PETRONAS flow Volume 01

Transcription

PETRONAS UPSTREAM MAGAZINE
Volume 01
PETRONAS Upstream Magazine
FEATURE FOCUS
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photocopying, recording or otherwise) without the permission of the copyright owner.
www.petronas.com.my
DECEMBER 2014
2014 PETROLIAM NASIONAL BERHAD (PETRONAS)
VOLUME 01
C
Planning For
A Masterpiece
PETRONAS’ SSIOGP in
Sabah-Visionary Bravado
and Technical Excellence
Reality Show
A Star is Born
Fast and Furious!
Beating the Odds
The integrated oil and gas training centre
keeps it real for trainees
PETRONAS is getting returns on marginal
fields in record time
Malaysia has emerged as the region's next
big thing in exploration
How is PETRONAS thriving admist harsh
conditions in Iraq?
EXPLORATION
Volume 01
C
O
N
T
E
N
T
S
GETTING
AN EDGE
THROUGH
TECHNOLOGY
G
Enhanced central command centre lets
PETRONAS tackle complex tasks more
10
The PETRONAS Real Time Visualisation
platforms worldwide with each other
11
10
4
A flow of
OPPORTUNITIES
5
Newsbriefs
PETRONAS reports
strong Q2 earnings;
and other news.
A Technological Edge
The upgraded
PETRONAS Real Time
Visualisation Centre
allows personnel to
tackle complex tasks
more efficiently.
EXPL ORATI ON
MARGINAL FIELD DEVELOPMENT/
PRO JEC TS & ENG INEER ING/EA RLY M ONETISATION
ON THE
FAST
TRACK
TO SUCCESS
14
PETRONAS has
approach to capture
returns on marginal
fields
14
15
On the Fast Track
The secret behind
PETRONAS’ early
monetisation of a trio
of marginal fields off
Sarawak’s shores.
Volume 01
FEATURE FOCUS
Planning
For A
Masterpiece
FEATURE FOCUS
Planning For
A Masterpiece
PETRONAS’ SSIOGP project in Sabah
is a testament to visionary bravado and
technical excellence
DR ILLING
20
by JOHN LOH
Reality Show
A Star is Born
Fast and Furious!
Beating the Odds
conditions in Iraq?
04 20
21
05
Feature Focus :
Planning for a
Masterpiece
The story of how the
world-class
Sabah-Sarawak
Integrated Oil and Gas
Projects (SSIOGP)
came together.
COVER
At its most basic, flow at
PETRONAS represents the
passage of hydrocarbons that
fuel the aspirations of businesses,
governments, families and
individuals. It also signifies the
transformation of our
organisation from a national
entity to a global enterprise with
the resources and capabilities to
match our ambitions.
Our purpose to continually and
sustainably provide energy is
what we celebrate in this
magazine.
P ROG R ES S O N P ROGRE SS
PROGRESS ON PROGRESS
Making
Steady
Progress
34
Progress Energy is making
great strides towards
being one of the
first players to export LNG
from Canada, says CEO
Michael Culbert.
Michael Culbert
President and CEO of Progress Energy
34
35
Making Steady
Progress
Progress Energy CEO
Michael Culbert talks
about the prospect of
Canadian LNG exports.
P E T RON A S Up s tre a m M a g a z i n e
1
EXPLORATION
Volume 01
C
O
N
T
E
N
T
S
GETTING
AN EDGE
THROUGH
TECHNOLOGY
G
10
The PETRONAS Real Time Visualisation
11
10
4
A flow of
OPPORTUNITIES
5
Newsbriefs
PETRONAS reports
strong Q2 earnings;
and other news.
A Technological Edge
The upgraded
PETRONAS Real Time
Visualisation Centre
allows personnel to
tackle complex tasks
more efficiently.
EXPL ORATI ON
MARGINAL FIELD DEVELOPMENT/
PRO JEC TS & ENG INEER ING/EA RLY M ONETISATION
ON THE
FAST
TRACK
TO SUCCESS
14
PETRONAS has
approach to capture
returns on marginal
fields
14
15
On the Fast Track
The secret behind
PETRONAS’ early
monetisation of a trio
of marginal fields off
Sarawak’s shores.
Volume 01
FEATURE FOCUS
Planning
For A
Masterpiece
FEATURE FOCUS
Planning For
A Masterpiece
DR ILLING
20
by JOHN LOH
Reality Show
A Star is Born
Fast and Furious!
Beating the Odds
conditions in Iraq?
04 20
21
05
Feature Focus :
Planning for a
Masterpiece
The story of how the
world-class
Sabah-Sarawak
Integrated Oil and Gas
Projects (SSIOGP)
came together.
COVER
At its most basic, flow at
PETRONAS represents the
passage of hydrocarbons that
fuel the aspirations of businesses,
governments, families and
individuals. It also signifies the
transformation of our
organisation from a national
entity to a global enterprise with
the resources and capabilities to
match our ambitions.
Our purpose to continually and
sustainably provide energy is
what we celebrate in this
magazine.
P ROG R ES S O N P ROGRE SS
Making
Steady
Progress
34
being one of the
Michael Culbert.
Michael Culbert
34
35
Making Steady
Progress
Progress Energy CEO
Michael Culbert talks
about the prospect of
Canadian LNG exports.
P E T RON A S Up s tre a m M a g a z i n e
1
D E V ELOPM E NT & P RODUCT ION
Volume 01
BUKIT
The Bukit Tua oil and gas field was discovered in April
2001 with the drilling of the Bukit Tua-1 well to a depth
of approximately 6,500 ft. The entire field is estimated
to contain recoverable reserves of 65 million barrels of
oil and 110 billion cubic feet of gas.
TUA
IN
INDONESIA
SET TO COME
ONSTREAM
C
O
N
T
E
N
T
DRILLING
S
BUKIT TUA
FIELD
PETRONAS Carigali Ketapang, the lead operator for
East Java, Indonesia
the Ketapang PS
expects to commence production from the Bukit Tua
JAVA ISLAND
Madura Island
East Java
oil and gas field by early 2015.
The Bukit Tua field, located 35 km
The WHP is linked to a floating
at a water depth of 57 metres (187 ft)
in the Ketapang 2 block, is expected
to produce 21.5 million barrels of oil
(20,000 barrels per day) of crude and
46 million standard cubic feet per day
(mmscfd) of gas during the first five
years of production.
(FPSO) facility located 900 km
away. The spread-moored FPSO
has a daily processing capacity
of approximately 45,000 barrels
of liquids per day and a crude
storage capacity of 630,000
barrels.
The development plan for the field,
which was approved in July 2008,
included the drilling of five production
wells and installation of an unmanned
well head platform (WHP) featuring
nine drilling slots, and a topside
weighing 1,500 tonnes.
Oil from the Bukit Tua field will
be exported from the FPSO
with tandem mooring through
a floating hose, while gas will be
transported through a 110-km
export pipeline to an onshore
receiving facility (ORF) in Gresik.
The Bukit Tua oil and gas field was
discovered in April 2001 with the
drilling of the Bukit Tua-1 well to
a depth of approximately 6,500
ft. An appraisal well was drilled
in November 2013 to assess the
potential of the field. The entire field
is estimated to contain recoverable
reserves of 65 million barrels of oil
and 110 billion cubic feet of gas.
Overall, PETRONAS is present in nine
Production Sharing Contracts (PSCs)
in Indonesia and is the operator for
three of these ventures.
OIL
20,000
barrels per day
GAS
70 million
standard cubic
feet per day
wells
5 production
slots
9 drilling
Topside
weighing
110km
export pipeline
to an onshore
receiving facility
(ORF) in Gresik
1,500 tonnes
Discovered in
2001
April
with the drilling
of Bukit Tua-1
well to a depth
of approximately
6,500 ft.
46
46
Bukit Tua Kicks Off
Production from the
Bukit Tua oil and gas
field is expected to start
by end 2014 or early
2015.
47
Myanmar
Laos
MIDDLE EAST
MIDDLE EAST
Thailand
Cambodia
SEAsiaMajor discoveries in the last five year
(2009-2014)
THOUGHT LEADERSHIP
Production
Measure
Oil
Gas
M A L A Y S I A
Singapore
MALAYSIA:
The Star
Performer
Indonesia
DRILLING
Thriving
Amid
Challenging
Conditions
Wood Mackenzie’s SE Asia Upstream Analyst, Jamie Taylor,
and Exploration Analyst, Suzannah Toulmin co-authoried this article,
benchmarking Malaysia’s performance in upstream
exploration against the rest of Asia Pacific.
Despite the harsh environment, PETRONAS is
confident that it can continue to enjoy success
with the Garraf oil field in Iraq
by LUKE ROSHAN
04 40
41
40
05
Shining Brightly
Malaysia is expected to
become the region’s star
performer in the E&P
sector, says energy
consultancy Wood
Mackenzie.
48
49
C A PA B I L I T Y B U I L D I N G
Toughing it Out
48 Despite the testing
environment,
PETRONAS is confident
that it can continue to
enjoy success with the
Garraf oil field in Iraq.
CAPABILITY BUILDING
Keeping it
REAL
The integrated oil & gas
training centre simulates the
real-life experience
Lorem ipsum nuyipol kljpoiu
trewbm lpoi nmnkugiu hhmflropiy
klomyukrtuk mpsdlsprtet hyt
sjgducsc.
Launched in March this
year the Integrated Oil
& Gas Training Centre
(IOGTC) is aimed at
getting Petronas trainees
to experience what it is
like to be involved in the
real-live operations of an
actual plant.
Located at the Institut Teknologi
Petroleum PETRONAS (INSTEP) in
Batu Rakit in Terengganu, it is built
around the concept of giving trainees
an integrated, hands-on experience
to complement classroom learning
through live simulation and training.
PETRONAS is the only oil company
facilities as part of its capability
development programme for
technicians and operators, who will
be benchmarked against international
standards.
The centre has everything required for
training under the flagship one-year
Petroleum Technology Programme
(PTP) from a drilling rig module to a
downstream processes training plant.
facility,” says INSTEP trainer, Encik
Mohd Lutfi.
“These training plants are exactly
the same as a fully functional plant,
except on a smaller scale. For example,
the upstream side includes a fully
functional control room as well as a
well production and a pigging system,”
he adds.
LIVE IS BETTER
To add to the realism of the work
environment, the trainees are deployed
on three shifts as the plant is run 24/7.
Unlike traditional on-the-job (OJT)
training, which is often limited to only
observation, the experience is much
more complete and holistic.
“The training plant integrates all of the
systems found on a rig or platform,
allowing multiple processes to be run
simultaneously, giving trainees exposure
to a complete upstream processing
“The key idea in using the live
simulation training facilities is to let
our trainees get their hands dirty and
really experience what it feels like to be
working as technicians and operators,”
59
58
58 Keeping it Real
PETRONAS’ Integrated Oil
gives trainees a dose of
real-life plant operations.
STAY IN TOUCH WITH US
EXPLORATION
CORPORATE SOCIAL RESPONSIBILITY
Get in with the flow
REALISING
Petroliam Nasional Berhad
(PETRONAS)
APIPE
DREAM
PETRONAS
A socio-economic development
programme has helped to dramatically
improve the lives of residents living
around the Yetagun pipeline in
Myanmar
by Christine Cheah
[email protected]
2
DEC 2014
64
65
Realising a Pipe Dream
64 Water shortages are a thing
of the past for a small
village in Myanmar thanks
to the Yetagun SocioEconomic Development
programme.
D E V ELOPM E NT & P RODUCT ION
Volume 01
BUKIT
TUA
IN
INDONESIA
SET TO COME
ONSTREAM
C
O
N
T
E
N
T
DRILLING
S
BUKIT TUA
FIELD
PETRONAS Carigali Ketapang, the lead operator for
East Java, Indonesia
the Ketapang PS
JAVA ISLAND
Madura Island
East Java
barrels.
