Multinational companies are stepping up exploration in Thailand as that country seeks to attract more foreign upstream investment.
Unocal Corp.'s Thai subsidiary, which accounts for most of Thailand's gas production, continues to be the dominant foreign operator. The company's latest push focuses on establishing commerciality of gas/condensate discoveries near its existing production in the Gulf of Thailand.
U.K. independent Premier Consolidated Oilfields plc is mulling its next step while studying results of a recently completed drilling program in the Gulf of Thailand that yielded some modest oil and gas discoveries.
State owned PTT Exploration & Production (Pttep) has agreed in principle to name British Gas plc (BG) as its partner and operator of the oil prone Block 5/27 in the Gulf of Thailand.
Meantime, bidding was scheduled to be complete last week on Thailand's biggest--and first in 5 years--oil and gas concession licensing round.
UNOCAL GROUP'S FOCUS
Encouraged by recent promising results, Unocal Thailand and partners plan to enter the next phase of a campaign to assess extent of gas/condensate deposits on the gas prone Block B-12/27 in the Gulf of Thailand.
Initially, that calls for a major 3-D seismic survey expected to begin late this year. It would be followed by a drilling program tentatively set to begin near yearend 1991.
But Unocal Thailand, which operates the 13,550 sq km concession, has yet to obtain approval for those plans from partners Britoil plc, Amerada Hess Corp., and Mitsui Oil Exploration.
The planned seismic survey, to cost about $3 million, will involve 8,000 line km. The group has not decided on the number of wells to be drilled on the block after the seismic survey is completed, but they are to be delineation wells, Unocal Thailand Pres. Graydon Laughbaum said. To date, a total of 10,670 line km of seismic survey has covered the block.
CURRENT PROGRAM
The Unocal group's current drilling program is wrapping up as its 1 Kaimuk, the last wildcat in the four well program, approaches planned total depth of 10,820 ft.
The Sedco 601 semisubmersible is drilling the well about 58 km southwest of Erawan field's central processing platform (CPP).
The four wells, costing a total of $9.5 million, are near other Unocal operated gas fields, including Erawan and Baanpot.
The group has found gas in the first three wells: 1 Morakot, 1 Pailin, and 2 Pailin. The most recent, 2 Pailin, drilled to 11,572 ft 57 km southeast of the Erawan CPP, flowed 5.7-7.5 MMcfd of gas and 60117 b/d of condensate through a 1/2 in. choke from various intervals between 10,732-11,310 ft.
Flow rates were not disclosed in the other two wells, although both were suspended as potential gas producers. The 1 Morakot was drilled to 11,120 ft about 23 km southeast of Unocal's Baanpot A platform, and the 1 Pailin was drilled to 11,859 ft about 40 km southwest of Erawan CPP.
Laughbaum said the Pailin trend contains the most promising structures on the tract and will get top priority for the 3-D seismic coverage.
Results of the seismic campaign will determine locations and number of delineation wells to assess commerciality of the discoveries. There are no plans as yet to develop the gas strikes.
Unocal owns a 35% interest in the block with Britoil 45%, Amerada 15%, and Mitsui 5%.
PREMIER'S PROGRAM
Premier has temporarily suspended its drilling program off Songkhla, along the eastern coast of the Thai peninsula, following unsuccessful results in its latest wildcat.
Tests of its 1 Songkhla Southwest, the fourth well drilled on Block B-11/27, yielded only small crude oil shows, and the well was plugged as a dry hole.
Results from 1 Songkhla Southwest, drilled about 16 km south-southwest of the 1 Songkhla oil discovery well, have raised doubts about the extent of the block's oil bearing structure.
Another wildcat, 1 Songkhla South, about 6 km south of the discovery well, also was dry.
A fourth drilled earlier, 1 Bua Ban, flowed 29 gravity oil at rates of as much as 750 b/d, half of 1 Songkhla's yield (OGJ, April 16, p. 32).
Premier said 1 Songkhla Southwest ends its current drilling program focusing on the Songkhla basin. It will be followed by study and correlations of well results, seismic data, and geological interpretations.
The company will resume drilling on the block in first half 1991. That will include drilling in two other basins on the block not yet explored.
