Serica updates Indonesian ops
Tuesday, March 16 2010 - 04:10 PM WIB
The Glagah Kambuna Technical Assistance Contract ("TAC"), operated by Salamander Energy, covers an area of approximately 380 square kilometres and lies offshore North Sumatra. The Company now holds an interest of 25% following the sale of a 25% interest in the Kambuna TAC to KrisEnergy.
The major achievement of first production from the Kambuna field occurred in Q3 2009. Following the mechanical completion and commissioning of all facilities, initial production started on 5 August, with gas and condensate being delivered to the onshore receiving facilities at Pangkalan Brandan, north Sumatra. Commercial sales began on 11 August, with gas being introduced to the pipeline system for transportation to the Belawan Power Plant. This event provided the Company with its first significant production revenue.
Shortly after gas sales commenced, production from Kambuna was suspended at the request of the then sole buyer, the State electricity generator PLN, so that it could carry out repairs to its gas turbines. After a six week shutdown, production from the field restarted on 7 November.
The gas sales contract with PLN provides for an average contract quantity of 35 mmscfd for the first twelve months and it has already been demonstrated that rates in excess of this can be delivered through the installed, temporary, processing facilities. Following the unplanned shut-down, it is expected that in 2010 PLN will nominate larger quantities of gas in order to reduce its potential annual take or pay liability.
Due to operational difficulties experienced by PLN, field production was lower than planned and gross sales for 2009 were 1,654 million standard cubic feet of gas and 130,000 barrels of oil.
Gas sales to the second buyer, Pertiwi Nusantara Resources ("Pertiwi") are contracted to commence in the first quarter 2010 at a rate of 12 mmscfd. Additionally a contract has been agreed with a division of Pertamina to extract LPG from the sales gas stream, which would require a boost in production of around 10% to maintain the contracted deliveries to the other customers. However, until the permanent onshore processing facility is completed in 2Q 2010, the maximum total gas sales rate will be approximately 40 mmscfd, with about 4,000 barrels of condensate per day.
Once the permanent facilities are commissioned, total sales gas rates of approximately 50 mmscfd should be achievable. The buyers may nominate quantities in excess of the contract rates in order to make up for any shortfall. However, under the Take or Pay provisions of the gas sales contracts, at the end of each 12 month sales period the buyers are required to pay for at least 90% of any gas contracted but not taken.
The Kambuna gas is used for power generation to supply electricity to the city of Medan in north Sumatra and for industrial uses. The gas sales prices per thousand standard cubic feet under the contracts with PLN and Pertiwi are approximately US$5.40 and $7.00 respectively, escalated at 3% per annum.
The Kambuna gas contains about 100 barrels of condensate (light oil) per million standard cubic feet, which is sold to the State oil company Pertamina at the official Attaka Indonesian Crude Price less 11 cents per barrel. Attaka has historically traded close to the price of North Sea Brent Crude.
A reserves report on the Kambuna field carried out by consultants RPS Energy estimates that at 31 December 2009 the gross Proved plus Probable Reserves of the field are 131 bcf of sales gas and 11.4 mm bbl of condensate, a total of 38.7 mm boe.
Kutai PSC
Serica is the operator of the Kutai Production Sharing Contract ("PSC") and currently holds a 30% interest (subject to certain governmental approvals and consents). The PSC is divided into five blocks located in the prolific Mahakam River delta both onshore and offshore East Kalimantan, adjacent to several giant fields, including Tunu (1,600 million boe), Attaka (800 million boe) and Peciko (>1,000 million boe).
The Company has completed seismic surveys in both the offshore and onshore parts of the PSC. In the onshore part of the Kutai PSC, Serica completed a 280 kilometre 2D seismic survey. While drilling the seismic shot holes a number of oil seeps were encountered, demonstrating the existence of a working petroleum system in the onshore part of the acreage. The interpretation of the offshore 3D seismic data has revealed several exploration targets, of which the Dambus and Marindan prospects are the most significant. In 2010, Serica expects to drill two offshore wells and one onshore well in the PSC.
East Seruway PSC
In October 2008, Serica was awarded the East Seruway PSC offshore north Sumatra, Indonesia, adjacent to the Glagah-Kambuna TAC. Serica is operator and holds a 100% interest in the PSC, which covers an area of approximately 5,864 sq km (2,264 sq miles) which is largely unexplored.
Serica has a detailed regional understanding of the offshore North Sumatra Basin having been a PSC operator there since 2003. The Company has just completed the acquisition of 2,100 line kilometres of 2D seismic data in the PSC to define further the exploration potential prior to drilling an exploration well in the block. (end of excerpt)