EXCLUSIVE: Devon Energy to focus growth in Sumatra

U.S.-based Devon Energy said that its Indonesian operations will focus most of its future growth in Sumatra, where some of its core properties are located. In addition, significant exploration drilling is planned on all operated blocks.

?We?ll focus our future growth in Sumatra, around our Jabung Block PSC and our interest in South Jambi B Block where we have significant oil and gas reserves,? Larry Leavell, the company?s Indonesian unit president told Petromindo.com in an interview Thursday.

According to Leavell, Devon, along with its partners, is investing about US$ 275 million into developing the so-called Betara Complex in Jabung PSC over the next three years. The funds will be used for facilities to process gas, liquefy petroleum gas and crude.

Leavell said the Betara project is expected to come on stream in the third quarter of 2003 with the initial gas sales of 65 million standard cubic feet per day (MMCFD), reaching the plateau sales of 150 mmcfd.

The gas, said Leavell, will be piped to Singapore starting 2003.

Starting 2003, Jabung Block will supply approximately 40 percent of 150 mmcfd of gas requirement, which will gradually peak to 350 mmcfd in 2009.

Besides natural gas, the Betara Complex would also be able to process some 10,000-barrel per day (bpd) of liquefied petroleum gas (LPG).

Currently, said Leavell, crude production from Jabung PSC averages 23,000 bpd with the potential of producing more in the future following a recent oil discovery in the Block.

Devon, Amerada Hess and Kerr McGee have equal working interest in Jabung with Devon as operator. Pertamina holds the remaining 10 percent interest

Devon has 30 percent working interest in Jambi B PSC, which will also supply gas to Singapore, while Gulf Indonesia Resources (operator) and state oil and gas company Pertamina hold 45 percent and 25 percent working interest, respectively.

The South Jambi B Block will also supply about 19 percent of the natural gas requirement to Singapore.

In South Sumatra, Devon also operates Bangko Block, where the company will conduct a 2D seismic survey and is hoping to be able to follow with exploration drilling in 2003.

Leavell said that Devon is keen to get involved in other business opportunities around its Sumatra properties, including participating in some more exploration blocks.

Apart from Sumatra properties, Devon also has a 25 percent interest in Tuban block joint operating body (JOB) where its Mudi field currently produces some 12,000 bpd of crude.

The company had recently discovered oil and gas in Sukowati field, which according to industry sources, might contain significant amount of crude reserve. The block is adjacent to ExxonMobil?s Cepu technical assistance contract (TAC) where more than 250 million barrels of crude reserve had just been discovered

?In the next two years we plan to drill two exploratory wells. We will drill the first well, East Mudi, after Sukowati this year and another next year, ? said Leavell.

According to Leavell, this year Devon plans to spend U$30 million on Tuban block exploration and development.

In Irian Jaya, Devon has two properties, Kepala Burung PSC and Salawati JOB PSC on Salawati Island, where combined crude production averages 12,500 bpd.

Leavell said last year Devon ran 2D seismic on both blocks and has generated numerous exploration drilling locations.

?On Kepala Burung, we plan to drill one exploratory well next year and on Salawati Island we are planning two exploration wells,? said Leavell.

Devon has 33.33 percent participating interest in Kepala Burung PSC and 17 percent in Salawati JOB. (alex)