OIL
20,000
barrels per day
GAS
70 million
standard cubic
feet per day
wells
5 production
slots
9 drilling
Topside
weighing
110km
export pipeline
to an onshore
receiving facility
(ORF) in Gresik
1,500 tonnes
Discovered in
2001
April
with the drilling
of Bukit Tua-1
well to a depth
of approximately
6,500 ft.
46
46
Bukit Tua Kicks Off
Production from the
Bukit Tua oil and gas
field is expected to start
by end 2014 or early
2015.
47
Myanmar
Laos
MIDDLE EAST
MIDDLE EAST
Thailand
Cambodia
(2009-2014)
THOUGHT LEADERSHIP
Production
Measure
Oil
Gas
M A L A Y S I A
Singapore
MALAYSIA:
The Star
Performer
Indonesia
DRILLING
Thriving
Amid
Challenging
Conditions
by LUKE ROSHAN
04 40
41
40
05
Shining Brightly
Malaysia is expected to
become the region’s star
performer in the E&P
sector, says energy
consultancy Wood
Mackenzie.
48
49
C A PA B I L I T Y B U I L D I N G
Toughing it Out
48 Despite the testing
environment,
PETRONAS is confident
that it can continue to
enjoy success with the
Garraf oil field in Iraq.
CAPABILITY BUILDING
Keeping it
REAL
sjgducsc.
(IOGTC) is aimed at
actual plant.
PETRONAS is the only oil company
standards.
Mohd Lutfi.
he adds.
LIVE IS BETTER
59
58
58 Keeping it Real
PETRONAS’ Integrated Oil
gives trainees a dose of
real-life plant operations.
STAY IN TOUCH WITH US
EXPLORATION
Get in with the flow
REALISING
Petroliam Nasional Berhad
(PETRONAS)
APIPE
DREAM
PETRONAS
Myanmar
by Christine Cheah
[email protected]
2
DEC 2014
64
65
Realising a Pipe Dream
64 Water shortages are a thing
of the past for a small
village in Myanmar thanks
to the Yetagun SocioEconomic Development
programme.
a flow of
OPPORTUNITIES
The inaugural issue of flow comes at a poignant
time for us at PETRONAS Upstream
As we enter our fortieth
year of business and
operations, we want to
chronicle our ongoing
transformation from a
national oil company into
major global oil and gas
company. This is a journey
that has been fraught with
perseverance, dedication
and passion, with more
adventures to be told.
flow aims to be more than just a
company newsletter for industry
insiders. Rather, we intend to fill it with
riveting, insightful and compelling
stories about not just what we do, but
how we do it and the lives we touch
along the way. These are the marks of
a progressive organization that defies
conventions to provide essential energy
to people.
Take PETRONAS’ Sabah-Sarawak
Integrated Oil and Gas Projects
(SSIOGP) facility. This multi-billion
behemoth is impressive for its sheer
scale, integration and the technical
expertise required to get it off the
ground.
It is the first and single-largest
integrated terminal for oil and gas in
Malaysia and Southeast Asia, and a
4
DEC 2014
512km contiguous gas pipeline that
straddles the length of Borneo.
But the true genius of this project
is in the vision and master planning
that was required to see it come
to fruition. In our cover story, we
give you an inside look on the
challenges of bringing the pieces
of this massively complex project
together.
PETRONAS is not one to shy
away from operating in extremely
challenging markets either, as
explored in our story about our
venture to develop the Garraf oil
field in southern Iraq. Despite the
many risks involved, the project
achieved first oil from the onshore
oil field in just over 24 months.
Today the field pumps out an
average of 90,000 barrels per day
(bpd) and is set to hit its production
target of 230,000 bpd by 2017.
Our success at SSIOGP and Garraf
hinges very much on our ability to
leverage on a stream of well-trained
talent and cutting edge technology.
In this respect, PETRONAS has
invested in training facilities such
as the USD80 million Integrated
Oil & Gas Training Centre (IOGTC),
which gives trainees a LIVE
simulation of working in an actual
plant. Meanwhile, the enhanced
PETRONAS Real Time Visualisation
Centre (PRTVC) acts as a central
command centre linking technical
staff in Malaysia to drilling platforms
around the world.
Dato’ Wee Yiaw Hin
Executive Vice President & CEO Upstream
Amid all the hardware and
technology, however, there is a
softer side to the way we work; one
that seeks to promote sustainability
within our organisation as well as our
the environment and communities
we operate in. One example we
look at is a village in Myanmar
that has benefited from a fresh
water programme established by
PETRONAS and its partners.
We hope you enjoy the stories of
that journey we present here. We
welcome any feedback on how we
can feed your interest on the ongoings of our operations worldwide
and the opportunities that reside in
Malaysia.
Dato Wee
Dato’ Wee Yiaw Hin
Executive Vice President & CEO Upstream
Newsbriefs
PETRONAS reports
strong earnings and
revenue growth in Q2
PETRONAS has chalked
up a 38 percent rise in
net profit for the second
quarter on the back of
a 15 percent increase in
revenue compared to the
corresponding period last
year due mainly to higher
oil and gas production as
well as liquefied natural gas
(LNG) sales.
the first half of the year to 30 billion
Ringgit versus 22.3 billion Ringgit for
the corresponding period last year.
Net profit for the three months ended
30 June surged to 21.06 billion Ringgit
from 15.26 billion Ringgit for the same
period last year. Meanwhile, revenue
rose to 85.36 billion Ringgit during the
quarter boosted by the favourable US
dollar exchange rate against the Ringgit.
Looking forward, he said declining
oil prices and rising operational costs
might dent earnings in the second
half of this year, especially with oil
prices likely to dip closer to $95 per
barrel after averaging $108.9 per
barrel in the first six months of 2014.
Total domestic and international
production of crude oil, condensate
and LNG climbed 6.3 percent in the
second quarter to 2.2 million barrels of
oil equivalent per day (boe/day) from
2.075 million boe/day due to new
production streams from Malaysia and
Iraq, growing output from Canada as
well as resumption of oil production
from South Sudan.
Despite potentially lower energy
prices and margin pressure on
operating costs in the global oil and
gas sector, the latest Standard &
Poors report on PETRONAS in June
expects cashflow adequacy for the
group to stay solid for the next
two years.
For the cumulative six-month period,
the group’s net profit rose 12% to
39.8 billion Ringgit from 35.6 billion
Ringgit; while revenue went up 12%
to 169.4 billion Ringgit from RM151.1
billion Ringgit.
DR ILLING
The group’s capital investments for
the second quarter totaled some 13.4
billion Ringgit compared to 11.8 billion
Ringgit for the same period last year.
That brought total capital outlay for
Group Chief Executive Officer
and President Tan Sri Shamsul
Azhar Abbas said the group aims
to increase overseas net profit
contribution from the current
11 percent to 20 percent over the
next five years.
The report added that PETRONAS’
strong liquidity and ample debt
servicing capacity should enable
the group to meet its sizable capital
expenditure and dividend comitments
amounting to some $100 billion
Ringgit in 2014 and 2015.
5
NEW SBRIE FS
Malaysia
may become
biggest
flexible LNG
supplier
Malaysia may emerge as
the world’s largest supplier
of flexible liquefied natural
gas (LNG) by the end of
the decade due to new
capacity both at home
and abroad, according to
the consulting firm, Wood
Mackenzie.
It noted that the volumes of flexible
LNG produced by PETRONAS could
rise from the 2.5 million metric tonnes
per year in 2013 to 26 million mt/year
by 2022. By then, the group’s overall
LNG supply line may increase by 55%
to 42 million mt/year – up from 27
million mt/year in 2013 – thanks to
new capacity in eastern Malaysia and
overseas stakes in Canada, Australia
and East Africa.
Such momentous growth could
challenge Qatar’s position, which
accounted for some 20 million mt/
year of flexible LNG supplies in 2013,
the report added.
As to who will hold more flexible
volumes in 2022 will depend on how
each can get buyers to commit to
long-term offtake as some of the
current term contracts will be due for
renewal in the next few years.
Wood Mackenzie noted that
PETRONAS’ long and diversified
LNG portfolio can also work to its
advantage should other greenfield
projects “struggle to get developed.”
It can also be used to support the
group’s marketing of its Pacific North
West (PNW) project in Canada prior to
production start-up.
6
DEC 2014
Badra Field
First Oil
PETRONAS has reached
another milestone in its
international upstream
ventures as the Badra field
in southeast Iraq achieved
first oil on 20 August
2014. Gazprom Neft, the
operator of the Badra
oilfield, announced that
the first oil production
from Badra is now being
delivered via the newly
built Badra-GarrafNasiriyah pipeline to Iraq’s
national pipeline system.
The Development and Production
Service Contract (DPSC) with the
Iraqi government was won in 2010
by a consortium of companies
comprising Gazprom Neft of Russia
(30% participating interest), KOGAS
of South Korea (22.5%), PETRONAS
Carigali (15%), and TPAO of Turkey
(7.5%).
Pursuant to the DPSC, Oil
Exploration Company as the State
Partner holds the remaining 25%
participating interest.
Current production from Badra is
averaging over 15,000 barrels of oil
per day (bopd). Production at
the oilfield is expected to peak
at 170,000 bopd. The project is
scheduled to last for 20 years,
with the possibility of a five year
extension.
N E W S BRIE FS
Malaysia offers
up plenty of gas
finds
Malaysia has become the
top ranked country for
Royal Dutch Shell in terms
of gas finds worldwide
with 10 new discoveries
this year, the highest
annual gas finds in five
years for the global oil and
gas giant.
The latest discovery, which was
announced in August, was in the
Marjoram-1 well 180 km off the
Malaysian coast in 800m of water. The
company has an 85 per cent interest in
the block with PETRONAS Carigali Sdn
Bhd holding the rest.
DR ILLING
Under production sharing contracts
with PETRONAS, it is the largest natural
gas producer in Malaysia providing 50
per cent of the country’s gas demand.
How does
Malaysia fare
amongst its
neighbours?
READ ON PAGE 40
PSC deal inked with
Gabon
PETRONAS has signed
a Production Sharing
Contract (PSC) for an
offshore block with the
Republic of Gabon.
The F14 block is located in southern
Gabon and measures an approximate
2,500 square kilometres surface area
in water depth ranging from 2,000
metres to 3,000 metres.
PETRONAS currently has 100%
interest in the block and the
Republic of Gabon shall have
20% participating interest from
commencement of production.
“The signing marked an important
milestone as PETRONAS is reentering the Republic of Gabon,
now focusing on the deep water
pre-salt play,” said PETRONAS
Vice-President of Exploration
International Effendy Cheng
Abdullah.
7
NEW SBRIE FS
PETRONAS ties up with Socar, TPAO
PETRONAS has signed
a memorandum of
understanding with the
State Oil Company of
Azerbaijan (Socar) to
enhance co-operation
in the oil and gas sector
of the Central Asian
nation.
in other parts of the region,
particularly Turkmenistan,” Mr Najib
said.
Prime Minister Datuk Seri Najib
Razak said in September that
PETRONAS had the potential to
become a major player in the
Central Asian region following its
tie-up with Socar.
The petroleum industry in
Azerbaijan produced 881,300
barrels of oil per day last year
and one billion cubic metres of
gas per year.
“Azerbaijan is rich in petrochemicals
and Petronas is looking to invest
and collaborate with Socar. There
are good prospects for investment
and they will be synergistic with
what PETRONAS is also doing
In March, PETRONAS had also
inked a deal with Turkish national
oil company (TPAO) to enhance
cooperation in upstream oil and gas
projects in Turkey and other areas
as mutually agreed.
PETRONAS and
Pemex also
signed a tripartite
Memorandum of
Understanding and
Cooperation with
YPF, the Argentinian
national oil
company.
