The Change in Attitude Towards New Technology and the Impact on Project Economics
Authors: Jok Alexander , Rajah Benny , van Elk Jan F. 
Published: December 2007

The Baram Delta is one of Malaysia's oldest and most prolific oil-producing areas. On the 31st October 1988, PETRONAS Carigali Sdn Bhd (PCSB) took over the operatorship of the nine oil fields in Baram Delta from Sarawak Shell Berhad(SSB). From its cluster of nine oil fields in the South China Sea, lying off the coast of Miri, Sarawak, the Baram Delta produces one-sixth of Malaysia'scrude oil production. After PCSB took over the operatorship of the Baram Deltafields, it implemented a number of large and economically attractive development projects. Existing platforms were revisited and wells worked-over or side-tracked. Furthermore, 5 new platforms were placed, to allow drilling of new wells. Typically 6 to 14 wells were drilled from these newly installed engineering structures. The two main development projects implemented during this phase were the Baronia project (two platforms; 21 wells) and Baram Field development project (two platforms and a jacket; 33 wells).

Currently all major attractive projects have been implemented and further development is by the implementation of remaining smaller and more marginal projects. Typically, wells are side-tracked or additional conductors placed on existing structures.

During the transition from the implementation of the large attractive projects to the current situation, where we implement smaller projects, our attitude towards the application of new technology changed. When implementing the economically very attractive and large projects we merely optimized these projects by the application of world-wide existing proven technology that was new to us in our operations.

Driven by the marginal to unattractive economics of the smaller remaining projects, mere optimization is not sufficient. The current projects are only attractive when new technology is applied. Furthermore, we cannot just anymore apply new technology proven elsewhere, but new to us. In the revisits of the Bokor and Tukau fields, we have and plan to implement technology new to the industry. In the Bokor Field we have drilled a triple-lateral horizontal well, while in the Tukau field we plan to use the dual completion splitter wellhead. Since these technologies are unproven, implementation carries considerable risk, but when successful, large volumes of reserves can be economically developed extending the life of the existing fields. Instead of optimization, new technology now drives the value creation.

In this paper, we will show the impact of this change in the application ofnew technology on project economics and the potential impact on our reserves base.

Introduction

The Baram Delta is one of Malaysia's oldest and most prolific oil-producing areas. From this cluster of nine oil fields in the South China Sea, lying off the coast of Miri, Sarawak, the Baram Delta produces one-sixth of Malaysia'scrude oil production (Fig. 1).

The first offshore oil production in the Baram Delta Area was from the West-Lutong Field in 1968 operated by Sarawak Shell Bhd (SSB) under a concession, which granted SSB the license to explore, develop and produce the hydrocarbon resources discovered. Following the 1974 Petroleum Development Act(PDA), this concession was replaced by the Production Sharing Contract (PSC) in 1976.

In 1985, SSB signed a new PSC with PETRONAS for the five fields in the BaramDelta area (Bakau, Baram, Baronia, Fairley Baram and West-Lutong), whose PSChad expired. The 1985 PSC extended SSB's operatorship of these five fields until 1988.

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