Serica updates Indonesian ops
Friday, April 1 2011 - 12:51 AM WIB
Glagah Kambuna TAC - Kambuna Field, Offshore North Sumatra
The Glagah Kambuna Technical Assistance Contract (TAC) covers an area of approximately 380 square kilometres and lies offshore North Sumatra. Serica holds an interest of 25% in the TAC which contains the producing Kambuna gas field.
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 Nusantara Resources ("Pertiwi") are currently approximately US$5.40 and US$7.00 respectively, escalated at 3% per annum. A third contract for the supply of gas for LPG attracts the same price as the PLN contract and can add up to 10% to contracted gas sales.
Kambuna gas yields significant volumes of condensate (light oil) and currently approximately 75 barrels of condensate per million standard cubic feet of sales gas are extracted. The condensate is sold to the state oil company Pertamina at the official Attaka Indonesian Crude Price less 11 cents per barrel. The Kambuna condensate lifted in December fetched a price of US$93.01/barrel with sales in February 2011 realising US$105.88/barrel.
The operational difficulties experienced by PLN soon after first gas in 2009 persisted into 2010, with contract rates not being achieved consistently until the second half. Gross Kambuna field sales were 11,278 million standard cubic feet of gas and 980,193 barrels of condensate, equivalent to gross average daily sales for the year of 31 mmscfd and 2,685 bbl/day.
By the third quarter of 2010 average gross gas sales were in excess of 40 mmscfd with all three gas buyers purchasing gas. In September 2010, average gas sales of 42 mmscfd were achieved, the highest monthly figure to date. The field was shut down for two weeks in November 2010 to complete the commissioning of the permanent production facilities, and average gas sales in December 2010 of 39 mmscfd were achieved.
In August 2010 Serica reported that the Kambuna field operator, Salamander Energy, had commissioned an independent reserves audit of its operated fields, including the Kambuna field. The operator's new estimates of reserves relied primarily on shut-in and flowing down-hole pressure data recorded in only one of the Kambuna wells during a period of interrupted production. It was noted that, if the estimates were to be confirmed by future field observations it would result in a reduction in Serica's remaining net entitlement 2P reserves as at 1 January 2010, from 6.0 mmboe to 3.4 mmboe.
Serica commissioned an independent reserves audit on the Kambuna field for its 2010 annual reserves filings. This new reserves report, carried out by RPS Energy, the same consultants as used by the operator, estimates that at 31 December 2010 the gross Proved plus Probable Reserves of the field are 28.1 bcf of sales gas and 2.3 mm bbl of condensate, a total of 8.2 mmboe. These new estimates reflect significant reductions in reserves from the figures previously reported by Serica in 2009, and occur as a result of observing a faster than anticipated pressure decline in the Kambuna 3 well. However, part of the reduction in reserves is due to the reclassification of the Upper Belumai reservoir interval as contingent resources rather than reserves. The Upper Belumai interval represented approximately 20% of the best estimate of gas initially in place in the Kambuna field made by RPS as at 31 December 2009 for Serica's 2009 annual report.
The Kambuna offshore facilities are designed to accommodate a further well which the Joint Venture has approved for drilling in 2011 to exploit the gas bearing potential of a northern extension of the field. This activity plus the planned installation of gas compression which is being brought forward, is expected to maintain the productive capacity of the field at current levels until late 2011 or early 2012.
The performance of the field will continue to be monitored throughout 2011 as further production information becomes available.
East Seruway PSC
Serica is operator and holds a 100% interest in the East Seruway PSC offshore North Sumatra, Indonesia, adjacent to the Glagah Kambuna TAC. The PSC covers an area of approximately 5,864 square kilometres which is largely unexplored.
Serica has a detailed regional understanding of the offshore North Sumatra Basin having been a PSC operator there since 2003. In 2010, the Company 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.
Serica is currently interpreting the new seismic data before drilling an exploration well in the block.
Kutai PSC
Serica is the operator of the Kutai Production Sharing Contract and holds a 30% interest. The PSC is divided into five blocks located in the Mahakam River delta both onshore and offshore East Kalimantan.
The interpretation of offshore 3D seismic data revealed several exploration targets. Serica secured the Trident IX jack-up drilling rig to drill the Dambus and Marindan prospects.
The Dambus-1 offshore exploration well was spudded on 4 September 2010. The objective of the well was to investigate the potential for gas and oil accumulations in a stacked sequence of Miocene sands. Dambus-1 was drilled as a deviated well to a total depth of 3,225 metres MD (2,713 metres true vertical depth subsea ("TVDSS")). Based on the indicative data obtained while drilling, hydrocarbons were encountered in clean sands in the gross interval 2,070-2,102 metres MD (1,787-1,812 metres TVDSS) and there were indications of further hydrocarbon-bearing sands in an interval below 2,760 metres MD (2,340 metres TVDSS). In order to obtain definitive data on the extent of the hydrocarbon bearing sands, the well was plugged back and sidetracked and wireline logs, pressure data and fluid samples were acquired. Sidetrack Dambus-1ST was drilled to a total depth of 2,800 metres MD (2,568 metres TVDSS). Excellent quality gas-bearing Miocene reservoir sands were encountered in the interval 2,025-2,047 metres MD (1,795-1,816 metres TVDSS) of which the net gas-bearing sands amounted to approximately 18 metres.
Following an extensive logging and sampling programme in Dambus-1ST, the deeper sands were found to be water bearing. The upper gas-bearing sands alone are not currently expected to be commercially exploitable by themselves and the well was plugged and abandoned. Other prospects and leads exist in the area around Dambus and they will be reviewed in light of the Dambus result. The gas discovered at Dambus will reduce the threshold volume required for the development of any further resources that may be discovered in the immediate area.
The Trident IX drilling rig then moved to the Marindan prospect in the southern offshore part of the PSC and the Marindan-1 well was spudded on 27 October 2010. The objective of the well was to investigate the potential for hydrocarbon accumulations in a sequence of Miocene sands and carbonates. Marindan-1 was drilled as a deviated well and on 2 December 2010 reached total depth of 3,469 metres measured depth ("MD") (3,225 metres TVDSS). High gas readings and oil shows were recorded in the interval 2,670-3,260 metres MD and downhole logs indicate thin hydrocarbon bearing sand and carbonate reservoirs, but the indicated volume of hydrocarbons present is not expected to be sufficient to justify commercial development and the well was plugged and abandoned.
Hydrocarbons have been discovered both at Marindan and Dambus, but the accumulations found in the wells are not sufficient to support standalone development. A review of options for the development of these discoveries together with other undrilled prospects in the Kutai PSC is currently underway.
Forward Programme
A well is planned to exploit the gas bearing potential of a northern extension of the Kambuna field. If this well is successful, it will increase field reserves and, together with the installation of compression facilities, will extend Kambuna field plateau production rates. This well is scheduled to be drilled in the second half of 2011.
In the adjacent East Seruway Block, an exploration well is scheduled for the end of 2011 or early 2012.
In the Kutai PSC area, an onshore well commitment is outstanding but we have so far been unable to secure a drilling permit from the Forestry authorities. Serica is continuing to analyse the results of the 2010 offshore drilling campaign in order to determine the future offshore programme. (end of the excerpt)