Sampang PSC owners revise development plan for Oyong field

Australian oil company Cue Energy Limited said Wednesday that it and its partners that own the Sampang production sharing contract concession offshore East Java was modifying the development plan for the concession's Oyong field following an incrase in recoverable oil reserves and the rise in oil prices.

Cue said the joint venture is now expecting to start oil production in the field in the third quarter of 2005.

Cue said that captial expenditure would fall as the result the revised plan of development. Cue, which has 15 percent share in the concession, will spend US$14.5 million, down from the initially planned US$19 million.

?The planned new development will consist of a simple well head structure formed by triangular braced surface well conductors which will extend above the sea surface,? Cue said.

Cue said development wells would be drilled through and between the conductors. Up to seven development wells can be drilled through each structure.

"Recent analysis of the Mundu Formation reservoir rock properties and consequent revised dynamic reservoir simulation modelling, have indicated that the peak oil production rate could reach 20,000 barrels of oil per day for a six well oil development and should average 9,000 barrels of oil per day for the first two years of production," Cue said.

Cue further said oil and gas will be processed on a nearby moored barge. Oil will be exported by shuttle tanker and gas will be sent by pipeline to the PT Indonesia Power?s electricity generating plant at Grati, East Java.

Cue added that first gas is expected to be produced around 2006. Solution gas associated with the early oil production will be reinjected until gas delivery to Grati begins.

Cue reported earlier on Wednesday that a reserves audit by international assesment company DeGolyer and McNaughton showed that the field's technically proven oil reserves and technically proven plus probable oil reserves were significantly higer than previously thought.

The reserves (recoverable volumes) are characterized as technical reserves pending final an approval of full development by the joint venture. The DeGolyer and McNaughton reserves are:

Participants in the Sampang PSC are Cue Sampang Pty Ltd (15 percent), operator Santos (Sampang) Pty Ltd (45 percent), and Singapore Petroleum Company Limited (40 percent). (robert)