 30, 1990, p. 30).
- Norway's Den norske stats oljeselskap AS is seeking to increase its exploration activity in Thailand, using it as a springboard for upstream expansion elsewhere in Asia.
- A combine of Denmark's Maersk Olie og Gas AS and Houston firms Pogo Producing Co. and Rutherford Moran Oil Corp. has been awarded a concession covering 2.6 million acres off Thailand under the country's 13th licensing round (OGJ, Nov. 26, 1990, p. 30). Maersk will operate, and each company will hold a one third interest in the concession. Their work commitment on Block 8/32, which lies directly northwest of Kaphong gas field (see map, OGJ, Oct. 29, 1990, p. 20), totals $15 million. Plans call for seismic surveys covering 4,000 line km to get under way in 3-4 months, followed later by two exploratory wells.
UNOCAL'S 1991 PLANS
Unocal's 1991 Gulf of Thailand activity centers on developing Funan gas field, stepping up exploratory drilling and seismic surveys involving four gas prospects, installing seven platforms, and starting pilot gas production from a field also believed to contain crude oil.
The Unocal group's planned 1991 outlay of $170 million compares with spending of $209 million in 1990.
Last year's outlays were boosted by an especially large investment related to installation of a gas compression platform, a central gas processing platform, and an accommodation module in Funan field.
Unocal Thailand Pres. Graydon Laughbaum put his company's share of the total gulf expenditure at $137 million, compared with a 1990 outlay of $141 million.
By Feb. 13, 1990, Unocal had delivered 1 tcf of gas to PTT since it started production in the gulf in 1981.
FUNAN DEVELOPMENT
Funan is being developed under the third gas sales contract with PTT known as Unocal III.
Production is to start in the fourth quarter.
Plans call for 1991 installation of two wellhead platforms, a central processing platform (CPP), and an accommodation platform in, Funan field. Another Funan wellhead platform will be installed during first quarter 1992.
Most of the 50 development wells planned by the Unocal group in the gulf this year will be drilled in Funan field, with the remainder in Satun field, one of five fields currently producing. The other producers are Erawan, Platong, Kaphong, and Baanpot.
Unocal expects Funan production to start at 150 MMcfd, a level that will bring total gas deliverability from Unocal Thailand operated fields to as much as 780 MMcfd in the fourth quarter from 660 MMcfd at yearend 1990.
Installation of gas compression facilities in the gulf has boosted throughput capacity to 800 MMcfd.
The company expects total Thai offshore gas production to average 750 MMcfd in 1992.
UNOCAL GROUP EXPLORATION
On the exploration front, Unocal Thailand and partners will try to establish more Gulf of Thailand gas reserves to offset declining production from existing fields while increasing deliverability to PTT.
Laughbaum estimated ultimate gas reserves at 4.7 tcf in fields covered by the three gas sales contracts with PTT on production and under development.
Plans call for Unocal to drill as many as 18 exploratory and delineation wells in the gulf in 1991. Eight of those are slated for Jakrawan field, four to probe likely oil prospects in Block B-12/27, four in Funan field, and two in the Platong field area. Unocal operates Block B-12/27 on behalf of itself, BP, Amerada Hess Corp., and Mitsui Oil Exploration.
The wells will be drilled by the Sedco 601 semisubmersible, currently drilling delineation wells in Jakrawan, another field covered by the Unocal III contract.
Unocal's 1991 gulf seismic program begins with 9,800 line km of 2-D and 3-D covering several gas prospects on Block B-12/27. That campaign was to have begun by the end of last month.
Starting this month, a 3-D seismic survey covering about 3,900 line km will be conducted in the southern portion of Gomin, a gas field also covered by Unocal III.
Exploration on Block B-12/27 will cost about $15 million and focus on the Ploy prospect, where the four exploratory wells are planned.
The Unocal group still is evaluating three apparent gas discoveries on the block--1 Pailin, 1 Kaimuk, and 1 Morakot. A fourth well on the block, 2 Pailin, last year flowed as much as 7.5 Mmcfd of gas and 117 b/d of condensate.
OTHER UNOCAL GROUP PLANS
Unocal plans to bring another Unocal III field, Surat, on stream in the third quarter at a pilot rate of 10 Mmcfd.
Initial Surat gas production will be from four wells through Surat A platform, to be installed this year as part of first phase development.
Laughbaum said the project is needed to ascertain quality and extent of Surat reserves and production potential before full field development can begin.
Unocal Thailand has drilled seven wells on the Surat structure, four within the area of the proposed site for Surat A platform.
Elsewhere in the gulf this year, Unocal plans to install H and K wellhead platforms in Satun field.
To date, Unocal has set a total of 51 platforms in the gulf--39 wellhead, four production, three CPPs, four accommodation, and one gas compression.
It will retain Sedco 601 through 1991 for exploratory drilling but use two tender barges for development drilling.