President and Group CEO of PETRONAS, Tan Sri Dato’ Shamsul Azhar Abbas with the
Director General of Petróleos Mexicanos (Pemex), Emilio Lozoya Austin
PETRONAS signs deals
in the Americas
PETRONAS has signed
agreements with the
national oil company
of Mexico, Petróleos
Mexicanos (Pemex) and
with the national oil
company of Argentina,
YPF, aimed at furthering
8
DEC 2014
business opportunities
and co-operation
between the national oil
companies.
Signed on September 25, the
Memorandum of Understanding and
Cooperation between PETRONAS
and Pemex will explore channels to
exchange experience, knowledge
and best practices for activities
related to deepwater projects,
mature fields, heavy and extra heavy
crudes, as well as the possibility to
develop projects related to natural
gas and infrastructure.
Meanwhile, PETRONAS and
Pemex also signed a tripartite
Memorandum of Understanding
and Cooperation with YPF, the
Argentinian national oil company.
The agreement covers the
sharing of experiences and best
practices related to exploration and
production of oil and gas.
N E W S BRIE FS
Gumusut-Kakap starts production
The Gumusut-Kakap
floating production facility,
located approximately 120
kilometres off the coast of
Sabah, Malaysia has started
oil production.
The field is expected to reach an annual
peak oil production of around 135,000
barrels a day.
PETRONAS
Enters China’s
Unconventional
Energy Market
See feature
story on SSIOGP
on PAGE 20
“The move into deepwater is a natural
step that we have undertaken towards
realising our priority to monetise,
increase and maximise our resources
and values while we continue to sustain
and grow production,” said PETRONAS
President and Group CEO, Tan Sri Dato’
Shamsul Azhar Abbas.
The Gumusut-Kakap field is operated
by Sabah Shell Petroleum Co (33%),
partnering with ConocoPhilips Sabah
(33%), PETRONAS Carigali Sdn Bhd
(20%), and Murphy Sabah Oil Co. (14%).
In March 2014, PETRONAS and
HESS signed a farm-in agreement
for the Malang Block, Santanghu
Basin and the joint study bidding
agreement for the Santanghu,
Junggar and Sichuan Basin. The
two basins have been identified
as having sizeable unconventional
resource potential. PETRONAS will
hold 30% participating interest in
the Malang Block and will have 30%
participating interest in any blocks
awarded pursuant to the joint study
and bidding agreement.
Gumusut Kakap Platform
over a period of two years, while
the exploration period for the
Malang Block, Santanghu Basin is up
to 2019.
The agreements were signed at
the PETRONAS headquarters in
Kuala Lumpur. Signing on behalf of
PETRONAS were James Stannard, Vice
President of Unconventional, and Sauu
Kakok, Vice President of Asia Pacific
for HESS China Oil and Gas Limited.
DR ILLING
PETRONAS’ aim of
tapping into China’s shale
potential took a big step
forward when the Chinese
government approved
the PSC arrangement on
8 August 2014.
More about PETRONAS’
Unconventional feats
on PAGE 34
The joint-study agreements outline
the two parties’ partnership for
Unconventional Projects in China
Major players in China such as Shell,
BP, HESS, Chevron and ConocoPhillips
are actively collaborating with
local NOC’s to tap their huge
unconventional resources.
PETRONAS’ Vice President of Unconventional, Mr James Stannard and Vice President of
Asia Pacific for HESS China Oil and Gas Limited, Mr Sauu Kakok with their teams
9
EX PLORAT ION
GETTING
AN EDGE
THROUGH
TECHNOLOGY
efficiently.
The Petronas Real Time Visualisation
Centre links technical staff in drilling
10
DEC 2014
G
11
EXPLORATION
200
20
geoscientists
in
countries
Launched earlier this year, the upgraded Petronas
Real Time Visualisation Centre (PRTVC) is a state-ofthe-art platform that will enable the company to use
leading edge technology to take on new challenges in
the oil and gas industry.
While the centre previously housed
visualisation and data facilities, these
are now augmented by a 24-hour
real-time drilling operations and
monitoring centre (DOMC) equipped
with a secured geo-computing
architecture as well as 3D visualisation
capability via stereoscopic screens.
These added capabilities allow
the PRTVC to act as a central
command centre linking technical
staff in Malaysia to various drilling
platforms across the globe. At its
maximum capacity, the centre can
accommodate up to 200 staff who will
also be able to access data via tablets
through a mobile app.
The PRTVC is expected to help
Petronas personnel tackle complex
tasks more efficiently, hence saving
time and reducing costs for drilling
activities.
“The whole idea of this centre is
to enable real-time data for well
planning, monitoring and execution
12
DEC 2014
of drilling,” says Petronas Carigali
global drilling head, Datuk George
Ling Kien Sing. He adds that the
new add-ons help to speed up the
decision-making process needed to
ensure the group retains its global
competitive edge.
“Having these facilities will enable us
to have more effective collaboration
among some 200 of our geoscientists,
engineers and drillers stationed in
more than 20 countries. We are now
also able to do complex planning,
such as drilling deeper into the sea.
There is now no excuse for us not to
drill deeper,” says Datuk Ling.
The PRTVC is also viewed as
complementary to the training
programmes at the Integrated Oil
and Gas Training Centre (IOGTC)
at the Institut Teknologi Petroleum
Petronas (INSTEP) in Batu Rakit,
Terengganu.
Trainees will benefit from
opportunities to experience complex
challenges and realtime decisionmaking by working with professionals
from a multi-disciplinary engineering
background, says Petronas’
technical data General Manager
Mohd Hamka Ibrahim.
“These facilities will bring us to the
next level. The PRTVC can be the
platform for PETRONAS to accelerate
the technical development of our
young Malaysian talent to meet the
increasing demand of upstream
market with the latest niche
technologies in the oil and gas
industry,” he notes.
“We want to shorten the training
period. Previously, it took around
10 years for a person to become
productive. Now we are trying to
shorten that to about four to five
years from the way we train them,”
says Datuk Ling.
Mohd Hamka says the centre also
gives the company the ability to
monitor the health, safety and
environmental impact of its upstream
activities better. He adds that the
PRTVC can also be used to showcase
Petronas’ technological prowess as
a global O&G player.
The centre, is located on the 22nd
floor in Tower 2 of the Petronas
Twin Towers.
“Having these facilities will enable us to have more
effective collaboration between around 200 of our
geoscientists, engineers and drillers stationed in more
than 20 countries. We are now also able to do complex
planning, such as drilling deeper into the sea. There is
now no excuse for us not to drill deeper.”
Datuk George Ling Kien Sing
G
Prime Minister of Malaysia, Dato’ Sri Najib Tun Razak (centre) operating the 3D Rear Projection System, one of the facilities available at the
Real Time Visualisation Centre. Looking on are PETRONAS Executive Vice President and CEO of Upstream, Dato’ Wee Yiaw Hin (left) and
PETRONAS President & Group CEO, Tan Sri Dato’ Shamsul Azhar Abbas (right).
13
MARGINAL FIE LD D EVELOP M EN T/
PROJ E CT S & E NG I N EERI N G /EA RLY M ON ETI S AT IO N
ON THE
FAST
TRACK
TO SUCCESS
PETRONAS has
developed an effective
approach to capture
returns on marginal
fields
14
DEC 2014
EX P L O RATION
15
MARGINAL FIE LD D EVELOP M EN T/
PROJ E CT S & E NG I N EERI N G /EA RLY M ON ETI S AT IO N
Petronas Carigali Sdn Bhd (PCSB)
has proven again that it is possible
to deliver attractive returns on
investment (ROI) from development
projects at a trio of marginal fields
off Sarawak.
16
DEC 2014
The hummingbird concept was
deployed at both fields with a
wellhead platform (WHP) first
installed at each field and full well
stream (FWS) production delivered
to a floating storage unit (FSU),
Nautica Muar, via a 6-inch flexible
flowline.
Competitive Cost And Schedule Against
Industry Average
Zuhal East
AJK
KMSE
Industry Average (Asia)
60
30
50
0
40
20
30
M
M
)
0
0
S
(U
st
o
C
10
0
ty
10
D
20
ili
Located in Block SK315, approximately
200 km North-West offshore Bintulu
with water depth of 70 metres, AJK is
a marginal field and the first carbonate
deposit within Sarawak.The average
flowrate captured for the first well was
around 3,000 barrels per day (bpd) and
FIELD DEVELOPMENT CONCEPTS
c
The ZE-EMP project was successfully
delivered with Quartile 1 wells
performance against Malaysia Petroleum
Management (MPM)’s, benchmark at
an average well cost of USD8 million
per well; while the successful low cost
delivery of AJK also demonstrated
that challenging prospects can still be
delivered at optimum well cost.
To date, production from the two
wells have been recorded at up to
The AJK field development was
coupled to that of the KMSE field
where the extended well test (EWT)
was first carried out in October 2013.
Fa
This was achieved as part of a clustering
approach that enabled a shorter
development time to achieve delivery
of hydrocarbon flow over a viable
production timeframe.
successfully completed a 24-hour
continuous flow on 22 July 2014,
while the second well was opened on
the same day.
Project Duration (M0nth)
The three – Kayu Manis South East
(KMSE), Anjung Kecil (AJK) and Zuhal
East Early Monetisation Project (ZEEMP) – which comprise both oil and
gas components, were able to achieve
production rates ranging between
2,000-4,000 boe/day per well.
9,000 bpd with the first offloading of
commercial crude from AJK carried
out on 14-15 August. Production
is expected to last at least 3.5
years with an estimated maximum
production rate of 8,000 bpd.
The facilities include the unmanned and
minimal refurbished WHP with a Tarpon
system to minimal refurbished topside
with monopod structure of Tarpon
system connected. The FSU serves as
processing and storage facilities for
crude as well as accommodation for
operation crews.
The EWT facility employed the new
Sep-iSYS technology patented by
PETRONAS T&E, which caters to a
relatively low-cost design as opposed
to a conventional design.
It is essential to note that a fit-forpurpose subsurface evaluation played
a key role in realising the potential of
Unconventional Design, Accelarated Schedule
Zuhal East
AJK
KMSE
Conventional Wellhead Design
60
Febrication Duration (M0nth)
The whole project was based on
a fit-for-purpose concept and fast
track schedule in order to ensure the
economic viability of the marginal fields.
50
50
00
40
40
00
30
30
00
20
10
0
20
00
10
00
ta
To
eig
lW
ht
(M
ic
etr
n
To
es)
17
The subsurface modelling work was
based on the classical technical
approach using the 3D coarse-grid
layer model and MBAL analysis instead
of the time-consuming reservoir
characterisation and simulation model.
The well completion was designed to
be as simple as possible: open-hole,
single standalone screen with minimal
accessories and a single production
packer which allowed for the singletrip operation in ZE-EMP, resulting in
significant saving of rig time.
Another common approach for the
three projects was to integrate and
compress the FDP Milestone Review.
Instead of going through eight
different review sittings, the team
only went through one streamlining
the decision-making process which
18
DEC 2014
“
With good planning and
engineering know-how,
slim wells can achieve higher
drilling rate of penetration
(lesser rock volume to be
cut); faster and more efficient
hole cleaning; less tangibles
cost (such as smaller
tubulars and less steel);
less materials cost (drilling fluids,
cement, completion brine) and
allow for conductor sharing
which significantly minimise
well costs.
“
the marginal fields in a timely and cost
effective manner, especially in the ZEEMP and KMSE projects.
allowed the project to be completed
within the tight schedule.
Several common key characteristics
were observed from the low-cost
well deliveries – the most prominent
of which was the deployment of
monobore cemented completions
and a slim well architecture.
The monobore cemented completions
significantly reduced operation time
and hence lower tangibles costs, while
the slim well architecture helped to
drive well costs down.
