Services companies that have only recently acquired stakes in upstream ventures are perhaps not yet ready for the bigger risk of frontier exploration.

Heng Hiok BOON Head of Upstream Business Dialog Group

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Field development plan for Bentara field, part of Balai Cluster risk service contract, approved by PetronasMarch 2014

Malaysian upstream development

April 20, 2015

Malaysian services company Dialog Group’s upstream division has three ongoing projects: the Balai cluster small field risk service contract, the Bayan oilfield services contract and the D35, J4 and D21 production-sharing contract. Heng Hiok Boon, head of upstream business, talks to TOGY about mature and marginal field development and ensuring sustainable production from small and ageing assets.

With the higher costs of offshore brownfield developments, how can companies ensure that projects remain commercially viable?
The first area to be reviewed is the underpinning reason for the high costs. Then, we must identify potential opportunities for cost saving, while still maintaining the minimum acceptable standards of health, safety and environment and prudent reservoir management.
An obvious area, especially in the low oil price environment of 2015, is supply chain management, where prices must reflect the commercial reality. Another area is to adopt nimble and fit-for-purpose engineering applications, maximising the use of existing facilities and wells, which can save costs.
To ensure the continued use of existing facilities, good maintenance practices and programmes must be in place and followed through to preserve the long-term integrity of facilities.
In many ageing mature fields, whatever was implemented at the onset of initial field development may not be relevant under existing circumstances and should be reviewed and challenged. In most instances, reservoir potential would have significantly declined so that more compact facilities and slimmer well designs can be accommodated, avoiding the replication of past practices lowering the economic threshold associated with redevelopment.
Furthermore, complimenting this with new and fit-for-purpose technologies, which can show a clear differentiation in terms of increased production or reserves or operational cost savings, will be beneficial to redevelopment.
Strict adherence to established reservoir management policy will also be beneficial. For example in a depleted block in a brownfield development it may be too late to reverse the damage caused by lowering the reservoir pressure and creating a secondary gas cap. In this case, it could be prudent to deviate from the established policy and produce at a high gas-oil ratio.
Similarly, for small greenfield developments of marginal discoveries it may be advantageous to follow a high depletion rate over a short field life than to produce at a low rate for protracted periods in an attempt to maximise recovery. A balance between project profitability and rigid reservoir management should be considered.

In what ways are mature and marginal fields an attractive prospect for investment?
Speed of decision-making and a seamless project implementation schedule, along with rigorous cost control, are essential in developing both marginal and mature fields.
Smaller players are nimble and their production approaches and applications are typically mobile and cost-effective. They can be quickly installed and re-deployed. This is ideal for marginal greenfield and brownfield developments.
In contrast, the larger international oil companies need a much longer time before debuting production in a new licence area, as the scale of the work and processes they have to undertake is much greater and significantly more rigorous.
Services companies that have only recently acquired stakes in upstream ventures are perhaps not yet ready for the bigger risk of frontier exploration. In the case of mature, marginal fields, the oil has already been discovered and the challenge is to extract it efficiently.
Thus the risk is not in exploration, but in maximising and accelerating production and monetising relatively small volumes of oil.

What kind of technologies are being utilised at mature assets in Malaysia?
The first venture Dialog participated in was the appraisal and development of small marginal discoveries located in shallower waters. Though the development concept deployed was on the market for many years, it had only been applied in a few projects in the past.
We re-evaluated the concept, taking into consideration the fast-track project delivery schedule and, in discussions with our joint venture partners, recommended installing four of these minimum wellhead platforms in the Balai cluster. Subsequently, Dialog installed three similar structures for Petronas Carigali in its shallow-water field development projects.
From a subsurface perspective, seismic reprocessing of vintage seismic along with attribute studies, complimented by calibration to actual field data, can enable the extraction of more valuable information, thus providing an insight into the distribution of reservoir sands and hydrocarbons, which could help mitigate the subsurface risk and uncertainty in future drilling.

 

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