INDONESIA - Lasmo Operations.

The onshore field of Badak is where East Kalimantan oil and gas were found in commercial quantities in 1971 by Roy Huffington of Texas (Huffco). Huffco was also operating very old and small fields in the area, such as: Sanga Sanga, found in 1897 at a depth of 275 ft and by mid-1985 still producing about 3,800 b/d of 32[degree sign] API oil; Tarakan, found in 1906 at a depth of 200yft and by 1984 producing almost 2,000 b/d of 20[degree sign] API oil; and Samboja, found in 1909 at a depth of 360 ft, and by 1984 producing over 660 b/d of 21[degree sign] API oil. After Badak, Huffco found several fields producing oil and gas, including Nilam (1974), and Pamaguan (1974). In the mid-1970s, some of these proved to have large gas reserves suitable for LNG export from the Bontang liquefaction centre. The fields are part of Tarakan Basin, associated with Tarakan Island. The play is in Tertiary clastics connected to other sources of oil. Later Huffco properties became part of Vico, the second biggest gas producer in Indonesia next to ExxonMobil, supplying the Bontang LNG complex, and controlled by Lasmo. Lasmo is now part of ENI of Italy, which bought it in early 2001 but has since let it function as usual.

The world's biggest LNG complex at Bontang, near Badak, is on the east coast of Borneo. Its first LNG train, Badak 1, came on stream in Aug. 1977 with a 2m t/y capacity and was the world's 7th LNG venture. The main investor at the complex was a Pertamina-Huffco partnership called Vico. Vico later included Lasmo and Union Texas Petroleum. Lasmo acquired Vico's interests in 1991 when it bought Ultramar. Later Lasmo developed some of the fields' gas reserves to feed the complex and these included Badak and Sanga Sanga. Sanga Sanga's gas reserves in early 1995 stood at 7.6 TCF, supplying 60% of all Bontang gas.

Lasmo has several other assets in Indonesia. Its share of the gas output in this country is about 170 MCF/d, compared to 222.6 MCF/d in 1997 and a peak of 273 MCF/d in 1996. It has a 100% working interest in the offshore Kreung Mane PSA block of about 6,000 sq km in North Sumatra, which it acquired from Pertamina in Sept. 1999 and which is only 100 km from the Arun LNG complex. It has been committed to spend $39m to explore and develop this block, with the first well spudded in late 2000. Lasmo in late 1999 acquired a four-component (4C) seismic survey over the block, with is said to have a "multi-trillion cubic ft" potential. Water depths are up to 366 metres. Any gas produced will be sold to ExxonMobil.

Lasmo on May 1, 1999 farmed into two of Unocal's promising deep water blocks off East Kalimantan and a third shallow-water block (see below).

The Total/Inpex partnership, 50-50, produces the Handil and Bekapai oil and gas fields and other nearby structures on the Mahakam block with a total capacity of more than 480,000 b/d of oil equivalent. Bekapai, 40[degree sign] API with little sulphur, was discovered by Total in 1972 at depths of 4,600-5,600 feet. Handil, producing much more with the oil of 31[degree sign] API, was found in 1974 at depths of 3,000-9,000 feet.

Total (now TotalFinaElf) is the operator, having been in Indonesia for 31 years. It celebrated the production of its billionth barrel of oil on April 1, 1996. It then announced that its production of oil will reach 500,000 b/d by 2004. Its gas production capacity has risen from 1 BCF/d in 1996 to 3.4 BCF/d. Total supplies nearly 60% of the gas requirements of the Bontang LNG complex.

Because the expansion of LNG export facilities has been rapid, with LNG supplies maximised, the depletion rate of pre-1990 reserves accelerated. By then recoverable reserves available to Bontang were less than 14 TCF. In early 1991 Pertamina extended Total/Inpex's PSC to another 20 years - after a long period of hard bargaining. Total then embarked on a massive exploration programme in the area, which has since resulted in several gas discoveries, and the development of pre-1991 finds. New and pre-1991 discoveries include rich gas layers in the oilfields of Handil and Bekapai, and in Sisi, Peciko, Semberah, Tunu and Tambora (the latter two being among fields near Bontang). Their gas reserves are said to be in excess of 16 TCF. These fields produce large quantities of condensates. Total has equity in the Bontang LNG complex.