With good planning and engineering
know-how, slim wells can achieve
higher drilling rate of penetration
(lesser rock volume to be cut);
faster and more efficient hole
cleaning; less tangibles cost (such as
smaller tubulars and less steel); less
materials cost (drilling fluids, cement,
completion brine) and allow for
conductor sharing which significantly
minimise well costs.
The use of state-of-the-art geoimaging technology also enhanced
the cost effectiveness of the wells
development by simplifying the well
architecture to two casing strings.
EAR LY MO N E TISATION
Zuhal East: Going to
Great Lengths to Ensure
Success
To help boost the morale and motivation
of third-party contractors working on
it’s Zuhal East development, PETRONAS
introduced an initiative that allowed
them to raise any concerns they had
while working on the project. Through
the “Touch the Heart” program, workers
surfaced many issues they were facing,
including their inability to contact their
family members.
To address this problem, the company
ensured that they were provided with
telephone cards. Active participants in
HSE (health, safety and the environment)
related programs were also rewarded
with free call cards. By looking out for
the welfare of its contractors, PETRONAS
ensured better teamwork and higher
productivity.
This is just one example of the initiatives
that PETRONAS implemented to
ensure that development of Zuhal East
was accomplished on time and within
budget. The oil field, located about 40km
offshore Labuan with water depth of 42
metres, was discovered in June 2012, and
produced first oil on 17th May 2014.
As the field is considered a marginal one,
the company could not afford to slip in
terms of cost and schedule. Not only
did it achieve this goal, the project also
exceeded the applicable occupational
safety and health requirement by
achieving Zero LTI and Fatality.
A Blueprint for Developing Marginal Fields
Some cost effective observations
and recommendations from the
development of the three marginal
fields include:
1. Where possible, the facility will
constitute a minimal WHP with a
tie-in to existing facilities and
therefore no processing and
unmanned concept.
2. Where possible, refurbished
structures, components and
equipment will be considered.
3. All structures, components and
equipment, whether new or
refurbished, should be fit-for-purpose
4. The advantage of utilising a relocatable concept such as an EWT
vessel as processing and storage as it
has zero capital expenditure (Capex)
and only operational expenditure
(Opex) such as leased term, and
hence suitable for early monetisation
projects.
5. Use of lightweight platform
infrastructure such as a Tarpon
system (monopod with guided
caisson) which not only offers
low construction costs as well
as proven methodology, but
also facilitate rapid construction
and installation time, resulting in
minimizing of capital investment.
6. Deployment of self-installing
structure such as mobile offshore
production units (MOPU) that
do not require a lift barge to
eliminate the need for heavy lift
vessels for installation.
7. Dry vs wet tree: The latter
which uses a subsea facility for
marginal field may reduce costs
and installation time compared
to a conventional production
facilities. However, it can also
contribute to higher drilling and
completion costs, and hence
higher OPEX.
On the technical front, the use of Tarpon,
a proprietary technology from the United
States, stringent procurement procedures
and world-class engineering design were
some of the factors behind the project’s
success. Multiple yards were also utilized
during fabrication, with key PETRONAS
personnel stationed at the fabrication yard
at Port Klang Free Zone (PKFZ) throughout
the fabrication duration to oversee the
quality as well as work progress.
The project faced many problems
during its development. For instance,
during the installation campaign, pirates
stole materials such as conductor and
sacrificial anode corrosion protection
(SACP). However, the stolen materials
were quickly identified and transported
via airfreight, hence preventing any delay
to the installation schedule.
The determination of the team to
overcome challenges was a key factor in
Zuhal East Development being completed
ahead of schedule and within budget.
19
FEATURE FOCUS
Planning
For A
Masterpiece
by JOHN LOH
04 20
DEC 2014
DR ILLING
P EPTERTORNOANSA U
a gaagzaizni e
S pUs pt rset raem
a mM M
ne
21
05
FEATURE F OCUS
In terms of sheer scale, each component of the
Sabah-Sarawak Integrated Oil and Gas Project
(SSIOGP) is a world-class facility in its own right.
Yet, it is the way they have been brought together
that makes this massive development one with
few precedents.
Ten years in the making, the complex
pieces of this ambitious project
are bearing fruit. The multistage
development stands out as not only
a tremendous feat of engineering,
but also brings to bear PETRONAS’
unique ability to masterplan for
the long-term and gain consensus
from a large and diverse group of
stakeholders including international
and local partners, federal, state and
local governments, contractors, local
communities and more.
The RM54 billion project, sanctioned
in 2005, will go down in history
as PETRONAS’ largest integrated
development combining both
upstream and downstream
22
DEC 2014
investments which ingeniously
connect the oil and gas industry
in Sabah and Sarawak through the
Sabah-Sarawak Gas Pipeline (SSGP)
pipeline.
Each component of the SSIOGP has
yielded many “firsts” for PETRONAS
as well as daunting technical,
financial, and physical challenges, said
PETRONAS Chairman for Sabah and
Labuan Mohamed Firouz Asnan, who
oversees the national oil company’s
operations in Sabah.
The concept behind SSIOGP was
mooted after several major deepwater
oil and gas discoveries were made
offshore Sabah.
“Sabah is more greenfield than Sarawak
in the sense that development only
started in the 1970s, versus 1910 for
Sarawak. We decided to bring the new
deepwater oil and gas discovery to shore
to be processed in an integrated terminal
that will cater for Sabah’s current and
future needs,” said Mr Firouz.
According to Mr Firouz, Sabah is today
seeing active exploration activities.
With SSIOGP, PETRONAS hopes to
unlock and monetize stranded gas
offshore Sabah, a project that would
help sustain Malaysia’s matured oil
and gas production, and create spinoffs, benefitting both Sabah’s local
communities and the state’s socioeconomic development.
F E AT URE FO CU S
Joining forces - Lawas, 2012
Site visit by State Secretary of Sarawak, Tan Sri Datuk Amar Haji Mohamad Morshidi bin Abdul Ghani, with SSIOGP Integrated
Steering Committee (ISC) and working team members which include Malaysia Petroleum Management (MPM), PETRONAS Carigali
and sub-contractors at one of the sites along the 512km pipeline.
“The concept behind SSIOGP was mooted after huge deepwater
gas discoveries were made off Sabah. That became an opportunity
for PETRONAS to carve out a masterplan for a large-scale
integrated project for both oil and gas.”
DR ILLING
Mohamed Firouz Asnan
Petronas Chairman for Sabah and Labuan
23
FEATURE F OCUS
SSIOGP AT A GLANCE
Sabah-Sarawak Gas Pipeline
(SSGP)
Kimanis Power Plant
• Gas fired combine cycle
power plant
• Location: Papar, Sabah
• Design Capacity: 300 MW
• Partners: PGB (60%)
Yayasan Sabah (40%)
• Biggest power plant in
Sabah
• Length: 512 km
Weight: 187,000 MT
Highest point: 1030
• Location: Kimanis, Sabah to
Bintulu, Sarawak
• Design Capacity:Gas: 760 mmscfd
• Operator:
PETRONAS Carigali Sdn. Bhd.
(PCSB)
PETRONAS LNG COMPLEX
* A Demand center
Sabah Ammonia-Urea
Project (SAMUR)
• Location: Sipitang, Sabah
• Acreage: 210 Acres
• Daily Production:
2,100 MTPD of ammonia and
3,500 MTPD of granular urea
• First gas: 2015
Data as at September 2014
24
DEC 2014
Kimanis Training Centre
• Admin & Classrooms 2 storeys,
Hostel 3 storeys
• Location: Papar, Sabah
• Maximum Hostel Capacity: 62 px
• 2014 – First Female Intake: 7 pax
Sabah Oil & Gas
Terminal (SOGT)
• Integrated Oil & Gas Terminal
• Location: Kimanis, Sabah
• Design Capacity:
Oil: 260 kbpd
Gas: 1250 mmscfd
Condensate: 77 kbpd
• Operator:
(PCSB)
F E AT URE FO CU S
Gumusut Kakap
• Deepwater, 1200m depth
• Location: 120km from Labuan
Kebabangan
• Deepwater, 200 - 1000m
Kinabalu
• High Pressure High
Temperature (HPHT)
• Location: 55km Northwest of
Labuan
• Drilling Depth: 19,000 ft
Gas: 300 mmscfd.
• Operator:
• Location: 92 km North West of
Kota Kinabalu
Gas: 825 mmscfd
Oil: 80 kbpd
• Partners:
PCSB (40%)
Shell (30%)
CoP (30%)
• Largest jacket in Malaysia,
Free-fall survival craft on
platform (first of its kind in
Malaysia)
• A single integrated drilling,
production, utilities and
quarters (PDUQ) topsides
mounted on a fixed 8-leg
jacket in approximately 140 m
of water.
• Design Capacity: Oil: 150 kbpd
• Partners:
Shell (33%)
CoP (33%)
PCSB (20%)
MOC (14%)
• First semi-submersible floating
Production System (FPS) in
Malaysia
Malikai
•Deepwater, 500 m depth
•Location: 120kmNorth West of
Kota Kinabalu
•Design Capacity: oil: 60 kbpd
• Partners:
Shell (35%)
CoP (35%)
PCSB (30%)
• First Tension Leg Platform
(TLP) floating structure in
Malaysia.
DR ILLING
(PCSB)
• Integrated Central Processing
Platform (CPP)
25
FEATURE F OCUS
Connecting the Dots
On upstream, SSIOGP comprises the
development of four offshore oil and
gas fields namely Gumusut-Kakap
(GK), Kinabalu Non Assosiated Gas
(KNNAG), Kebabangan and Malikai –
which through a network of export
pipeline systems is connected to the
new onshore integrated Sabah Oil
and Gas Terminal (SOGT) in Kimanis.
This, in turn, supplies to downstream
power, petrochemical, residential and
commercial sectors in the state.
The heart of the entire SSIOGP
network is SOGT which is built on a
260-acre site located about 45km
from the Sabah state capital of Kota
Kinabalu.
As the first and single-largest
integrated terminal for oil and gas
in Malaysia and possibly Southeast
26
DEC 2014
Some of the gas is
further transported via the
new RM4.6 billion SabahSarawak Gas Pipeline
(SSGP) to PETRONAS
LNG Complex in Bintulu,
Sarawak where it is then
supercooled (to minus
162 degree Celsius)
and liquefied into LNG
and delivered to the
international market
via specially designed
tankers.
Asia, the multi-billion terminal has
the processing capacity of 260,000
barrels of oil per day, 77,500 barrels of
condensate per day and 1.25 billion
standard cubic feet of gas per day.
Some of the gas is further transported
via the new RM4.6 billion SabahSarawak Gas Pipeline (SSGP) to
PETRONAS LNG Complex in Bintulu,
Sarawak where it is then supercooled
(to minus 162 degree Celsius) and
liquefied into LNG and delivered to
the international market via specially
designed tankers.
Along the 512 km route from Kimanis
to Bintulu, there are several tiein points which feed into the new
ammonia and urea plant in Sipitang
(SAMUR) and future medium size
industries in the area.
F E AT URE FO CU S
Pipping the Pipeline Challenge
Construction of the 36-inch diameter
SSGP pipeline through dense Borneo
jungles and mountains with altitudes
of as high as 3,600 feet was a
mammoth task for PETRONAS.
In traversing the Sabah and Sarawak
forest, the SSGP team had to contend
with torrential rains, swampy stretches,
thick vegetation, and rocky slopes,
some of them inclining more than 45
degrees.
requiring over 3,000 workers in the
construction phase – all of which
totaled to 51 million manhours.
pipeline infrastructure is key in this
integrated development.
At each stage of the construction,
the team worked closely with
local authorities, businesses and
communities to gain over 2000 km
right-of-way (ROW) to construct the
pipeline.
“A lot of innovative thinking went
into SSIOGP, both technically and
commercially. Although it was
a very steep learning curve, the
lessons and experience we’ve
acquired here can be replicated
elsewhere. The commercial aspect
was quite unique,” Mr. Firouz said.