Unocal and partners expect gulf operating expenses to increase by 12% in 1991 because of increased costs as well as expanded activities. Accordingly, they also will increase the gulf work force from the current 1,009 in line with the expanded operation.
Cumulative outlays to date of Unocal and partners in the Gulf of Thailand have topped $2.6 billion.
BONGKOT CONTRACTS
Bongkot contracts call for installation of three wellhead platforms, one processing platform, one accommodation platform, and field pipelines.
As many as 30 wells in all could be drilled from the four pile wellhead platforms using a tender assisted rig. The eight pile processing platform will have a design capacity of 250 MMcfd, and the accommodation unit will be capable of housing 150 men.
McDermott's subsidiaries in Indonesia and Malaysia will handle construction.
Operator Total has called a tender for a condensate storage tanker. The last major Bongkot contract, it was expected to be awarded this month.
Partners have not agreed on the tanker's size, but Total engineers believe 30,000 dwt is likely.
The storage tanker will be permanently moored near the processing platform, using an external turret mooring system to receive and store condensate produced from the field for shipment to shore via shuttle tanker.
BONGKOT SEISMIC, DRILLING
Bongkot partners completed a major 3-D seismic survey covering about 7,000 line km over the elongated triangle shaped structure at the end of February.
Another seismic program targeting development and additional wildcat drillsites began shortly thereafter.
Bongkot drilling is to start in mid-1992, with an initial 20 development wells currently planned. Drilling will focus on the northern part of the structure, where former concessionaire Texas Pacific drilled 23 gas/condensate wells in the past decade or so.
Jean-Claude Soligny, general manager of Total Exploration & Production said, "The project is going satisfactorily with no big problems and basically on schedule."
Based on data gathered so far, Soligny is "fairly confident" about the earlier field reserves estimates of 1.5 tcf and 25 million bbl.
With field development efforts proceeding smoothly to date, he said, it seems likely the June 1993 production start-up date can be achieved.
Initial production will be 150 MMcfd, to plateau at 250 MMcfd for the long term.
BONGKOT FINANCING
Pttep has named Industrial Bank of Japan to raise a $180 million syndicated loan for Bongkot development.
The Japanese bank was chosen to raise the loan because of its favorable terms, including a 4 year grace period and a 14 year repayment term.
The loan is the largest for development of Thai petroleum resources.
Total is in the process of securing a syndicated loan to fund part of its outlays for Bongkot development from a group of international banks led by Japan's Sumitomo Bank.
Soligny said his company has not determined how much it will borrow for its share of investment in the project, which it also will fund partly from cash flow.
Interests in the 3,200 sq km concession are held by Pttep 40%, Total 30%, British Gas 20%, and Statoil 10%.
BRITISH GAS ACTIVITY
British Gas let a $2.5 million contract to Halliburton Geophysical Services for a 2D seismic survey covering about 4,000 line km over the 15,320 sq km Block B-5/27 off the southern peninsula province of Prachuab Khiri Khan.
Work was to begin earlier this year and take 60-90 days, depending on weather.
Interpretation and evaluation of the seismic data will take another 6 months.
At least one wildcat will be drilled on the block in 1992.
THAI SHELL RESUMPTION
Thai Shell Exploration & Production has budgeted about $16.08 million for resumption of drilling on its Block B-6/27 off the southern province of Chumphon.
The program calls for drilling two wells in the Nang Nuan area in 1991.
Thai Shell in July 1988 shut in Nang Nuan field after about 6 months of production. Production had peaked at 10,000 b/d of oil but quickly plunged to 1,500 b/d because of water coning.
Resumption of drilling reflects the company's renewed confidence there are more commercial oil reserves underlying the block. Thai Shell embarked on a series of studies and an extensive seismic program to reassess the block's oil potential.
The first of the two wells planned this year will target a new structure, Hong Fah. The 1 Hong Fah was to spud this month and take 8 weeks to drill.
Thai Shell will drill 3 Nang Nuan to further delineate the field. It is to spud in June.
Pending 3 Nang Nuan results, Thai Shell has no definite plan to resume oil production from the field.
The company the past 5 years has spent about $68 million on its Block B-6/27, including drilling four exploratory wells and the sole producer, 2 Nang Nuan.
Thai Shell has relinquished part of the acreage, leaving the block size at 3,000 sq km.
BP'S AGREEMENT
BP's renegotiated agreement with DMR allows it to take advantage of easier terms that took effect in August 1989.
The amended petroleum law was intended to encourage development of marginal fields by reducing government bonus and royalty takes that were outlined under the original petroleum act of 1982 (OGJ, Dec. 18,1989, p. 22).
Three other foreign operators working under 1982 terms and awaiting a switch to Thailand III terms are NCII, New Zealand's Petrocorp (Exploration) Ltd., and Canada's Gopher Oil. NCII and Petrocorp (OGJ, June 25, 1990, p. 21) also have marginal oil fields awaiting development.