Premier let contract to Western Geophysical to acquire 2,000 line km of 2-D seismic survey on the block. Work started in midsummer.
Operator Premier holds a 55% interest in the concession with Petrofina SA holding the remaining 45%.
BRITISH GAS VENTURE
While details of BG's agreement are to still to be ironed out by yearend, BG tentatively will receive a 50% interest in the concession and is required to absorb all exploration costs the first 8 years.
BG is obliged to fulfill the minimum program required of Pttep by the Thai Department of Mineral Resources: drilling one exploratory well and shooting at least 2,500 line km of seismic survey with a minimum outlay of $3 million in the first 3 year obligation period. Work and expenditure commitments for a second obligation period of 5 years also call for one well and a $3 million minimum.
There appears to be some reduction from the work Pttep first wanted undertaken under negotiations that saw BG outbid Norway's Den norske stats oljeselskap AS (Statoil) and Canada's Petro-Canada. The winner initially was required to commit at least $8 million for work that included drilling four wells the first 8 years. (OGJ, Apr. 2, p. 24).
It will be the second major upstream venture for BG in Thailand.
Last March, BG signed an agreement to obtain a 20% stake in a $650 million venture with Pttep, Total CFP, and Statoil to develop the B structure gas field in the Gulf of Thailand.
Block 5/27 covers 15,320 sq km off the southern isthmus province of Prachuab Khiri Khan, just north of Thai Shell Exploration & Production's suspended Nang Nuan oil field.
Previous exploration has indicated the block could contain as much as 165 million bbl of original oil in place, according to official government estimates.
LICENSING ROUND
After a series of delays, Thailand invited foreign oil companies to take part in its 13th petroleum licensing round since the kingdom's first Petroleum Act was passed in 1971.
On offer onshore are 83 blocks, each with an area of about 3,000 sq km.
In the Gulf of Thailand, 12 tracts, with areas of 5,000-15,000 sq km, are up for bid.
Six 5,000-15,000 sq km blocks in shallow waters of the Andaman Sea and three 20,000 sq km Andaman Sea blocks in water depths exceeding 200 m are also on offer.
Part of the delay in announcing the tender, previously scheduled for first quarter 1990, stemmed from changes in number and size of the blocks. Previously, a total of 109 tracts were planned for licensing (OGJ, Dec. 18, 1989, p. 22).
REQUIREMENT CRITICIZED
But more importantly, the licensing round delay was due to an adjustment of concession terms, notably a requirement that foreign operators incorporate in Thailand with an upfront payment of 100 million baht ($4 million) to be eligible for concessionary rights. The condition has drawn criticism, especially from U.S. oil companies on grounds it complicates taxation and accounting matters under U.S. laws.
The U.S. companies said the amount involved was not a stumbling block but they were concerned about accounting and tax considerations for foreign subsidiaries registered in such countries as Bermuda or Panama.
The requirement, not contained in the country's new petroleum laws, was meant to force license holders to pay costs of contracts and services needed for operations in Thailand.
One local analyst said the condition could hamper the Thai government's effort to attract more foreign petroleum operators to the country as intended under a long process of sweetening national petroleum laws.
But the Persian Gulf crisis stemming from Iraq's invasion and takeover of Kuwait may lead oil companies to step up efforts to search for reserves outside the Middle East and thus spur them to turn to Thailand, he said.
OTHER TERMS
As part of its policy to attract more companies and place limits on concessionary rights of operators in Thailand, the government will require a foreign company to apply for not more than four tracts or a total acreage of about 20,000 sq km in all areas except waters greater than 200 m deep in the Andaman Sea, said Thai Department of Mineral Resources Dir. Gen. Visith Noiphan.
Concessionaires will extend the Thai government first right of refusal to buy the crude oil produced from a block under a formula based on hydroskimming yields, multiplied by average products prices in Singapore, and reduced by refining costs and gross refiner's margin of not more than $3.50/bbl.
For natural gas, the prices are subject to negotiations.
Bidding under the licensing round was to have closed Oct. 23.
Copyright 1990 Oil & Gas Journal. All Rights Reserved.