DR ILLING
There was a total of 2,000 roads, rivers
and in some areas, drilled crossings
In addition to the technical challenge,
PETRONAS Carigali Sdn Bhd (PCSB)
had to deal with the investment
challenge which is necessary as
Designing
A Master
Plan
“SSIOGP exemplifies PETRONAS’
ability to masterplan for the longterm. This is PETRONAS’ unique
approach – we are not just building
for one field. Rather, we try cluster
the fields and build ‘super highways’
to SOGT which would enable quick
tie-ins of future new discoveries,” Mr
Firouz explained.
512 km
42,000+
weld joints
“Scale and integration is the name of
the game for SSIOGP. That’s the only
way to monetize deepwater assets.”
While there are surely many more
milestones ahead, one especially
memorable moment for Mr Firouz
was the delivery of first gas to the
Kimanis power plant on Christmas
Day 2013. Following the first
condensate export from SOGT on
2 October 2014, his team now is
preparing for the first crude export
from SOGT scheduled in November
this year.
27
FEATURE F OCUS
A boon for the
Community
“We put ourselves in their
shoes. This is where we
make every effort to do a
social impact assessment
to ensure the best
possible outcomes for
all stakeholders. Per our
HSE policies, we strive to
minimise damage to the
environment.“
Mohamed Firouz Asnan
by JOHN LOH
28
DEC 2014
F E AT URE FO CU S
DR ILLING
Local communities in
Sabah were heavily
involved in the setting
up of SSIOGP and
PETRONAS took efforts
to ensure that the locals
would benefit from this
development.
“We put ourselves in their shoes.
This is where we make every effort
to do a social impact assessment to
ensure the best possible outcomes
for all stakeholders. Per our HSE
policies, we strive to minimise damage
to the environment. We worked
with the fisherman’s association
to relocate and compensate those
who were affected. We want the
local communities to grow with us,”
explained PETRONAS Chairman for
Sabah and Labuan Mohamed Firouz
Asnan.
Grooming Future Talent
PETRONAS also set up the Kimanis
Training Centre (KTC) right across
from SOGT to offer an all-expense
paid specialised training in
instrumentation and control mainly
for Sabahans.
KTC has a capacity of 62 full time
students and can accommodate 100
short course participants. Two batches
have already graduated from the
two-year programme and year 2014
witnessed an inaugural admission of
female technicians.
Since the commencement of SSIOGP,
more than 25,000 people were
employed during the peak of SSIOGP’s
development, leading to the economic
spin-off on some townships and
villages.
Today, many locals were employed
to operate those facilities and over
100 CSR activities with various
communities located at the vicinity of
these projects have benefitted from
educational, health, infrastructure and
social programs run by PETRONAS.
29
FE ATURE F OCUS
“SSIOGP is a very bold project, with the scale to
match. The real uniqueness of the project is that it not
only unlocks production in Sabah, but the integration
it has achieved across companies, states, and even
countries.”
GROUNDBREAKING
FEATS
As the operator of two deepwater fields
that are part of the SSIOGP, Shell partakes
in the vision to go beyond the ordinary.
For Shell Malaysia Chairman Iain Lo,
the most outstanding feature of the
Sabah-Sarawak Integrated Oil and Gas
Projects (SSIOGP) is its massive scale
and the vision it took to pull everything
together.
“It is an incentive for investors like
Shell to invest, because we see that
petronas is willing to put in the
investment to get the infrastructure
in place. Few other NOCs could
have achieved something of this
magnitude, including getting two state
governments to agree, line up the gas
supply and make multibillion ringgit
investment decisions,” says Lo.
Within SSIOGP, Shell is the operator of
the Gumusut-Kakap (GK) and Malikai
deepwater fields, in which it owns 33%
and 35%, respectively. Both projects are
record-setting feats for Malaysia.
30
DEC 2014
“It’s deep, dark and
cold down there. GK
crude is cold and
solidifies easily. That
means the wells
can’t stop flowing,
or very big candles
will form on the
seabed.”
The semi-submersible floating
production system (FPS), the world’s
first to be built and integrated
onshore, has a topside that weighs
about 20,000 MT and has a hull and
Iain Lo, Shell Malaysia Chairman
topsides weighing a total of 40,000
MT or equivalent to 30,000 average
family cars. With an average annual
production of about 100,000 barrels
of oil per day, the FPS commenced
production in 2014, with first oil in
November 2012 via an innovative
tie-in approach to facilities in Kikeh,
Malaysia’s first deepwater field
operated by Murphy.
Malikai, meanwhile, will produce from
the first tension leg (TLP) platform to
be fabricated and deployed in Malaysia,
in water depths of 500m.
“We could have easily chosen to build
these structures in South Korea and
tow them out here, but together with
PETRONAS made a conscious decision
to fabricate them in Malaysia which
gets the whole service industry to
participate and upgrade their skills. That
F E AT URE FO CU S
Largest
Semi
Submersible
FPS In
Asia
Gumusut-Kakap platform
not only helps Malaysia build capacity,
but also hones the competitiveness of
our local firms to play in the regional
market,” Mr Lo said.
The Malikai TLP has a design capacity
of 60,000 bopd, with the oil to
be exported onshore to SSIOGP’s
integrated oil and gas terminal.
Working in waters two and half times
the height of the Petronas Twin Towers
presents an exhilarating challenge,
explained Mr Lo. “In GK, it’s deep, dark
and cold down there. GK crude is cold
and solidifies easily. That means the
wells can’t stop flowing, or very big
candles will form on the seabed.”
In such conditions, ensuring that the
oil keeps flowing is a critical factor. “If
there’s a problem, we have to use hot oil
recycling, or insert chemicals, but that’s
expensive. Our smart field technology
involves using 40,000 sensors to
continuously monitor the status of
all the flow parameters of the subsea
wells and FPS, which allows us to keep
flowing.”
“The technology needs to be brought
to bear to make sure the project is
safe and operable. Intervention at that
depth is difficult and expensive, and the
equipment needs to be modular.”
For Malikai, Mr Lo said production will
be brought onstream slowly so as not
to shock the wells.
“We are fortunate to have many O&G
developments in Malaysia. We should
not be satisfied to develop these
projects for ourselves, but use this
opportunity to expand and compete
and provide these services beyond our
borders. That must be the vision for
Malaysia.”
The operator also has to deal with the
challenge of risers that bob up and
down through millions of cycles of
loading and unloading. To mitigate
this risk, the project uses steel risers
developed by Shell in the Gulf of
Mexico. And to make intervention
cheaper when something goes wrong,
a vertical wellhead that facilitates easier
access is used.
31
FE ATURE F OCUS
SSIOGP is expected to generate huge spillover
benefits for the people of Sabah. Datuk Raymond
Datuk Raymond Tan Shu Kiah
Deputy Chief Minister & Minister of Industrial
Development
Tan, Sabah’s Minister of Industrial Development
writes this...
The Sabah Sarawak Gas Pipeline
(SSGP) to Bintulu is part of the
infrastructure put in place by
PETRONAS when oil and gas lands
at the Sabah Oil and Gas Terminal
(SOGT) in Kimanis.
Sabah has to appreciate the initiative
taken by PETRONAS. Looking
back, this is the catalyst for the
development of oil and gas activities
here.
In particular, the establishment of
Sipitang Oil and Gas Industrial Park
(SOGIP) with its anchor project, the
Sabah Ammonia and Urea plant
(SAMUR), the biggest Urea plant in
South East Asia.
All this started in a short span of 4
years with the Federal Government
providing facilitation funds to build
roads and other infrastructure for
Sipitang.
32
DEC 2014
The biggest
challenge is to get
the message across
to the people in
Sabah that there are
more benefits for
us especially for the
future generation
It is envisaged that SOGIP will be the
hub for development of petrochemical
industries in Sabah. Downstream
processing of gas is important not just
for value creation but also it creates
quality jobs and supports business
activities, particularly, the small and
medium size industries (SMI).
Additionally, part of the supply of natural
gas from SOGT is used for electricity
generation with 2 new power plants in
Kimanis providing a total capacity of
400MW.
The biggest challenge is to get the
message across to the people in Sabah
that there are more benefits for us
especially for the future generation
when we can put in place downstream
processing oil and gas industrial parks like
the ones in Kerteh, Gebeng and Bintulu.
SSGP which runs in a south-westerly
direction passing through Sipitang, has
provided the opportunity for gas to be
teed off to Sipitang for the development
of SOGIP.
With more gas projects and with the
right investment environment, SOGIP
is assured of adequate gas supply for
the development and growth of its
downstream processing industries.
F E AT URE FO CU S
Sabah-Sarawak Integrated Oil & Gas Project
(SSIOGP)
TERMINAL &
PIPELINES
OFFSHORE
Gumusut-Kakap
1
st • Gumusut-Kakap has
•••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••
28,000
tonnes
(including auxiliaries) topside
super lift in March 2012
Water depth:
1,200 m
Design capacity
Power generation
300
SOGT is the
Biggest
62
100
••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••
integrated oil and gas terminal
in Malaysia
Electricity
••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••
demand
short course
participants
Sabah
Ammonia-Urea
Project (SAMUR)
Graduates as
Technicians and
Assistant Technicians
Total
Dimension
Largest single-train granular
urea facility in South East Asia
km
full time students
•••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••
Addresses Sabah’s
Sabah-Sarawak
Gas Pipeline
(SSGP)
512
Capacity
MegaWatts
Gas-fired power plant
•••••••••••••••••••••••••••••••••••••••••
been promoted as 1st
ultra deepwater project
• Asia’s semi-FPS
• implementation of Steel
Catenary Risers in the East
Record breaking
Kimanis Petroleum
Training Centre
Kimanis
Power Plant
Sabah Oil & Gas
Terminal (SOGT)
DEEPWATER
EDUCATION AND
CAPABILITY
BUILDING
PLANTS
DR ILLING
180 kbpd (oil)
760 MTPA
Pipeline
••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••
Kebabangan
760
DEEPWATER
Heaviest
mmscfd
(gas)
••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••
Ammonia
Design capacity
Total Capex
1200 MTPA
Kebabangan Northern
Hub Project (KBB)
36”
Urea
Diameter
about
RM53.8 USD16
billion
Kebabangan Northern
Hub Project (KBB)
• jacket in Malaysia: 14,000mt
• topsides float-over Malaysia:
installation in 18,000 mt.
Total platform weight is
equivalent to 3 Eiffel Towers
Malikai
Total Resources
Employed (at peak) :
•••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••
Fixed jacket structure at
142m water depth
(integrated deck + 8 legged
jacket)
Kimanis
Power Plant (KPP)
SPR Power Plant
Dalak pipeline (DLKP)
•••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••
Water depth:
200- 1000 m
kbpd (oil)
151
Generating Capacity: 100MW
Gumusut-Kakap (GK)
offshore barges / vessels
Sabah Oil Gas Terminal (SOGT)
Design capacity:
80
••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••
The centre of the overall development in SSIOGP
825
2,846
SABAH
Kinabalu NAG (KNAG)
mmscfd (gas)
Malikai
Sabah Ammonia-Urea
(SAMUR) Project
DEEPWATER
First
Tension Leg Platform (TLP)
••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••
21,603
onshore construction
personal
••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••
1,046
SARAWAK
•••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••
personnel during normal
operations
PETRONAS LNG
Complex Bintulu
Water depth:
500 m
offshore personnel
Sabah Sarawak Gas
Pipeline (SSGP)
to be fabricated and deployed
in deepwater field in Malaysia
billion
••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••
••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••
70
Legend
Design capacity
Gas Pipeline
60 kbpd (oil)
Oil Pipeline
CSR programmes
Community projects
along the pipeline,
Education,healthcare,
local economy
Kinabalu Deep and East (KNAG)
SHALLOW WATER
1200
1
st
1000
Malaysia’s
High Pressure High
Temperature (HPHT)
Development
800
SABAH
SARAWAK
SOGT, KIMANIS
PETRONAS LNG COMPLEX
200
60 m
PETRONAS TWIN TOWERS
(Height = 452m)
Design capacity:
300 mmscfd (gas)
Jacket
9,900 mt
HIGHEST POINT = 1030m
Its highest point is located at 1030 meters
above sea level, 2 times the height of
PETRONAS Twin Towers
600
400
•••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••
Water depth:
GUMUSUT FPS HOST
(Water depth = 1200 m)
Sabah-Sarawak
Gas Pipeline (SSGP)
0
0
20
40
60
80
100
120
140
160
180
200
220
240
260
280
300
320
340
360
380
400
420
460
480
512 km
Topside
14,000 mt
33
Making
Steady
Progress
being one of the
Michael Culbert.
