Southeast Asia's current economic climate and low oil prices are discouraging exploration and development in the region, but the Malaysia-Thailand Joint Development Area (JDA) remains a bright spot.
This is the view of Wood Mackenzie Consultants Ltd., Edinburgh, which says this offshore area's proximity to the well-developed Thai gas market should provide long-term strategic value.
"The area," said Wood Mackenzie, "has become one of the major potential gas producing provinces in the region, with estimated recoverable reserves of almost 10 tcf of gas, 45 million bbl of oil, and 100 million bbl of condensate."
Exploration progress
The analyst said that the nature and rate of development of the JDA reserves will be dictated by the markets for gas (see story, p. 27), but a heads of agreement has been signed for the sale of natural gas from the area's Blocks A-18 and B-17.Block A-18 is operated by the Carigali-Triton Operating Co. (CTOC) joint venture of Malaysian state firm unit Petronas Cariga* and Triton Energy Corp., Dallas.
Block B-17 is operated by a joint venture of units of the Malay and Thai state firms, Petronas Cariga* and PTT Exploration & Production plc, respectively.
Wood Mackenzie said that Block A-18 holds 79% of the JDA's proven gas reserves of 9.8 tcf, and Block B-17 the remainder. Similarly, Block A-18 holds 83% of the 145 million bbl proven liquids reserves, and Block B-17 the rest.
The analyst said that Blocks A-18 and B-17 are relatively well explored, so further significant discoveries are unlikely (OGJ, July 21, 1997, p. 94). All 16 wildcats on the blocks encountered gas and condensate.
Ten wildcats drilled to date on Block A-18 notched up discoveries including Bulan, Bumi East, Bumi, Cakerawala, Samudra, Senja, Suriya, and Wira gas fields.
Three of the discovery wells-in Bulan, Cakerawala, and Senja-were said to have identified significant oil pay zones, "which should improve development economics."
Of six appraisal wells drilled on Block A-18, two were drilled in Bulan, two in Cakerawala, and one each in Senja and Suriya. All six encountered gas, said Wood Mackenzie.
Six wildcats drilled on Block B-17 encountered gas and condensate, but only three of these finds are thought to be commercial: Muda, Jengka, and Tapi. Four appraisal wells have been drilled in Muda, and one each in Jengka and Tapi.
"Up until now," said Wood Mackenzie, "Block C-19 has received very little attention. Results from the Samudra-1 well, completed in September 1997 by the CTOC venture, have highlighted the potential of the southern end of the JDA."
Samudra-1 cut 171 m of net pay and flowed a combined 49 MMcfd of gas and 858 b/d of condensate on test.
Wood Mackenzie said a 3D seismic survey is planned on the block to determine further exploration prospects.
Delays possible
The heads of agreement calls for 390 MMcfd of gas to be delivered from Cakerawala field beginning in 2001 and 250 MMcfd to be supplied from Muda and Jengka beginning in 2002."However," said Wood Mackenzie, "given the delays already experienced in securing a gas sales agreement and the time required for development, we estimate that production from Block A-18 will not commence until 2002 at the earliest, with Block B-17 coming on stream a year later via the Muda field."
Initial development of Block A-18 is expected to focus on Cakerawala, where the operator plans to install three wellhead platforms, a quarters platform, a processing platform, a riser platform, and a storage and offloading ship. Thirty-five development wells are envisioned.
The development plan for Block B-17 Muda, Tapi, and Jengka is expected to be similar to that for Cakerawala, initially comprising a single processing and production platform and at least one satellite wellhead platform in Muda.
Wood Mackenzie said that the agreement calls for early gas to be supplied to Malaysia by pipeline to a demand center at Ranot in Thailand's Songkhla province, with a further line running south to Perlis, where the main buyer will be a combined-cycle power plant.
"However," said the analyst, "it should be noted that, with large quantities of relatively cheap gas available off Peninsular Malaysia, the rationale for Petronas to import relatively expensive JDA gas remains unclear."
Among other problems for JDA developments was said to be Triton's failed move to find a buyer for the whole or part of the company. Instead, ARCO agreed to buy half of Triton's 50% interest in Block A-18 for $150 million (OGJ, July 27, 1998, p. 36).
"A gas sales agreement has yet to be signed," said Wood Mackenzie, "and, given the uncertainties concerning demand for the gas in the Malaysian and Thai gas markets, ARCO will have been unwilling to pay a full price for the acquisition.
"Instead, it appears that the deal has been partly structured on the achievement of certain objectives, which could include the bringing on stream of certain fields or attaining specific production rates."
Among regional project delays the analyst cited: Myanmar's Yadana gas field, from which PTT is buying 5 MMcfd of gas instead of 65 MMcfd, because of delays in building Ratchaburi power station; Pailin field in the Gulf of Thailand, from early 1999 to the third quarter; and Myanmar's Yetagun project by 6-12 months, with start-up now expected in 2001 (OGJ, Dec. 29, 1997, p. 18).
"With a global recession looming," said Wood Mackenzie, "prospects for economic recovery in the short term are limited. In the light of such poor economic performances, it is unlikely that there will be additional demand for gas in the short-to-medium term. Consequently, the likelihood is that development timescales will be pushed back."
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