Serica in talks to commercialize N. Sumatra gas discoveries

Canadian junior E&P firm Serica Energy said on Friday it had held talks with state oil and gas company Pertamina and state gas distribution firm PGN with respect to a gas sales agreement for the Kambuna Field in Glagah Kambuna TAC, offshore North Sumatra, with production expected to commence in 2008.

Glagah Kambuna contained three discovery wells: the Glagah-1 well drilled by Caltex in 1985 and the Kambuna-1 well drilled by Bow Valley in 1986. In September 2005, Serica drilled its first operated well, the Kambuna-2 appraisal well. The well was drilled to a depth of 7,963 ft and tested gas at 17.5 MMCFDand over 1,500 BPD of crude. Serica has submitted a Plan of Development for Kambuna field to Pertamina last December.

Serica has a 55% working interest and is the operator of the block.

As part of this development plan, Serica has contracted Veritas DGC to acquire a 3D seismic survey of up to 470 square kilometres commencing in mid-2006. The survey will cover a large area covering additional prospects lying both in the Glagah Kambuna TAC and in the adjacent Asahan Offshore PSC, where Serica is also the operator.

Following the interpretation of the new data and selection of well locations, drilling will take place in 2007, the company said.

?Field development, in 50 meters of water, will be straightforward and potential markets for Kambuna gas include the PLN power plant at Belawan and the city of Medan, one of Indonesia's largest cities.?

The company also said it would submit PoD for Tanjung Perling gas field in Asahan PSC where it has 55 percent working interest.

The Asahan PSC contains the Tanjung Perling and Togar discovery wells. The Tanjung Perling Field, approximately 20 kilometres offshore, was discovered by Pertamina and Japex in 1974 but was uncommercial at that time.

The company said recent new seismic information had indicated that the Tanjung Perling Field, in the south of the Asahan Block, may be commercial and a development plan is being prepared for this field and would be submitted to BPMIGAS this year. Serica recently executed an MoU with PGN, relating to the delivery of gas from the Tanjung Perling Field starting in 2008.

The Togar-1A well, drilled in October 2005, was the Serica?s second operated well and was a small gas discovery. The well successfully confirmed the use of seismic direct hydrocarbon indicators as an effective exploration tool in the Asahan Block, which contains a number of other prospects that are currently being evaluated for exploratory drilling. Togar itself may be exploited via a future larger development on the block as a satellite to other potential field developments. (alex)