34
DEC 2014
P RO GRE S S O N P RO G RE S S
Michael Culbert
35
Progress Energy owns one of the
largest unconventional blocks of
land within the western Canadian
sedimentary basin. With this
resource, and Petronas’ funding,
it is now a world-class play with a
size sufficient to support an LNG
project for up to 40 years.
36
DEC 2014
From a maiden venture into coal bed methane via Australia’s
Gladstone LNG in 2010 to its landmark acquisition of Canada’s
Progress Energy in 2012, the journey into unconventional
energy has been a decisive one for PETRONAS.
The acquisition of Calgary-based
Progress Energy, a leading Canadian
natural gas producer, two years ago
marked a significant milestone for
PETRONAS, and bolstered its target
of increasing its O&G production by a
compounded annual growth rate
of 3.5%.
The estimated US$11 billion PNW
LNG plant is a proposed natural
gas liquefaction and export facility
on Lelu Island within the District of
Port Edward. The facility will liquefy
and export natural gas produced by
Progress Energy in northeast British
Columbia.
Since the deal closed in December
2012, Progress Energy has intensified
drilling at its land holdings in the
resource-rich North Montney region
to build up its reserves and feedstock
for the Pacific Northwest LNG (PNW
LNG) export terminal, set to be
another milestone when it begins
commercial operations in 2019-2020.
Progress Energy currently produces
more than 400 mmscfd of natural gas
from the North Montney Joint Venture
(JV), one of three production areas in
Canada that PETRONAS participates
in. The other two are the Progress
Sasol Joint Venture (JV) and Alberta
Deep Basin Tight Oil. Of the three, the
North Montney JV holds the largest
prospective resources with proven
and probable reserves of 8.4 bcf
as of the end of 2013 and 50 tcf of
recoverable resources.
President and CEO of Progress
Energy Michael Culbert called 2014
a “big year for reserve additions”.
The target for this year is to drill 180
horizontal wells in North Montney
and prove some 15 tcf of proven
and probable reserves by December,
which would be sufficient to cover
the first 20 years of PNW LNG’s
requirements.
“We are moving aggressively on all
fronts and working with the B.C.
provincial government to get the
fiscal and regulatory framework in
place,” he said in an interview.
“Progress Energy owns one of the
largest unconventional blocks of
37
land within the western Canadian
sedimentary basin. With this
resource, and PETRONAS’ funding, it
is now a world-class play with a size
sufficient to support an LNG project
for up to 40 years,” he added.
PNW LNG, with a 2 bcf per day
capacity, was designed expressly for
this purpose. The facility will have
two LNG liquefaction and purification
plants, each liquefying 6 mtpa of
natural gas, or 1 bcf per day.
B.C. is home to natural gas
resources that greatly exceed
Canada’s domestic needs, with
the federal government estimating
that it has enough natural gas to
support domestic use and exports
for 150 years.
Already, PETRONAS and Progress
Energy have pulled ahead of the
competition by selling down their
stake in PNW LNG and its upstream
resources to 62%, securing both
equity and long-term offtake
commitments from large national
oil companies (NOCs). It has so
far inked agreements with Japex,
PetroleumBrunei, Sinopec, and Indian
Oil Corp.
Historically, B.C. has sold surplus
natural gas to other jurisdictions
in Canada and the United States,
but with increased natural gas
production out of the United
States, demand and prices for
natural gas from B.C. are facing
a decline. Nonetheless, energyhungry Asian markets scouting for
fresh supplies of natural gas have
become a boost for Canadian
gas as they make the switch from
traditional and higher-emission fuel
sources like coal.
38
DEC 2014
PNW LNG must get off the ground by
early 2015 or risk missing the critical
2019-2020 window for Canadian
LNG to enter the market, said Mr
Culbert. Timing is crucial as Canada
could be saddled with a “trapped gas”
situation should the various proposed
LNG export projects for B.C. get
delayed, leaving their natural gas
resources without an end point.
Competition is also increasing from
neighbouring United States, which is
experiencing a shale gas boom and
will, for the first time, go from being a
net importer to net exporter of natural
gas. This has caused overall production
of natural gas in western Canada to
plummet 10% to 20% over the past five
years, presenting a formidable challenge
for anyone attempting to monetize
Canadian shale, Mr Culbert noted.
Even so, Petronas’ massive
investment into Canada is a stamp of
confidence. For PNW LNG especially,
investors were drawn to its vertical
integration, which gives its equity
partners a stake in a completely
integrated upstream and downstream
project, from fields to pipeline and
down to shipping.
Another feature unique to PNW LNG
is that its fields are tied in to existing
infrastructure, allowing its current
natural gas production to be fed into
the domestic market even as the
export plant gets underway, generating
revenue for Petronas.
CREATING JOBS
Progress Energy currently employs
some 25 active rigs and a 3,000-strong
labour force in North Montney. That
pace is expected to continue for
the next 20 years, providing steady
long-term employment for the local
community. In terms of social benefits,
PNW LNG is estimated to create up to
4,500 jobs at the peak of construction,
plus 330 new long-term careers
operating the facility in the community
and an estimated 300 spin-off jobs in
the region.
First Nation communities and residents
of Prince Rupert and Port Edward have
embraced the project as they see it
reviving the local economy, which
previously comprised mostly of mining
and forestry activities.
“Those industries are not as active
anymore, but LNG is set to provide
jobs and opportunities. There’s a real
sense of hope,” said Mr Culbert.
He added: “We’re hoping to be one of
the first in Canada to export LNG. I like
our chances. There are exciting times
ahead.”
39
THOUGHT LEADERSHIP
MALAYSIA:
The Star
Performer
04 40
DEC 2014
Myanmar
Laos
Thailand
Cambodia
Production
Measure
(2009-2014)
Oil
Gas
M A L A Y S I A
Singapore
Indonesia
DRILLING
RN
ON
Usptsr ter ae m
a mMMa ag ga az zi ni nee
P EPTERTO
A SA SU p
41
05
Annual volumes discovered from
exploration
Annual value creation from
exploration
3.5
3.5 35%
3.0
3.0 30%
2.0
1.5
1.0
0.5
0.0
2004
2006
2008
2010
10
2.5 25%
2.0 20%
1.5
15%
1.0 10%
0.5 5%
0.0 0%
2012
2004
2006
Australia
Indonesia
Vietnam
Asia Pac % of global
Malaysia
30%
25%
20%
15%
4
10%
2
5%
0%
Annual value creation
by
0
2008
-2
10
35%
Gross volumes
discovered in
8
commercial, technical and
contingent
fields by year of
6
completion of discovery well.
Value Creation @ Base (US$Bn)
2.5
12
40%
Value Creation @ Base (US$Bn)
4.0 40%
Volumes Discovered (bnboe)
Volumes Discovered (bnboe)
12
4.0
8
6
4
2
0
2010
region2012
at our Base price
assumption. Value creation is
2004
2006at 10%
2008
2010to 2012
discounted
nominal
Australia
Indonesia
Australia
Vietnam
Asia Pac
% of global
Malaysia
1/1/2014.
Malaysia
Indonesia
Vietnam
-2
2004
2006
2008
2010
Australia
Indonesia
Malaysia
Vietnam
2012
**Selected
Asia
countries shown for comparison **Selected Asia Pacific countries shown for comparison
**Selected Asia Pacific countries shown for comparison **Selected Asia Pacific countries
shown
forPacific
comparison
Source: Wood Mackenzie Exploration Service
Source: Wood Mackenzie Exploration
Service
Source: Wood
Mackenzie Exploration Service
Emerging exploration hotspots in Sub-Sahara Africa and several giant
finds in the Middle East and Latin America have underpinned global
reserves growth in recent years, leading to claims of an exploration
renaissance. Over the last three years however, global exploration has
failed to replicate the exceptional successes of 2010. Asia Pacific has
not escaped the pinch.
Despite being considered a mature
province, Asia Pacific typically
contributes around 18% of annual
resource additions. While the region
fell behind the leaders in recent years,
recent successes offshore Malaysia by
PETRONAS, Newfield/SapuraKencana,
Mubadala and Shell have boosted the
regions reputation, partially offsetting
underwhelming results in Australia and
Indonesia.
Natuna Basin. Four large discoveries
were also made offshore Brunei,
adding to the success story offshore
northwest Borneo. Discovery sizes in
Malaysia over the past five years have
averaged 73 mmboe, comfortably
higher than its regional peers, and
more than double the regional
average, vindicating PETRONAS’
decision to refocus its exploration
efforts on domestic acreage.
Regional exploration efforts added
19 billion boe of new resources over
the last five years, from over 500
discoveries. Of this, Australia, China,
India and Malaysia delivered 70% of
the total volume discovered. A third of
new fields were found in Australia and
Indonesia.
Regional exploration efforts added
19 billion boe of new resources over
the last five years, from over 500
discoveries. Of this, Australia, China,
India and Malaysia delivered 70% of
the total volume discovered. A third of
new fields were found in Australia and
Indonesia.
But average discovery sizes are
declining, with only 33 “large” finds of
more than 100 mmboe over this period.
Of these, eight were offshore Malaysia,
with all but one in the Sarawak-East
But average discovery sizes are
declining, with only 33 “large” finds
of more than 100 mmboe over
this period. Of these, eight were
offshore Malaysia, with all but one
42
DEC 2014
Source: Wood Mackenzie Exploration Service
in the Sarawak-East Natuna Basin.
Four large discoveries were also
made offshore Brunei, adding to the
success story offshore northwest
Borneo. Discovery sizes in Malaysia
over the past five years have averaged
73 mmboe, comfortably higher
than its regional peers, and more
than double the regional average,
vindicating PETRONAS’ decision to
refocus its exploration efforts on
domestic acreage.
VALUE CREATION
Resource add does not tell the whole
story – after all, companies are
focused on creating value. A multi-tcf
gas find may look good in terms of
reserves replacement metrics, but
will it make money? The increasing
costs associated with exploring more
remote basins, often in deepwater,
require larger discoveries to merit
development.
Regional (and global) value creation
has trended downwards over the
past decade, driven by increasing
exploration costs as a result of
industry-wide cost inflation, and an
increasing focus on more challenging
prospects in deeper and more remote
waters. A recent swing towards
E X P LO RATIO N
Star Performer
Discovery sizes in Malaysia over the past five years
have averaged 73 mmboe, comfortably higher than
its regional peers, and more than double the regional
average, vindicating PETRONAS’ decision to refocus its
exploration efforts on domestic acreage.
DRILLING
43
Conversely, gas
found offshore
Western Australia
or East Africa is
likely to require
costly investment
in new LNG
facilities.
44
DEC 2014
more gas-focused finds (which attract
a lower price on a barrel-equivalent
basis), has also constrained full-cycle
value creation. Appraisal success of
recent finds may indicate discoveries
warrant development, but there
is a growing trend of many basins
destroying value through disappointing
drilling results.
