Salamander updates Indonesian ops
Thursday, March 18 2010 - 09:33 AM WIB
Production
Kambuna gas and condensate field, Glagah-Kambuna TAC, (50%, Operator)
The development of the Kambuna field was successfully completed and first gas was produced in August 2009 through early production facilities. The field had just finished ramping up to the full contracted volume of 40 MMscfd in late September when production was shut in at the request of the buyer. Damage had been caused to the turbine burners at the Belawan Power Plant due to unexpected carry over of condensate and water. After conducting a detailed investigation into the cause of the problem, the buyer agreed that Kambuna's gas had consistently been delivered on specification and that the problem was related to other gases that were being co-mingled with the Kambuna gas in the pipeline downstream of Salamander's delivery point. On completion of the investigation, following repairs to the turbines and after Kambuna gas was given a dedicated pipeline, production recommenced in early November 2009 and was ramping up towards the full contracted volume in March 2010 following refurbishment and recommissioning of another gas turbine at Belawan. A take or pay provision in the GSA has been activated.
Work continues on the permanent onshore receiving facilities at Pangkalan Brandan. These are expected to complete in Q3 2010 and will have the capacity to handle in excess of the current contracted volumes. Kambuna gas is already an important contributor to power generation for the City of Medan which requires additional baseload power supply. Once production has switched to the permanent facilities, bringing additional volumes on-stream will be a priority for both the local authorities and the Group.
Offshore Northwest Java PSC / Southeast Sumatra PSC (5%)
Offshore Northwest Java saw a change of operatorship in 2009 with Pertamina buying out BP's interest. Pertamina was able to increase production which had been lagging behind budget and also appraised the APNE gas field and prepared and submitted a plan of development for these reserves. The operator is targetting commencement of the APNE development in 2010 with production starting in 2011. An aggressive drilling programme is planned for 2010 and is already underway. Production for the year was 61,000 boepd (gross).
Southeast Sumatra saw production at budget levels of 62,000 boepd (gross) and the operator has plans to continue infill drilling later in 2010.
South Sembakung Development, Simenggaris PSC (21.5%
In August 2009, a Gas Sales Agreement was signed with PT Pertamina Gas (Pertagas) and PT Medco Gas Indonesia for gas sales from the South Sembakung field, Simenggaris PSC, East Kalimantan. The agreement covers the supply of approximately 20 MMscfd of gas over an eleven year period at a minimum price of $3.00/Mscf plus an inflator linked to methanol prices. The gas will be sent, via pipeline, to the nearby Bunyu Island Methanol plant and production is expected to commence in late 2011. The pipeline will be constructed by the consortium of buyers.
Exploration
Bontang PSC (90% Operator)
During the first half of 2009 the Group completed an additional 3D seismic survey over the Bontang PSC to extend coverage to the East where mapping indicated additional prospectivity. The Bontang PSC lies at the northern end of the prolific Kutei basin and has been unexplored since the 1980's. The 3D seismic data has defined multiple prospects with cumulative mean potential resource in excess of c. 500 MMboe. The Angklung prospect has been selected as the first exploration drilling target on the block and the well is expected to spud later in 2Q 2010. Angklung is a fault bounded closure with sandstone reservoir targets in the Middle Miocene and potentially contains unrisked prospective resources of 125 MMboe. The main risk on the prospect is the development of sandstone reservoirs although sandstones were found by a 1971 Unocal well, Bungalun-1, drilled outside structural closure only a few kilometres from the site of the Angklung-1 well. There are numerous prospects to follow on from Angklung 1 and Salamander has recently secured a four year extension to the PSC and a rearrangement of licence commitments to allow sufficient time to fully evaluate the potential of the block.
The Group also completed a gas marketing study focussed on the local Bontang area. The results of this study suggest that the Tutung discovery, appraised by Salamander in 2008, could be commercially exploited if tied to an independent power plant development. The Group plans to complete a further appraisal well on Tutung in an onshore location during 2010 with a view to pursuing such a development option in 2011.
On 3 March 2010 the Group announced the acquisition of an additional 20% interest in the Bontang PSC taking its equity interest to 90%.
Bengara PSC (41.7%)
The South Sebuku-1 exploration well was drilled in June 2009 and encountered gas in four zones. Two of these zones were tested and flowed at a cumulative rate of 10.9 MMscfd. An appraisal well is planned for H2 2010. Providing this is successful, then it is anticipated that South Sebuku discovery would be developed via a tie in to the South Sembakung field, located only 15 kilometres away. In February 2010, the Group increased its equity in the Bengara PSC from 25% to 41.67%.
Kutai PSC (23.4%)
The Kutai PSC comprises first phase relinquishments around a number of giant fields in the Mahakam delta including Tunu (1600 MMboe) and Attaka (800 MMboe). The operator completed a 2D seismic survey in 2009 that has firmed up a number of drilling prospects thought to have mean prospective resources in the 35-70 MMboe range. Two of these prospects are scheduled for drilling in 2010. (end of excerpt)