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Indonesia Oil & Gas Fields - East Kalimantan.

The main hydrocarbon regions in Kalimantan, the Indonesian portion of Borneo island, are in the east: the Kutei Basin and the Tarakan Basin. (Kalimantan is a huge wilderness, thinly populated and rich in resources. The terrain extends from high mountain peaks, through lush rain forests, to mangrove swamps and rivers running to the coast. In 1983, about 3.7m hectares of rain forest in East Kalimantan burned with 20m sq metres of hardwood destroyed - then valued at $12 bn. In addition, coal and peat deposits were also burned out, causing Indonesia huge losses). There are several important oil and gas operators in East Kalimantan. They include a Total/Inpex partnership which is now the biggest producer of oil and gas in the region, Arco which produces from small oilfields, and Unocal. Lasmo Operations: The onshore field of Badak is where East Kalimantan oil and gas were first discovered in commercial quantities in 1971 by Roy Huffington of Texas (Huffco). Then Huffco was also operating very old and small fields in the area, such as: Sanga Sanga, found in 1897 at a depth of 275 feet and by mid-1985 still producing about 3,800 b/d of 32 deg. API oil; Tarakan, found in 1906 at a depth of 200 feet and by 1984 producing almost 2,000 b/d of 20 deg. API oil; and Samboja, found in 1909 at a depth of 360 feet, and by 1984 producing more than 660 b/d of 21 deg. API oil. After the Badak discovery, Huffco found several fields producing oil and gas, including Nilam (1974), and Pamaguan (1974). In the mid-1970s, some of these fields proved to have large reserves of natural gas 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, now the second biggest gas producer in Indonesia next to Mobil, supplying the Bontang LNG complex, and controlled by Lasmo. (Indonesia has two LNG complexes, one at Bontang near Badak on the east coast of Borneo, and one at Arun at the northern tip of Sumatra. The first LNG train at Bontang, Badak 1, came on stream in August 1977 with a combined capacity of 2m t/y and was the world's 7th LNG venture. The main investor at the Bontang 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 Bontang complex and these included Badak and Sanga Sanga. Sanga Sanga's gas reserves in early 1995 stood at about 7.6 TCF, supplying 60% of all Bontang gas. The Total/Inpex partnership also supplies this complex and is expected to become the largest single producer of gas in Indonesia. (In mid-1995 Lasmo sold its oil interests to Kondur Petroleum, a local firm connected to the pro-Suharto Bakrie Brothers industrial and trading group and has since boosted oil output to 19,000 b/d). 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 220,000 b/d. Bekapai, 40 deg. 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 deg. API, was found in 1974 at depths of 3,000-9,000 feet. Total is the operator, having been in Indonesia for 29 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 450,000 b/d by 2000 and 500,000 b/d by 2004. Its gas production capacity was to rise from 1 BCF/day to more than 3 BCF/day by 2000.

At present Total's gas production is averaging more than 1.5 BCF/day and breaks down as follows: 1.3 BCF/day from Tunu field, by 2000 to reach more than 2.2 BCF/day; 100 MCF/day from Tambora field which will continue to produce at this level through 2000 and beyond; and 100 MCF/day of gas associated with oil production. Tunu is a giant covering 400 sq km, with reservoirs located at 2,200-4,100 metres in fairly shallow waters. Initial reserves were estimated at 4.5-5 TCF and those at nearby Tambora were put at 1.5 TCF. Further appraisal by mid-1995 raised Tunu reserves to 9 TCF. Tunu and Tambora went on stream in 1990. The new oil and gas field, Peciko which has an oil reserve of 100m barrels and a huge gas reserve, will be on stream in 1999 in a $1.25 bn development, to produce 500 MCF/day in the initial phase and 900 MCF/day from 2000. Peciko's oil production rate is yet to be decided. Production of associated gas from oil oilfields will double to 200 MCF/day by 2000. 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. 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. In 1991-95, Total drilled 31 exploration wells and had 16 discoveries. It has pioneered new E&P techniques in Indonesia, where the French company employs 1,600 people, such as slimhole drilling and stacked wellhead platforms. Total is the fourth largest producer of hydrocarbons in Indonesia, next to Caltex, Mobil and Vico. It will rank second or third by 2004, depending on the extent of Mobil's new discoveries and field developments and the outcome of Exxon's work at Natuna. (Total is acquir-ing the Belgian oil and chemicals group Petrofina and will be known as Total Fina). 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 more than 50,000 b/d of 39 deg. 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; but development of this area has been delayed. 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/day of gas from five wells. The output rose in 1997 on the completion of two additional wells. More wells were to be drilled in 1997/98. Unocal found this field in August 1995 near its Sepinggan field. The first drillstem test flowed at the rate of 22.3 MCF/day of gas and 163 b/d of condensate through a 56/64-inch choke. The second flowed 10.7 MCF of gas and 2,572 b/d of condensate through a similar choke. Oil was found later. Exploration has involved 3D seismic. The company found the Berukang offshore field in early 1995 in the Makassar Strait some 7 km north-east of the Serang field. The first well tested an aggregate flow of 1,263 b/d of oil and 7.4 MCF/day of gas. The well was drilled to a total depth of 4,181 metres. Unocal has also explored high-risk offshore areas in 400-metre deep waters, some of which have high potentials. Like Total, Unocal has introduced slimhole drilling and stacked wellhead platforms. In 1991-95, it drilled 15 exploration wells and made seven discoveries. In partnership with Mobil, Unocal operates the nearby Greater Merah Besar block, where its latest in a series of discoveries, West Seno 4, in early 1999 tested 19,344 b/d of oil and 18.6 MCF/day of gas in deep water in the Kutei Basin. Its proven reserve is estimated at 150m barrels oe and probable reserves are put at almost 2 bn barrels oe. The field and the earlier finds are to be developed rapidly and production will start in 2001. The oil is similar in quality to the 39 deg. API, low-wax Attaka grade. 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 won 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 would be entitled to 40% of the gas and 35% of the oil, after capital cost recovery, if a commercial find is made. Now Unocal wants to buy a 10% stake in the Rapak block off Kalimantan owned by Suharto associate Bob Hassan. In late 1998, it took two blocks off South Sulawesi.
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Publication:APS Review Gas Market Trends
Date:Mar 8, 1999
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