OUTLOOK FOR THIRD MALAYSIAN LNG PLANT BRIGHTER WITH BIG GAS FIND

Prospects for a third liquefied natural gas export complex in Malaysia are brighter than ever.

A unit of Occidental Petroleum Corp. has drilled its fourth and biggest natural gas strike into a carbonate reef on Block SK 8 off Sarawak, East Malaysia, turning up still more potential reserves for the country's proposed third LNG plant.

Occidental Petroleum (Malaysia) Ltd. 1 Serai flowed at a combined rate of 133 MMcfd of gas and 2,262 b/d of 41-42 gravity condensate on tests of two zones totaling 263 in a gross gas column of 564 ft. The gas contains 3% CO2 and negligible hydrogen sulfide. Water depth is 407 ft.

The find brings to a combined total of 5 tcf of gas in place in the four SK-8 fields for which Oxy has disclosed test results. Another Block SK-8 well, 1 Bijan, found hydrocarbons, but Oxy did not disclose test results. On adjoining Block SK-6, Oxy's 1 Bentara wildcat flowed 1,200 b/d of oil and 9.8 MMcfd of gas (OGJ, Oct. 15, 1990, p. 38).

WELL DETAILS

Oxy 1 Serai's lower zone flowed 67 MMcfd of gas and 1,162 b/d of 40.8 gravity condensate through a 1 1/2 in. choke from 99 ft of pay at 6,112-6,211 ft. The flow was limited by capacity of a test separator.

The upper zone flowed 66 MMcfd and 1,100 b/d of 42.7 gravity condensate through a 1 1/2 in. choke from 164 ft of pay at 5,768-5,932 ft.

The well is 3 miles southwest of the big Jintan gas field Oxy found on the 4.2 million acre block in April 1992. Oxy 1 Jintan flowed 32.9 MMcfd of gas and 832 b/d of condensate (OGJ, May 4, 1992, p. 56). Oxy's 2 jintan appraisal flowed 64.4 MMcfd of gas and 620 b/d of condensate, doubling reserves estimates for the field (OGJ, Dec. 28, 1992, p. 31).

Oxy 1 Selasih, also on Block SK-8 about 70 miles southeast of Jintan, flowed 41.9 MMcfd of gas and 283 b/d of condensate (OGJ, Feb. 15, p. 46).

Oxy signed a production sharing contract with state owned Petroliam Nasional Bhd. (Petronas) for SK-8 in 1989, with plans for eight wildcats in 5 years (OGJ, July 24, 1989, p. 24). Operator Oxy and Nippon Oil Exploration Sarawak Ltd. each holds a 37.5% interest in the block, with Petronas Carigali holding the remaining 25%.

Oxy also is operator of adjoining 1.1 million acre Block SK-6 and 50-50 partner with operator British Gas plc in the 2 million acre Block SB-2 off Sabah.

In 1989, Oxy said it plans to spend $90-100 million in 5 years of exploration in Malaysia. At the time, the company said it expects to ultimately shoot more than 25,000 line miles of seismic on the three blocks.

LNG UPDATE

Oxy Chairman Ray Irani said, "A preliminary analysis indicates the Serai discovery will significantly add to the recoverable gas present in Block SK-8, which will support construction of a new liquefied natural gas facility in East Malaysia.

"The proximity of Serai to jintan field will minimize pipeline and production facilities required to transport gas to the LNG plant."

A group under the direction of Petronas, and including Oxy and Nippon Oil Exploration (Malaysia) Ltd. has begun studies for a new LNG project and a development plan for the gas fields.

The LNG plant would be developed by the parties through a joint venture in which Petronas would take 70% of the equity in the plant, Oxy/Nippon the remaining 30%. The joint venture is expected to be formed by yearend.

The LNG project under study would make Malaysia the largest supplier of LNG to the rapidly expanding East Asian market, Oxy said.