THAILAND'S OIL PROSPECTS BRIGHTEN

Sept. 21, 1992
Oil exploration and development looks brighter in Thailand while gas prospects are mixed. Thai Shell Exploration & Production Co. Ltd. hopes to bring on stream in 1993 a rarity for Thailand: a commercial oil discovery in the Gulf of Thailand. Shell also has boosted its estimate of reserves in onshore Sirikit oil field, Thailand's first commercial oil field. Esso Exploration & Production Khorat Inc. has dropped plans to drill more wells to sustain current production from Nam Phong,

Oil exploration and development looks brighter in Thailand while gas prospects are mixed.

Thai Shell Exploration & Production Co. Ltd. hopes to bring on stream in 1993 a rarity for Thailand: a commercial oil discovery in the Gulf of Thailand.

Shell also has boosted its estimate of reserves in onshore Sirikit oil field, Thailand's first commercial oil field.

Esso Exploration & Production Khorat Inc. has dropped plans to drill more wells to sustain current production from Nam Phong, Thailand's first commercial onshore gas field.

Esso also said it does not plan to resume exploration on the Phu Horm structure in Udon Thani, where one of two wells was a gas discovery.

Meantime, Thailand's top E&P player, Unocal Thailand, has outlined its upstream spending plans and activity for the year.

In other Thailand developments:

  • The government sued a financially ailing Australian oil firm for allegedly breaching a concession agreement.

  • The Thais terminated the concession rights awarded to independents Croft Exploration of the U.K. and CTC Minerals of the U.S.

  • A group of units of Maersk Olie og Gas AS of Denmark, and Pogo Producing Co. and Rutherford Moran Oil Corp., both of Houston, used the Sedco 601 semisubmersible rig to spud its first wildcat on Block B8-32, northwest of Kaphong gas field in the Gulf of Thailand. Units of operator Maersk, Pogo, and Rutherford each own one third interest in the 2.6 million acre concession (OGJ, Nov. 26, 1990, p. 30).

SHELL DISCOVERY

Shell's attempts to revive oil production from its offshore B6/27 concession has paid off with what may prove to be a significant oil discovery.

Thai Shell Managing Director Paul Rowlands said the Nang Nuan B-01 discovery well has the potential to inherit the role as the country's sole offshore oil producer from the short lived Nang Nuan A-02 on the same block (OGJ, Apr. 23, 1991, p. 28).

Nang Nuan B-01 has a potential productive capacity of 5,000-10,000 b/d, about the same range Nang Nuan A-02 produced in 1988. The earlier well produced about 500,000 bbl of oil in 6 months before being suspended due to water coning.

Nang Nuan B-01, about 35 km off Chumphon province, flowed 4,700 b/d of waxy crude from pay at 3,187 m during a drillstem test of about 6 hr. The Harvey H. Ward jack up drilled the well to 3,311 m in late July.

About 6 km north of the A-62 well, the B-01 lies on a separate structure but in the same karstified limestone in the same basin. Production testing is under way to help assess the economics of placing the field on stream in first half 1993. Preliminary reserves estimate is 10-15 million bbl.

Rowlands noted that assessing reserves and production in such situations is notoriously difficult, as Shell found in the 1988 well. However, he said initial results are sufficiently encouraging that Shell is taking steps to secure the well for future reentry. And the company is studying options for offshore production and transportation, considering a platform at a cost of $2 million.

Shell also is considering reentering the A-02 well to assess the feasibility of reestablishing production there, The company has no plans to drill more wells in the area but will reevaluate after establishing production for some time.

With the latest discovery well, Shell has met all of its concession commitments under a second exploration phase that expires Feb. 5, 1993. Since being awarded the concession Feb. 6, 1985, Shell has spent $95 million to acquire 7,700 line km of 2-D seismic data and 430 sq km of 3-D seismic data and drill six wildcats, one appraisal well, and one development well.

SIRIKIT RESERVES HIKE

Shell also hiked its estimate of original recoverable oil in Sirikit field, in the northern province of Kamphaeng Phet, to 106 million bbl from 87 million bbl. At the same time, the company is working on plans to implement a waterflood in the field that is expected to boost reserves by a further 25 million bbl.

The reserves boost will enable Shell to sustain the field's current plateau production of 23,000-24,000 b/d for several more years, Rowlands said.

When Sirikit went on stream in 1982, initial estimates of reserves were less than 30 million bbl. To date, the field has produced 60 million bbl.

Shell also has exhausted prospects on the S1 block containing Sirikit, where it has drilled more than 100 wells since 1979. Total outlays for the block to date are $245 million.

ESSO PLANS

Esso shelved plans to drill at least one more well in Nam Phong field in the fourth quarter to maintain production of 65 MMcfd.

Esso Khorat Operations Manager Bryan Mackora said an analysis of the current five producing wells shows they could sustain a level of 65 MMcfd for 2-3 years. The analysis does not change the most recent estimate of gas reserves in the field, 300-500 bcf, about one third of the original estimate.

Gas production from Thailand's first onshore commercial gas field started in December 1990 and to date totals about 267 bcf. The gas, 95% methane, fuels a 244,000 kw power plant nearby that meets more than one third of Northeast Thailand's electricity demand.

During the past 12 years Esso has spent about $192 million for exploration and development in the region.

