Game changer: New technology opens tight oil in Malaysia

Malaysia

National oil company Petronas has instituted an aggressive domestic campaign of marginal field, enhanced oil recovery (EOR) and deepwater projects for Malaysia. Schlumberger’s vice-president and general manager for Malaysia, Brunei and the Philippines, Maen Razouqi, discusses the application of new technologies and the contract models that are allowing service providers to support Petronas in its efforts.

The future of the oil and gas industry in Malaysia lies in costly marginal and deepwater fields, so making sure cost elements are overcome through technological development and efficient utilisation is imperative.

Budgets and capital expenditures in complex reservoir environments are different from those of less challenging plays. Accordingly, efficiency must be brought into the game to make the economics viable.

For any exploration and production company to enter an area or block for the first time, they have to be convinced of the viability of the opportunity.

The use of new technology can be a game-changer, but exploration and production companies are often cautious in deploying technology that has not been backed by years of proven results in the field.

For example, when a seismic survey is conducted, the result is often only seen and appreciated years later, making it extremely difficult to convince an exploration and production company to deploy new seismic technology up front.

TECH TALK: In Malaysia, we have seen budgets and an intake of technology increase as the industry deals with challenging reservoirs and more complex operations. The country has contributed greatly to the field-testing of new technologies, especially in the area of EOR, particularly since 2012.

To optimise recovery, a company has to plan for EOR as soon as the reservoir is discovered. It is important to keep in mind at the earliest stage of development that, down the road, EOR will come into play in an effort to squeeze more out of the reservoir. Early life-of-field planning is extremely important with regards to production gains and in controlling costs.

SMALL COST: Looking at EOR in terms of capital and operating expenditure, subsurface work is a relatively small cost. Most of the investment happens on the facility front, and planning for the optimum chemical, water or gas injections. Before applying EOR technologies, it is essential to understand the reservoir in question.

In years past, companies had to conduct a pilot or micropilot when attempting chemical EOR or similar applications, then assess the results. The process could take years. This assessment can be done in a matter of days or even hours through digital conceptualisation of the rock. The technology allows operators to simulate different scenarios for pumping polymers, carbon dioxide or chemicals and examining the results in a fraction of the current cycle. In this way, an operator can filter out and pinpoint the optimum method for their field.

CONTRACT DIVERSITY: We are seeing a greater amount of diversity in Malaysia’s oil and gas industry when it comes to doing business, either under a production-sharing contract or through a technical alliance.

In Malaysia, services providers are working closely with oil companies to implement technologies that will make projects more successful and operations more efficient by enabling the discovery of more resources or by increasing and prolonging hydrocarbons production levels.

The application of certain drilling technologies, for example, would allow sections of wells to be drilled in a smaller amount of time, thereby reducing the overall cost of the well.

It is a challenging time for the global oil and gas industry, but there is some level of flexibility in contracts in Malaysia. Our customers are open to approaching the required work with different contractual models, as long as doing so brings overall benefits for the intended projects.

STAY TUNED: The kind of production coming from regions such as the Americas would not be possible with traditional thinking alone. Innovation, efficiency, reduced costs and speed are what make tight formations and unconventional exploration efforts viable. This thinking can be applied to Asia, as well.

Although China’s economy has been slowing, demand for oil in the country is still growing at a rate of 300,000 barrels of oil per day according to a recent <a href='https://theenergyyear.com/companies-institutions/opec/’>OPEC report.

Malaysia, Indonesia and Brunei are going to have to keep on searching and developing their hydrocarbons resources for their neighbours. But first and foremost, the industry must navigate the market conditions of 2015, be efficient, make sure costs are low, prepare human talent and keep a lookout for new extractive technologies and the potential optimisation of the assets that we have.

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