Appraisal success of recent finds
may indicate discoveries warrant
development, but there is a growing
trend of many basins destroying value
through disappointing drilling results.
Despite Australia adding higher volumes
of resource than Malaysia recently, the
value of the resource found in Malaysia
is considerably greater. An extensive
pipeline network in Sarawak, feeding a
well-established LNG complex, makes
the development of new discoveries
in Sarawak relatively straightforward.
Conversely, gas found offshore
western Australia or East Africa is likely
to require costly investment in new
LNG facilities.
That’s not to say finding and
developing gas in Malaysia is easy or
cheap. Recent finds are thought to
contain higher volumes of CO2 and
H2S, which will drive up development
costs. Already in 2014, PETRONAS
and its partners have enjoyed further
success offshore Sarawak, with
nearly 5 tcf of gas found close to
existing infrastructure. A number of
new entrants have been attracted to
Malaysia by recent drilling successes,
which should maintain exploration
E X P LO R ATIO N
DRILLING
activity in the years to come. A stable
fiscal regime and relatively low-cost
drilling has also made the country
more appealing.
PETRONAS is expanding capacity
at the Bintulu LNG complex, and
is pursuing small-scale FLNG to
monetise gas offshore Sabah and
Sarawak. This technology could open
up new exploration and development
opportunities should discovery sizes
continue to shrink and gas continue to
be the dominant hydrocarbon found.
OUTLOOK
High cost dry holes in eastern
Indonesia and sub-commercial gas
finds offshore western Australia have
dampened enthusiasm for these
plays. High-profile licensing rounds
in Myanmar, and ongoing drilling
campaigns in Malaysia, will drive
high levels of exploration activity
in the region over the next 5-10
years. The fiscal terms in Myanmar
are challenging, and little is known
about the hydrocarbon potential of
this deepwater province. Still, the
potential prospectivity coupled with
the opportunity to be a major player in
a newly accessible frontier is attracting
the interest of leading explorers.
At a time where cost and value are
key, upstream operators are much
more likely to invest in proven basins
and regimes with high prospectivity
(even perceived) and tougher
returns, than unproven provinces
with lower government take. This
is being played out currently, with
many US based operators retrenching,
predominantly towards North America,
and relinquishing exploration acreage
in underperforming basins across Asia
Pacific.
Ultimately, exploration strategies will be
measured by success with the drillbit
and the ability to commercialise
discoveries. With ever-tightening
budgets, Asia Pacific needs more
success stories like Malaysia if it is to
continue to attract the world’s best
explorers and prove up new resources.
PETRONAS’ continued investment
in the creation of new industry to
commercialise gas discoveries will
encourage explorers to pursue
exploration opportunities.
45
BUKIT
TUA
IN
INDONESIA
SET TO COME
ONSTREAM
Petronas Carigali Ketapang, the lead operator for
the Ketapang PSC in offshore East Java, Indonesia
north off the coast of Madura Island
production storage and offloading
barrels.
46
DEC 2014
DE V E LO P M E N T & P RO DUCTIO N
DRILLING
BUKIT TUA
FIELD
JAVA ISLAND
Madura Island
East Java
OIL
20,000
barrels per day
GAS
70 million
standard cubic
feet per day
wells
5 production
slots
9 drilling
Topside
weighing
1,500 tonnes
110km
export pipeline
to an onshore
receiving facility
(ORF) in Gresik
Discovered in
2001
April
with the drilling
of Bukit Tua-1
well to a depth
of approximately
6,500 ft.
47
MIDDLE E AST
(44%)
(22.5%)
(22.5%)
(10%)
Achievement First Oil: June 2012
48
DEC 2014
M IDDLE E AS T
Thriving
Amid
Challenging
Conditions
by LUKE ROSHAN
49
MIDDLE E AST
‘‘
Being able to succeed in Iraq is more challenging
than any other project, and requires a holistic
assessment of the security, technical and commercial
situation, and an implementable strategy to tackle the
challenges head-on.
’’
PETRONAS Iraq Country Chairman, Mohd Zaini Mohd Yunus.
In early 2010, PETRONAS, the Malaysian national oil and
gas company, embarked on a risky venture to develop
the Garraf oil field in the Thi Qar Province in southern
Iraq. Despite the challenging business environment, the
oil heavyweight achieved first oil from the onshore oil
field in just over 42 months. Today the field, which was
discovered in 1984, is already producing at an average
rate of 90,000 barrels per day (bpd) and is set to hit its
production target of 230,000 bpd by 2017.
While the development of the Garraf
oil field by PETRONAS might seem
routine to industry watchers, the
company’s success in establishing
itself as a key player in expanding
Iraq’s crude oil production is
particularly satisfying because it
demonstrated a certain finesse, said
the company’s Iraq Country Chairman
Mr. Zaini.
“Many major International Oil
Companies (IOCs) have been doing
studies on Iraq for more than 30 years,
and when the opportunity presented
itself to enter this market, we were
eager to seize it, notwithstanding the
high level of geopolitical, security and
project risk,” he explained.
“Being able to succeed in Iraq is
more challenging than any other
project, and requires a holistic
assessment of the security, technical
50
DEC 2014
and commercial situation, and an
implementable strategy to tackle
the challenges head-on. This,
coupled with our commitment
to contributing to the well-being
of people and nations wherever
we operate, means that we are
confident that having security,
technical, manpower capability, and
community development as our top
priorities, we are preparing ourselves
adequately to succeed in Iraq.”
Iraq has for a long time been
an important supplier to global
markets, but its ability to fully realise
its potential had previously been
stymied by decades of conflict
and sanctions. Iraq only started
to expand its output in 2010 after
securing service contracts with
international oil companies like BP,
Royal Dutch Shell, Exxon Mobil and,
of course, PETRONAS.
Since then, output has risen to 3.4
million bpd, with exports hitting a record
2.8 million bpd in February 2014. This
means that Iraq is now OPEC’s secondlargest producer behind Saudi Arabia,
a status that has helped boost the
country’s political capital with both the
Vienna-based group as well as on the
international stage.
Leveraging on IOCs like PETRONAS,
Iraq has been able to fulfill its ambitions
of not just in increasing oil production
but also developing its people and the
communities they live in.
In order to successfully operate in such
a challenging environment, and to
surmount the numerous bureaucratic
and regulatory hurdles present,
developing a good working relationship
with governmental authorities and the
local community is essential.
“The good relationships we have
developed with these authorities have
helped to overcome the red tape and
regulatory challenges. In respect of the
community, we have been from the very
beginning placed a strong emphasis
on conducting appropriate and
targeted Corporate Social Investment
(CSI) initiatives. PETRONAS has been
recognised for its efforts in this respect,
and has been ranked the most active
by the Ministry of Oil amongst all other
IOCs in terms of contribution to the
local communities,” Mr. Zaini said.
M IDDLE E AS T
Garraf Development Production Service Contract (DPSC) signing ceremony 2010
PETRONAS technicians at the Garraf oil field
51
MIDDLE EAST
Children in Garraf have
benefited from the various
CSR programmes to improve
education outcomes
52
DEC 2014
MIDDLE EAST
Due to the particularly deprived nature of this rural
community, and in consonance with PETRONAS’
commitment to contribute to the well-being of the
people and the nation, PETRONAS has embarked on
various community programmes in Garraf
refrigerator maintenance, carpentry,
and masonry. Special emphasis is given
to the training of local women, with
sewing, basic English, IT, hair grooming
and beauty courses.
the particularly deprived nature of this
rural community, and in consonance
with PETRONAS’ commitment to
contribute to the well-being of people
and nations wherever it operates, the
company has embarked on various
community programmes in Garraf.
“Even though this is the first service
contract for PETRONAS in Iraq, the
government has acknowledged
PETRONAS’ performance as being
at par with the other IOCs present in
Iraq, and we are setting benchmarks
particularly in respect of our CSI and
crude oil lifting practices. Regardless
of the challenges, Iraq remains a key
investment for PETRONAS to move
forward in this blooming region.”
Mr. Zaini expressed his satisfaction
with how PETRONAS and its jointventure partner, Japan Petroleum
Exploration Co (Japex) has dealt with
the challenges of land acquisition
and compensation, particularly since
the Garraf oil field is located within a
populated agricultural area. Due to
Initiatives such as improving the
infrastructure within the Garraf area
(including roads and water treatment),
capability building and education
through training and scholarships,
providing employment opportunities,
and promoting Health, Safety and
Environment awareness, have been
conducted in collaboration with the
host authorities and other valued
partners.
A key project perfectly illustrating the
nature of this cooperation was the
establishment of the Garraf Vocational
Training Centre (GVTC), which was the
result of the collaboration between
the Government of Japan, PETRONAS,
and JAPEX. Since 2012, the GVTC
has continuously been conducting
vocational training for the local
community in respect of a wide variety
of skills, including Basic English, IT,
electrical wiring, air conditioning and
With these community initiatives and
numerous engagement activities
conducted on monthly basis, these
efforts have built trust between
PETRONAS and the local community,
thereby allowing PETRONAS to more
easily conduct day to day activity, as
well as ensuring added protection by
the community during challenging
times in Iraq.
A Bullish Outlook
The outlook for further investments
in Iraq by the company looks bullish.
Despite the ongoing volatile situation
in northern Iraq, the company is
confident of continuing its operations,
especially in light of the recent
formation of a new government and
cabinet.
“With the Southern part of Iraq
continuing to remain relatively stable
and all four of PETRONAS’ fields
producing (Garraf, Majnoon, Halfaya,
and Badra), the business outlook
continues to remain positive for
the time being. PETRONAS has also
established a Business Continuity Plan
(BCP) to ensure that production will
continue and operations will not be
halted in the event of an emergency,”
Mr. Zaini stated.
53
MIDDLE EAST
“We are committed to
being a good corporate
citizen whose main
objective is to develop
the people and resources
of Iraq for the benefit of
the country.”
Mr. Zaini added that Iraq is very
attractive from a technical point
of view as its massive reserves are
relatively easy to develop. Despite the
fragile security situation within the
country, he believes that PETRONAS
has developed a formula for success
that will allow it to operate in the
country with little resistance or threat
of disruption to its operations.
“We are committed to being a
good corporate citizen whose main
objective is to develop the people
and resources of Iraq for the benefit
of the country.” Mr. Zaini said.
As the Garraf project embarks on
its next major phase, the project is
expected to advance from strength
to strength, and is confident of
achieving the production levels
mandated by its contractual
obligations while at the same time
continuing to develop the local
community.
54
DEC 2014
MIDDLE EAST
KEY FACTS ABOUT THE GARRAF OIL FIELD
Garraf oil field is located in the province of Thi Qar, approximately five
kilometres north-west of Al-Rifa’i city and 85 kilometres north of Nasiriyah
City. The field is operated by PETRONAS Carigali Iraq Holding (PCIHBV).
The Development and Production Service Contract (DPSC) for the Garraf
Contract Area (GCA) was signed between South Oil Company (SOC),
PETRONAS Carigali Sdn. Bhd, Japan Petroleum Exploration Co. Ltd (JAPEX)
and North Oil Company (NOC) on 18th January 2010, and was made effective
on 10th February 2010.
The onshore oil field was discovered in 1984 and contains oil in Cretaceous
reservoirs. The field is 17.5km long and 5.5km wide. It is estimated to hold
recoverable reserves of 1.3 billion barrels of oil. The current production
capacity of the field is 100,000 barrels of oil per day (bpd). The capacity will
be increased to 250,000 bpd in 2020 to meet the Plateau Production Target
(PPT).
Development works for the Early Production System (EPS) started in early
2011 and the first oil production was achieved in August 2013. Currently, the
development work of the Full Field Development (FFD) is actively ongoing.
The EPS facilities include two oil processing trains of 50,000 bpd each, three
storage tanks, produced water treatment, 15 MW power plant, 2 cluster
wellpads, 3 single wellpads and other supporting infrastructures.