Mackora said Nam Phong by itself is economic, but taking into account E&D costs to date on 50,000 sq km of concessions in seven provinces, Esso's return is marginal.

The steep reduction in Nam Phong's reserves estimate has led the Petroleum Authority of Thailand (PTT) to shelve a $312 million project to lay a gas pipeline from the field to Saraburi province in Thailand's central plains in 1992-93. The 24 in., 390 km line was to tie into PTT's onshore/offshore grid fed by Unocal Thailand's gas fields in the Gulf of Thailand via the eastern seaboard.

PTT put a floor of 1 tcf reserves at Nam Phong to justify the investment in the pipeline.

Meantime' affiliate Esso Udon classified the Phu Horm gas discovery as noncommercial. Esso Udon spent $75 million exploring for oil and gas on two blocks covering 20,000 sq km in Udon Thani and Sakon Nakhon provinces. Three other wells were dry.

UNOCAL SPENDING PLANS

Unocal and partners plan to spend $148 million this year for gas development projects in Thailand.

Unocal to date has spent $3.1 billion on exploration and development in Thailand, almost all of it offshore.

Of the 1992 budget, $141.8 million will go for Gulf of Thailand development and $6.2 million for onshore gas exploration in Northeast Thailand.

Total 1992 budgeted outlays are down 28.15% from 1991, when Unocal and partners stepped up spending for development of Funan gas field, which went on stream in February (OGJ, May 18, p. 19). Most of the year to year decline in spending reflects a decline in offshore outlays of 25.75% from last year's level.

However, said Unocal Thailand Vice Pres. Allan Armitage, "From the exploration and production point of view, we will be at a similarly high level since we've gotten Funan construction behind us. It will be a little slower on the construction side."

The Unocal group's 1992 spending breaks out as $30 million for explor atory drilling vs. $31 million in 1991, $76 million for development drilling vs. $79 million in 1991, and $33 million for facilities vs. $81 million in 1991.

UNOCAL GROUP PLANS

Unocal and partners in 1992 plan to drill 52 wells vs. 59 in 1991.

Of this year's total, 48 are planned in the Unocal 1, 11, and III sales contract areas, broken out as 37 development and at least 11 exploratory and delineation wells. Four exploratory wells are planned on Block B-12/27, Unocal plans to use three drilling rigs in the Gulf of Thailand this year.

Noteworthy this year will be early production testing in Surat gas field, installation of one platform each in Erawan and Jakrawan gas fields, and a 9 km gas pipeline in the Erawan Jakrawan area.

With Funan on line, Unocal expects to increase total gas deliverability from its six producing fields to PTT to an average 744 MMcfd from last year's average level of 666 MMcfd. At the same time, condensate production is expected to climb to 25,723 b/d from 21,750 b/d in 1991.

One of the biggest drilling programs is slated in jakrawan field, where Unocal has drilled a string of eight successful wells.

Last year Unocal and partners drilled 41 development wells in the three contract areas and 15 exploratory and delineation wells on Block B-12/27.

Through yearend 1991, Unocal Thailand had drilled 597 wells and installed 58 offshore platforms-44 wellhead, four production, four central processing, five accommodation, and one gas compression.

LAWSUIT

Thailand is suing Bass Strait Oil & Gas (Holdings) NL for more than $7.5 million (Australian) for allegedly breaching terms of a concession in the central plains.

It is believed to be the first such lawsuit involving the Thai Department of Mineral Resources (DMR) and a foreign concessionaire. The amount of the suit represents the value of exploratory work commitments the Melbourne company allegedly failed to fulfill on BS block, covering 5,560 sq km, during a 3 year period beginning in November 1985.

DMR Director Gen. Visith Noiphan said Bass Strait was obliged to spend $8.65 million for exploratory work, including drilling one well, but spent only $1.14 million. Under Thai petroleum law, concessionaires must pay DMR the minimum amount stipulated in concession agreements even if the exploratory work covered by that stipulated amount is not carried out. The amount must be paid within 30 days of the end of the first 3 year obligation period.

DMR took the legal action after failing to negotiate a settlement. It also seeks 7.5% in interest on the stipulated amount.

CONCESSIONS TERMINATED

Thai Industry Minister Sippanondha Ketudat canceled the Croft and CTC concessions, saying the two companies' requests for delays were not justified.

Both companies said the military crackdown on the prodemocracy movement in Bangkok in May delayed their final decision on signing.

CTC obtained two onshore tracts in Northeast Thailand, 5940/32 and 6040/32. Croft obtained two onshore tracts on Thailand's southern peninsula, 5024/32 and 5025/32, two onshore blocks in the Northeast, 5442/32 and 5541/32, and one in the Andaman Sea, 6/32.

Earlier, two Canadian companies and a Belgian-U.K. combine pulled out of concessions also awarded in the last licensing round, Thailand's biggest.

Dropped were Canadian Occidental Petroleum Block 5842/32, in the Northeast, Coho Resources Blocks 5041/32 and 5043/32, near Sirikit, and a combine of Fina Exploration SA and Enterprise Oil plc Blocks W1/32 and W2/32 in the Andaman Sea.

Sippanondha said the tracts will be put up for bid in the next round of licensing, expected within 18 months.

In all, 12 companies or groups have signed concessions from the last licensing round.

Copyright 1992 Oil & Gas Journal. All Rights Reserved.