Meanwhile, BP Thailand has reached agreement in principle to sell crude produced from its 1,400 sq km BP-1 tract to PTT (OGJ, Apr. 2, 1990, p. 23).
The interim sales accord hews to a formula based on hydroskimming yields, multiplied by average product prices in Singapore, and reduced by refining costs and gross refiner's margin of not more than $3.50/bbl.
BP DEVELOPMENT PLANS
The new terms, coupled with the oil sales accord, flash a green light to BP's $12 million development plan for Nueng and Sawng oil fields. The two fields are to start up in August at 1,200 b/d.
Initial production will come from three wells--each expected to produce about 400 b/d--two in Sawng in Suphan Buri province, and one in Nueng in Nakhon Pathom province.
The $12 million outlay covers a 4-5 year full field development that includes another eight or nine development wells drilled to an average 4,900 ft. About $3 million of the total will go for installation of oil production facilities this year.
Barry Bidston, BP Thailand general manager, said further activity will depend on how the first three wells perform. More development drilling probably would get under way in 1992.
Oil production from the block could peak at 3,000 b/d if the additional wells are successful.
There are no current plans for further exploration on the concession.
Reserves are estimated at 3.7 million bbl for Sawng and 300,000 bbl for Nueng. Consequently, development activity will focus on Sawng.
BP has explored for hydrocarbons in Thailand since the 1970s, onshore and offshore, spending more than $60 million in the process.
NCII GROUP PLANS
Initial oil production from the NCII group concession is to come from two wells in Bung Ya field in Sukhotahi province at a rate of 700 b/d.
Field reserves are estimated at 900,000 bbl. Bung Ya crude will move by rail to the state owned Bangchak oil refinery at Bangkok.
Operator NCII has applied for a production license covering a 6 sq km area on the block. A provisional agreement with PTT, based on negotiations that began in July 1990, was to be in place earlier this year.
The NCII group is expected to receive the same terms as in the BP accord.
NCII also is seeking an extension of its exploration concession rights for 4 years beginning this month, when it is to complete its first 8 year exploration period.
While data from Bung Ya field performance will help chart NCII's exploration program, the company plans to conduct more 3-D seismic surveys over the tract this year, to be followed by exploration and delineation drilling in 1992.
NCII has drilled five wells in an area along the border of Sukhotahi and Kamphaeng Phet. Two were discoveries and will be placed on production (OGJ, Feb. 22, 1988, p. 24).
The company expects to find "considerably" more oil reserves on the block, an NCII official said.
The group's farmout effort is included in commitments contained in the original concession with DMR.
As the result of the offer, original group interests will be reduced pro rata to allow for a 19% Thai holding. Current interests are held by operator NCII and Combined Oil & Gas Thailand 331/3% each and Thai Energy & Mining Co. and Thai Energy Resources 16-2/3% each.
NAM PHONG START-UP
Exxon Corp. unit Esso Exploration & Production Khorat is moving Nam Phong gas through a pipeline PTT laid to the Electricity Generating Authority of Thailand's (EGAT's) recently commissioned gas fired power plant 3 km away.
Deliveries began at a modest 12 MMcfd to test Esso's $7 million gas production facilities, PTT's transmission system, and EGAT's 121,000 kw gas turbine.
Esso projects Nam Phong deliverability at 60 MMcfd during the project's first 3 year phase.
EGAT also conducted a test run of a second 121,000 kw dual fuel turbine at the Nam Phong power plant. Initially, it will run on diesel fuel but is to convert to natural gas earlier this year, when additional gas supply becomes available.
The two gas turbines will take the full 60 MMcfd when operating at capacity.
First production came from 1 Nam Phong, the 1981 discovery well that flowed 20 MMcfd of dry gas. Esso plans to put on stream three more wells drilled nearby.
Holding estimated reserves of 1.5 tcf, Nam Phong is the only sizable gas field Esso has discovered after spending more than $125 million exploring for hydrocarbons in Northeast Thailand during the past decade.
With exploration continuing around the Nam Phong structure, Esso hopes to increase field deliverability to as much as 250 MMcfd.
STATOIL PLANS
Tore Sund, managing director of Statoil (Thailand), said his company is negotiating with a few other foreign oil firms to acquire interests in their existing and new concessions in Thailand.
Statoil took the plunge in Thailand's upstream sector by acquiring a 10% interest in Bongkot field.
Sund cites Thailand's fast growing demand for oil and gas.
Statoil wants to establish a base in Thailand to expand its upstream campaign into other countries in the region.
He declined to name the companies with which Statoil is negotiating, locations of acreage involved, and size of interests sought.
However, he said some of the companies had taken part in the current round of petroleum licensing (OGJ, Nov. 26, 1990, p. 30). Results of that round are expected to be disclosed in the next few weeks.
Statoil did not take part in the bidding.
Thailand became one of a handful of countries Statoil targeted for overseas expansion of its businesses, which until recently was confined to Europe.
Copyright 1991 Oil & Gas Journal. All Rights Reserved.