The FFD facilities will include additional oil production trains, gas processing
facilities, water injection facilities, export pipelines, wellpads and other
associated facilities in order to achieve and sustain the PPT.
Currently, the processed oil is transported through 8 km pipeline to. Garraf –
Ahdeb tie in. It will then be transported to Tuba Tank Farm and subsequently
to the Southern Iraq export facilities.
55
MIDDLE EAST
INVOLVEMENT WITH THE LOCAL COMMUNITY VIA CORPORATE
SOCIAL INVESTMENT (CSI) INITIATIVES
REFURBISHMENT EFFORTS
CAPABILITY
BUILDING
THROUGH
TRAINING &
SCHOLARSHIP
PROGRAMMES
Training of 88 PETRONAS
Operations Technicians (POTs)
in PERMATA & INSTEP, Malaysia
19 Jan 2011
1 Oct 2013
28 Nov 2013
Approval of Garraf
Preliminary Development
Plan (PDP) Rev
Export Oil Sales
Agreement (EOSA)
was signed
Achieved FCP
18 January 2010
10 February 2010
56
Classroom trainings & workshops
for Ministry of Oil (MoO) & South
Oil Company (SOC) Staff
DEC 2014
31 Aug 2013
Achieved 1st oil
25 Oct 2013
Reached FCP Volume
(Cum. Export: 3,201,210 Bbls)
HSE, Fire-Fighting & English
Training in Garraf & Malaysia for
19 Iraqi fire fighters
Commencement of
production from
Garraf in fill
First Lifting
18 Aug 2014
Achieved 100kbld,
October 2014 xxxxxxxx
Cooperation with PETRONAS is regarded as ‘Look Petronas’
in JAPEX which means we will learn from Petronas through
this project just like Malaysians did in the past as ‘Look East’.
Q&A
to overcome challenges with
toughness and persistency in
various negotiations studying all
the possible options.
4.Tell us about how you overcame
one of the most challenging
aspects together?
Dr. Kazuo Nakayama, Managing Director/President of Middle East,
Africa & Europe Division, JAPEX
1. What was the most challenging
aspects about working on the
Garraf project from a business and
operations perspective?
We would like to highlight the cost
and schedule management was and
is one of the greatest challenges in
Garraf Project among others like
security and cultural sensitivity.
Project revenue is as low as USD1.49
for every barrel of produced oil
and any project cost hike will easily
affect the project economics. We
have discussed with PETRONAS
many times and studied the ways to
ensure the project profitability.
2. In what areas did JAPEX and
PETRONAS work together?
We can say that the cooperation
between both parties extends to
almost all the fields in the project.
Currently there are 22 JAPEX staff
seconded to PC Iraq working
together with PETRONAS staff in
such as Production, Maintenance,
Petroleum Engineering,
Development, Finance, CSR/
Administration and Supply Chain
Management. It’s been more than 3
years since our staff work together
on the Garraf Project both in the
Also, the Iraqi government
officials have highly
evaluated that PETRONAS
has started oil production
from green field ahead of
other companies.
office and fields. Cooperation
with PETRONAS is regarded
as ‘Look Petronas’ in JAPEX
which means we will learn from
PETRONAS through this project
just like Malaysians did in the past
as ‘Look East’.
3.How would you describe your
impression of PETRONAS as a
business partner?
To us, PETRONAS is a predecessor
in overseas E&P business.
PETRONAS is operating in more
than 20 countries successfully.
JAPEX is in the middle of its
effort to diversify and expand
our overseas projects, and we
saw PETRONAS demonstrating
very strong mindset has that is
necessary to conduct challenging
projects. We’ve witnessed many
times PETRONAS staff trying
JAPEX and Petronas have their
own culture and working style, but
both parties have shared values as
business partners for the Garraf
project. In case of negotiating with
the Iraqi Government, both parties
get together to visit Baghdad
many times to work on the most
challenging issues.
5.How would you describe the
future of the Garraf oil field?
We achieved First Oil in August
2013 but there are still so many
challenges ahead of us to achieve
full field development and plateau
production. However, we believe
we’ll be able to move forward to
make Garraf to be the center of
‘Thi Qar Oil Company’ through
close partnership with PETRONAS.
This project will benefit people in
Garraf Oil Field and Iraq as well as
PETRONAS and JAPEX.
6.How is PETRONAS regarded
amongst the community in Garraf
and in the Iraq government?
We know there is high expectation
among the local community
to benefit from petroleum
operation and feel that people
are starting to think existence of
PETRONAS in Garraf will benefit
them in long term especially
through employment and various
community programs.
Also, the Iraqi government
officials have highly evaluated
that PETRONAS has started oil
production from green field ahead
of other companies.
57
C APABILIT Y BUI L D I N G
Keeping it
REAL
58
DEC 2014
CAPABILITY BUILDING
sjgducsc.
(IOGTC) is aimed at
actual plant.
Petronas is the only oil company
in Asia to offer live simulation training
standards.
Mohd Lutfi.
he adds.
LIVE IS BETTER
59
CAPABILITY BUILDING
shares Datuk George Ling Kien Sing,
Head of the Drilling Division.
“There are emergency situations at a
live plant that technicians will face such
as gas and oil leaks, pipes bursting,
electrical or motor burns. You will
never know how people will react until
they are in that situation. At the training
plant, we can recreate these situations
in a safe environment with the same
obstacles such as limited space.
“After going through this simulated
experience, the trainees will be familiar
enough with operations to be able to
work independently and ease the way
into live operations. With the facilities
in place, the programme can produce
operations-ready technicians in the
span of 12 months,” he notes.
60
DEC 2014
“The training plant
integrates all of the
systems found on a rig
or platform, allowing
multiple processes to
be run simultaneously,
giving trainees exposure
to a complete upstream
processing facility”
INSTEP trainer,
Encik Mohd Lutfi.
The Executive Vice President and
Chief Executive Officer of Upstream,
Dato’ Wee Yiaw Hin adds, “The
success of our operations rests
greatly on the abilities of our people.
Our operations are complex and
can be dangerous if not handled
correctly. There is no better teacher
than experience.”
With the new training facilities,
INSTEP has also doubled its training
capacity from 850 trainees to 1,700
trainees each year as part of its
continuing efforts to become a
regional educational hub for the
oil and gas industry. These efforts
dovetail with Malaysia’s manpower
plans to meet the oil and gas
industry’s growing needs for a highly
skilled workforce.
INSTEP IOGTC infographic_Eng 297x420mm.pdf
11/6/14
10:30:47 AM
CAPABILITY BUILDING
INSTEP Integrated Oil
(IOGTC)
61
CAPABILITY BUILDING
HANDS-ON
Experience to Complement
Existing Programmes
IIOGTC provides a blend of theoretical knowledge enrichment
and hands-on skill development to INSTEP’s flagship 1-year
Petroleum Technology Programme (PTP) through a live plant
experience in its upstream and downstream facilities.
SEMESTER 1 (6 MONTHS)
SEMESTER 2 (6 MONTHS)
• 24 weeks of classroom theory and practical
workshop sessions on technical disciplines
including:
• 6 to 8 weeks of plant training
• 1 week of emergency response training
• 5 weeks maintenance workshop and
training and assessment
• 3 or 5 weeks control room training and
assessment
• 12 weeks on-the-job training (OJT) plant
assessment
•
•
•
•
•
•
Electrical
Instrumentation
Process & Analytical
Mechanical & Inspection
Exploration & Production
Health, Safety & Environment
UMW-INSTEP Drilling
Academy (UIDA):
62
DEC 2014
Featuring a diesel-powered drilling rig and the
DrillSim-600 drilling simulator to cater for professional
drilling programmes.
E X P LORATION
64
DEC 2014
REALISING
APIPE
DREAM
Myanmar
by Christine Cheah
65
Myanmar
Children and farmers at
villages along the Yetagun
project area benefitting
from fresh water supply
piped in from streams and
waterfalls
THATON
BASSEIN
Yangon
Man Sot
MOULMEN
GULF OF MOATTAMA
t
The sound should come as a surprise. In the summer
months, the river levels fall and catchment ponds
evaporate. For the rural villages that depend on these
sources for water, shortages are a fact of life.
AMHERST
Thailand
Thong Pha Phum
BAN I TONG
Kanchanabur
M12
PCML
M13
PCML
BANG
Yetagun
Ratcha Buri
Power Plant
M-14
PCML
season,” says Tun Tun Oo, Chairman
Inn Byar, a small village in Kalainaung sub-township in
of Inn Byar’s Water Committee.
“Accessibility was also an issue. The
Myanmar, is still in the sinking heat of the late summer
main source of our water is a stream,
season, when even the most diligent shopkeepers have
which is situated at the cliff about a
mile down from the village. We would
beaten a retreat into the cool shade of the indoors to
take a water tank on a bullock cart and
fill it up. Each household would fetch
wait out the relentless sun. The silence is broken only
water from the designated area. But
by the faint drifting laughter of children from the village
now we can bring the water to us.”
school and the quiet burble
of water gushing into a
Yetagun Socio-Economic Development
Supported by PETRONAS
concrete storage tank.
The sound should come as a surprise.
In the summer months, the river levels
fall and catchment ponds evaporate.
For the rural villages that depend on
these sources for water, shortages are
a fact of life.
“We used to face shortages throughout
the year, except during the rainy
66
DEC 2014
Health Location
• Tanintharyi Division
– Kanbauk Dawei
• Yangon
• Inle Lake area in Shan State
Education
Infrastructure
Outcomes
• Built 36 early childcare Development
(ECCD) Centres
• Fresh water supply for over 20 ECCD
Centres
• Vocational training – 70%
participants boosting income
Community Support Vital
In some villages, the water
supply systems built as a result
of the Yetagun Socio-Economic
Development initiative can be as
simple as a gravity-flow based
pipeline from the water source to a
concrete storage tank in the village.
Other systems are more complex,
using generators to power the
pumps that bring water from wells
and ponds to catchment areas
closer to home.
At the Inn Bayar is one such system,
where water is pumped from the
stream to a tank in the village and
then distributed to the households
by pipeline. PETRONAS supplied
pipe materials and provided
guidance on build of quantity to
enable a steady supply of fresh water to
the homes.
“Since installing this system, the
community is supplied throughout the
year. We also distribute water to the
nursery and primary school. With plenty
of water, the children are learning the
habit of washing their hands to protect
them against infectious diseases,” says
Tun Tun Oo.
The community is the key element of
the success of these programmes that
provide the building materials, but a
committee formed from the community
spearheads the project, identifying
needs, overseeing construction and
maintenance once the project is
complete.
At most of the projects, a simple
metering system allows the committee
to charge a nominal fee for the water.
The funds are channeled back into
maintaining the water infrastructure or
to support other development projects
within the community. At Inn Byar, the
funds are channeled towards
maintenance for the generator and water
pump.
Water sustains not only the people, but
their livelihoods as well. The hushed
stutter of a sprinkler system can be
heard, watering the vegetable gardens.
At Inn Byar, the supply makes it easier
to water the rubber, betel nut and
fruit trees that provide income to the
households in the village. The bounty
has been abundant. Having operated
in Myanmar for nearly 20 years, we
adopt a holistic approach in designing
sustainable programs to benefit the
people in areas of our operations.
67
Volume 01
FEATURE FOCUS
All rights reserved. No part of this document may be reproduced, stored in a retrieval
system or transmitted in any form or by any means (electronic, mechanical,
photocopying, recording or otherwise) without the permission of the copyright owner.
www.petronas.com.my
DECEMBER 2014
VOLUME 01
C
Planning For
A Masterpiece
Reality Show
A Star is Born
Fast and Furious!
Beating the Odds
conditions in Iraq?

PETRONAS flow Volume 01

Transcription

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