Repsol’s gas find ticks the boxes [NGW Magazine]
Repsol’s Kali Berau Dalam-2X well in Sakakemang province, South Sumatra, found at least 2 trillion ft³ of recoverable gas, the Spanish operator said, after preliminary analysis.
Although not huge, the block is the biggest discovery in Indonesia in the last 18 years, and according to Repsol it is among the ten largest finds worldwide in the last 12 months.
Repsol and Malaysia's Petronas have 45% each and Japan's Mitsui Oil Exploration (Moeco) has 10%.
Indonesia is the focus of Repsol’s exploration investments in southeast Asia and it plans to execute an intense drilling and seismic campaign in 2019 and 2020. It acquired the asset when it bought Talisman, but went on to sell some of the local assets to Jadestone, a company set up by former Talisman executives with upstream knowledge of Indonesia.
Repsol’s focus is on gas, which it sees as a key fuel for the energy transition to a low-carbon global economy.
The discovery is making history for Indonesia. “It's a significant discovery," the head of Indonesia's upstream regulator SKK Migas, Dwi Soetjipto, said soon after.
Analysts at Wood Mackenzie were scarcely less upbeat. Repsol's well re-entered after well control problems in late 2018, having targeted the pre-tertiary fractured basement play. Before drilling, the prospect was estimated to hold in the region of 1.5 trillion ft³ of gas.
"Further appraisal will be required to determine the extent of the discovery and firm up resource estimates, with another well scheduled on the block for later this year. Wood Mackenzie estimates anything larger than 300bn ft³ would be considered commercial, given how close it is to gas infrastructure,” it said.
The discovery is 25 km from the Grissik gas plant, which gathers and processes production primarily from ConocoPhilips-operated Corridor production-sharing contract, before sending it to buyers in Sumatra, West Java and Singapore.
Woodmac also said ConocoPhillips and state Pertamina would be interested in the result, as they are looking for resources that could extend the life of the Corridor PSC, scheduled to expire in 2023. The Corridor PSC is a key supplier of gas to Singapore and West Java, but it is expected to see declining output from 2024 – a new source of supply would also be positive news for gas buyers in these markets.
"Indonesia's oil and gas regulator, SKK Migas, has recently upped its efforts to encourage exploration in the country as it faces dwindling output and a lack of new investment activity. The regulator has targeted the discovery of at least one new giant field (500mn barrels of oil or equivalent) by 2023. The Kali Berau Dalam discovery could be the good news Indonesia needs to kick-start its exploration sector. If pre-drill estimates are realised, it would be the largest discovery in Indonesia since ExxonMobil's Cepu discovery in 2001."
The gas potential was found after the companies drilled KBD-2X well on August 20, 2018. The drill-bit went as deep as 2,430 metres in February and the well flowed 45mn ft³/day.
Repsol plans to boost its investment in Indonesia. If the discovery is proven, the company will build a production facility, Repsol’s exploration director, eastern hemistphere, Simone Sciamanna said. For now though it has declined to comment on what the likely markets for the gas are.
The company will continue the exploratory work in the coming months with an additional planned appraisal well.
"Repsol has co-operated closely with SKK Migas on the exploration activity carried out in the block and continues to work on next steps with Indonesian authorities," it said.
Repsol has made more than 50 hydrocarbon discoveries during the 2007-2019 periods, it said.
Ten have ranked among the largest hydrocarbon finds worldwide in their respective years, demonstrating Repsol’s exploratory abilities. More than half of these discoveries are already in production.
Repsol has proprietary cutting-edge technology that has allowed the company high exploration success, and it is developing innovative projects in this area of expertise in collaboration with world-renowned companies and institutions, it said.
Meanwhile Indonesia's deputy of energy and mines minister Arcandra Tahar said it would help Repsol to speed up the production of the Sakakemang block. The government expects commercial production might start up in the next five years.
After exploration, Repsol has to submit a plan for development, at which point the ministry can see how many years it thinks it will take to develop the block. “If we speed it up, it may take less than five years (to produce)," he said.
Oil & gas blocks tender
Indonesia's ministry for energy and mineral resources is offering five oil and gas blocks to investors as part of the government's effort to boost its oil and gas production. The ministry said that the five conventional oil and gas blocks include two previously producing blocks, namely Selat Panjang and West Kampar; and three exploration blocks, namely Anambas, West Ganal, and West Kaimana, Arcandra said.
Bidders will have free access to oil and gas block data once they have accessed the bid document. Only the winning bidders will be subject to the fee for package data.
Pertamina moves into LNG supply
Pertamina has signed an agreement with Anadarko to buy 1mn mt/year of LNG from Mozambique LNG. Pertamina plans to use the LNG to fulfill domestic demand, the company's marketing director Basuki Trikora Putra said. "We chose Mozambique, as the price and the quality are good," he said.
Anadarko is developing an onshore LNG terminal in Mozambique with a total volume of 12.88mn mt/year, while ExxonMobil and Eni are also working on an onshore LNG plant, Rovuma LNG. Neither has yet taken the final investment decision but Rovuma LNG is allocating the gas to its partners to market, rather than finding third-party buyers willing to commit to long-term contracts as a pre-condition for FID, which has been Anadarko’s approach.
Pertamina is seeking more LNG from worldwide sources. Besides Anadarko, the company had signed some LNG import contracts with Cheniere’s Corpus Christi terminal, taking 0.76mn mt/year from 2018 under a 20-year contract.
Pertamina had also signed a contract with Woodside for 0.6mn mt/year in 2022-2024. The volume can be increased to 1.1mn mt/year for 2024-2038. The company had also signed a heads of agreement with ExxonMobil to take 1mn mt/year under a 20 year contract starting in 2025, so the LNG might come from the US major’s Mozambique output. However no further details were disclosed.
Pertamina and Bangladesh Oil and Gas Corporation (Petrobangla) signed a letter of intent last year regarding LNG supply to Bangladesh. The supply volume is also 1mn mt/year. Pertamina had originally aimed to start supplying the LNG in the fourth quarter of last year to Bangladesh, but it delayed it to this year.
Indonesia is expected to help Bangladesh solve its LNG deficit as gas demand rises. Bangladesh is expected to need 11mn mt/year by 2030 as its own fields decline and the economy grows.
Pertamina is considering other ways to develop its LNG business, including the possibility of selling it to the Philippines, Basuki said.
The company has met with the Philippines' regulator and electricity companies that are among its possible customer base. From its preliminary study, it thinks that the country's LNG market condition is promising, he said, adding that the company is keen to see how the market condition of the Philippines develop.
Pertamina cannot yet decide whether it will act only as a supplier of LNG or whether it would also play a part in developing the infrastructure, Basuki said.
Pertamina will prioritise LNG imports to meet domestic demand that is expected to increase in the future. However the company will also sell its LNG portfolio to other buyers once domestic demand fulfilled, according to Basuki.
Pertamina has started selling its LNG from Cheniere Energy to other buyers, as Indonesia's gas demand is lower than expected thanks to the delay of some projects, such as power generation and refinery upgrades, Basuki said.
"It's short-term sales, for only a year’s supply. The volume this year will be more or less 1mn mt. There is also another buyer for the following year, but it's only until 2022," he said.