Eni seeks partner for Krueng Mane exploration block
Tuesday, October 14 2003 - 12:02 PM WIB
Farm out Summary
Eni Indonesia (Op & 100%) is looking for a partner to participate in its exploration activities in the Krueng Mane Block, located 50km offshore north Sumatra in water depths ranging from 400m to 1350m. The JAU-1 gas-condensate discovery is present in the block, with reserves estimated at 183bcf.
This block is subject to the favourable Indonesian deepwater PSC terms of 60:40 for gas. The recoverable past cost pool available to the successful farminee, is approximately $18m.
Eni is intending to undertake a 2D seismic programme in early 2004 to help better define the potential of several large prospects. A promote of 2 for 1 is sought on a 2D seismic programme of approximately 2000km for the farminee to earn a working interest of up to 50%. A full data room will be open in November 2003, at the offices of Eni Indonesia in Jakarta.
Opportunity
There exists an excellent market opportunity in this region to supply gas to the Arun LNG plant. The presence of gas accumulations in the block is already proven, and the time frame for production from any new field in the Krueng Mane Block will be relatively short term, with 1st gas anticipated 3-4 years from the point of discovery. Of note is that the Arun LNG plant is fully depreciated (unlike new LNG projects) and hence the only capex costs for any new gas development will be associated with the offshore facilities.
This block has proven undeveloped reserves of 183bcf within the JAU Field and exploration potential of at least 4.5tcf reserves in the three main prospects. Leads with considerable additional potential are also present but at present they are ill defined by the available old seismic lines. An indication of the substantial economic potential of this block is provided by a model for a development comprising JAU Field + 1 Prospect (e.g. BSN with P50 reserves of 900bcf) supplying gas to the Arun LNG plant. This model yields a very attractive EMV = US$82m and an NPV8 = US$406m, with IRR of 35%.
The political instability of north Sumatra (Aceh) so far never had an impact on the operations of this PSC, safely located 50km off the coast.
Block Overview
The Krueng Mane Block is located offshore northern Sumatra approximately 50km north of the Arun LNG plant. Water depths range form 400m to 1350m. This block was signed in September 1999 and extends across part of an old Inpex block that was relinquished in 1996. The Krueng Mane Block was signed with a well & seismic commitment work programme but includes an option to relinquish from Year 2 onwards. The current status is that the commitment has been fulfilled up to end Year 5, i.e. Sept 2004.
Three wells lie within the current licensed area. In 1986 Jambu Aye Utara-1 resulted in the discovery of a gas field accumulation estimated to be 183bcf, in 650m water depth. Inpex drilled appraisal well JAU-2 in 1987, but did not develop the accumulation because at that time this modest sized gas field was uneconomic.
Bungong Jeumpa-1 (BJM-1) was drilled in 2000, following the award of the Krueng Mane Block. An effective reservoir was absent at the primary target level in the post-rift section but the well did encounter good quality sandstones at syn rift level, and considerable up-dip potential remains untested at this deeper level. This well was P&A.
During 2002, Eni Indonesia has reviewed the results of the Well BJM-1, re-assessed the remaining exploration potential of the block and evaluated the commercial value of the JAU discovery.
These studies have shown there is considerable remaining potential in this block, with at least 4.5tcf of exploration potential reserves within the main three prospects (BSN, Safir & Emerald). Of particular note are the development synergies between the JAU discovery (183bcf) with the low risk Prospect BSN and / or Prospect Safir.
Eni Indonesia is intending to undertake a seismic acquisition programme (approximately 2000km of 2D) in late 2003 / early 2004 to help better define the potential of this block and facilitate prospect ranking for a well programme in late 2004 ? early 2005.
Main Discoveries in the North Sumatra Region
Several large gas and condensate fields have been made in the north Sumatra region, both offshore and onshore: The giant Arun gas field (c.14 tcf reserves) located onshore is the most important. Discovered by Mobil in 1971 the field is a combination stratigraphic / structural controlled accumulation. The reservoir is a carbonate reef build-up in the lower to middle Miocene Peutu Fm., developed on the crest of a basement horst.
A second important gas discovery with respect to the Krueng Mane Block is the NSB-A field (circa 1tcf) and its satellites, located only 45km to the SE of the JAU. Again discovered and operated by ExxonMobil, this field is located gas field and has a pipeline to the Arun LNG plant. The reservoir is a large reef developed on the Malacca carbonate platform. This field has been charged from a gas mature kitchen that lies to the west and extends into the Krueng Mane Block.
The presence of this NSB-A facility is a key factor in assessing the economic value of the JAU discovery and the remaining exploration potential of the Krueng Mane Block.
The other important gas fields in the region include the producing Cunda, South Lhok Sukon A & D fields in the North Sumatra Block B, and the Pase field in Block Pase A.
The JAU gas field (183bcf) is a simple four way closure with a high confidence seismic DHI coincident with the field GWC. The gas and condensate bearing reservoir (tested by a DST at 35mmscfg/d) is the post-rift, trangressive shelfal sandstone of the Baong Fm., (Middle Miocene). Gas is also present in the older, syn-rift Lower Parapat sandstone, which represent an upside potential.
Krueng Mane Block Exploration History
The Krueng Mane Block extends across part of the previous and much larger block called the Offshore North Sumatra Block that was licensed to Inpex from 1982 to 1996. During this period, 5 wells were drilled and a large amount of 2D seismic data acquired. However, the seismic grid across the block remained coarse and the only well drilled to test the potential in the deepwater portion of this block / basin was Well Intan Utara-1. Although P&A, this well recovered gas condensate from the basal post-rift sandstone.
After Lasmo (now Eni Indonesia) was awarded the Krueng Mane Block in 1999, Unocal farmed-in for 15% in late 2000. The licensed area was increased slightly to 6,278km2 in February 2001 to ensure the JAU gas field lies entirely within the block. Well BJM?1 was drilled in late 2000 and a 25% relinquishment made in September 2001, reducing the block size to 4,712km2. A further 25% relinquishement is due by 27th September 2005 (in Year 6).
Eni Indonesia took over Unocal?s equity in the block in 2001 and now holds 100% share. Eni Indonesia has since undertaken a complete revision of the block potential to evaluate the well results and to assess the remaining exploration potential and commercial value of the JAU-discovery.
Contact Address and Numbers
Giuseppe Moscato (Krueng Mane Team Leader)
Email: giuseppe.moscato@eniindonesia.co.id
Leonardo Salvadori (Exploration Manager)
Email: leonardo.salvadori@eniindonesia.co.id
Antonio Argenton (New Ventures Coordinator)
Email: antonio.argenton@eniindonesia.co.id
Eni Indonesia
Kuningan Plaza, South Tower Suite 901
Jl. H.R. Rasuna Said Kav C 11-14
Jakarta 12940 ? Indonesia
Tel: (+62) 21 3000 32000, Fax: (+62) 21 3000 3230