Tunu, among Total's fields, is a giant whose gas production now averages 2.2 BCF/d. Tunu covers 400 sq km, with reservoirs located at a depth of 2,200-4,100 metres in fairly shallow waters. Its reserves are estimated at 9 TCF. Another gas field nearby is the 100 MCF/d Tambora. Tunu and Tambora went on stream in 1990. Peciko which has an oil reserve of 100m barrels and a huge gas reserve, has been on stream since November 1999 and its development cost about $1.25 bn. It produces 900 MCF/d of gas. Total's production of associated gas from oil structures has doubled to 200 MCF/d.

Most of the partnership's fields lie in the Kutei Basin, the Mahakam Delta, where oil production had been established since the late 19th century. Gas production in this area is a more recent activity but the fields are a major source of supply for the LNG trains at Bontang. Oil and gas in the Kutei basin are produced from Tertiary deltaic sands in multi-reservoir fields. Fields occur both onshore and offshore. Exploration now shows that much of the pre-Mahakam Delta is underlain by gas deposits.

Unocal, whose PSC was extended in early 1991 for another 20 years, has several oil and gas fields in East Kalimantan, both onshore and offshore. Its oil producing fields include Attaka (discovered in 1970 at a depth of 7,500 feet and by the mid-1980s producing about 50,000 b/d of 39[degree sign] API oil), Melahin and Kerindingan (both found in 1972 at a depth of 11,150 feet and producing heavier oil). Fields producing gas supplied to the Bontang complex include Attaka and Mutiara. Unocal in 1982 discovered a big gas field at Kerenden, 225 km west of the remote Balikpagan field.

Unocal's oil production now has reached almost 70,000 b/d. Output was boosted in October 2000 with the coming on stream of its Mahoni field off East Kalimantan. Initial output of 4,000 b/d was doubled in the past five months and should reach 10,000 b/d in April, raising Unocal's total oil production to 72,000 b/d. Its major deep-water West Seno field, the first deep-water field development in Indonesia, should be on stream in 2002 with a capacity of 100,000 b/d. Unocal hopes that, with its Merah Besar and Janaka fields, its production would reach 272,000 b/d by 2003. These fields lie in the Greater Merah Besar block, in the Kutei Basin. Their oil is similar in quality to the 39[degree sign] API, low-wax Attaka grade. Unocal has made several oil and gas discoveries in this basin.

Unocal's exploration of high-risk areas in deep waters has paid off. Like Total, it has introduced slimhole drilling and stacked wellhead platforms. The recoverable reserves at West Seno, for example, at over 300m barrels of oil, 1.5-2 TCF of gas and 80-100m barrels of condensate. On Jan. 9, 2001, Unocal announced an oil and gas find in the Ranggas prospect in the southern portion of the Rapak PSC block, offshore East Kalimantan. Ranggas-1, drilled to 11,845 ft in 5,303 ft of water, encountered 250 ft of gas pay and 40 ft of oil pay. It was to conduct delineation drilling on the structure with additional results expected in March. This is a new geological structure 25 km south-east of West Seno. Unocal holds an 80% working interest in the Rapak block, with Lasmo having 20%.

In April/May 2000 exploration drilling in shallow waters of Unocal's Balikpapan block, off East Kalimantan, resulted in three major finds. Gas reserves discovered in Unocal's Central Delta Play zone are estimated at about 2-3 TCF.

Unocal put the Seguni oil and gas field on stream in June 1996. Its production averaged 6,700 b/d of oil and 9 MCF/d of gas from five wells. The output rose in 1997 on the completion of two additional wells. More wells were drilled in 1997/98. Unocal found this field in August 1995 near its Sepinggan structure. It found the Berukang offshore field in early 1995 in the Makassar Strait some 7 km north-east of the Serang field.

In September 1997, Unocal signed a PSC for the Sesulu block in the Mahakam Delta covering 7,797 sq km, where it was to drill four wells in three years. This is near its production system. In late 1998, it got PSCs for the nearby Sangkarang and Lompa blocks covering a total of 18,200 sq km in 300-940 metres of water depths. Like most Unocal blocks, these are frontier areas in which the US company is entitled to 40% of the gas and 35% of the oil, after capital cost recovery, if a commercial find is made.