Malaysian mountain high
  from: Offshore Engineer
  by: Jennifer Pallanich
  Thursday, October 02, 2008

With its first East Belumut field oil producer onstream offshore Malaysia, Newfield Exploration is harnessing its horizontal and extended reach experience as well as some special completion techniques to exploit reservoirs with around 20 million barrels of recoverables. Jennifer Pallanich reviews the US independent’s plans for these South China Sea fields, mostly named for Malaysian mountains, and the neighboring acreage.

The efficient methods associated with successful independents have helped Newfield Exploration economically develop a series of fields in its operated PM323 acreage offshore Malaysia, believes the company’s international vice president Bill Schneider. It takes a specific mindset to develop smaller fields well, he adds.

PM323’s East Belumut oil rim is a slim 14m in Oligocene sands, sandwiched between a gas cap and a large aquifer.

‘The key is to put the wells in the oil leg far enough from the gas so it doesn’t cone and block off production, and far enough from the water so that doesn’t cone and water out the well,’ Schneider says of the field, which began producing in late June. ‘East Belumut is a very large resource. The question is what will the recovery be?’

Once the company has about six months of production history at East Belumut, which is in about 75m of water in the Malay Basin, it will rerun the reservoir simulations to determine the impact on ultimate recovery. The four fields in PM323 have about 360 million barrels in place, Schneider estimates. The estimate of a 20- year field life is largely a factor of how well Newfield maintains a low drawdown, he adds. ‘We didn’t think this would be flowing as well as it is,’ Schneider says of initial expectations of the well producing 700b/d to 1000b/d. Current production rates of 1500b/d are not limited by the reservoir but rather mechanically for low drawdown, he adds. The horizontal open-hole sand control completion with standalone sand screens and swellable packers uses production inflow control technology to minimize drawdown. According to Newfield, the combination of the technologies, provided by several vendors, was largely untested during project sanction although major operators had already tested individual components on large projects. Newfield is one of the first to use this combination on a full field scale.

‘We’ve restricted where the perforations in the pipe are,’ Schneider says. ‘That has resulted in a very low drawdown.’

Inaugural work

Diamond Offshore’s brand-new Ocean Shield jackup has been drilling at East Belumut since June, and Diamond expects the rig to mob to Australia in late 4Q 2008 for a one-year contract with Eni.

‘The technological challenge is producing the oil and not coning gas or water,’ Schneider explains.

The East Belumut A platform, built by what was then Ramunia and later merged under the MMHE umbrella, has a production capacity of 50,000b/d. The Seaway Heavy Lifting crane vessel Stanislav Yudin installed the platform’s 2350t deck in May.

Exxon discovered East Belumut during exploratory campaigns in the 1970s and 1990s but never brought the field into production. The Malaysian government retendered the permit with terms favorable for developing smaller discoveries. Under the revised terms, the government take is low at the beginning and increases in line with revenues. The revised terms, as well as advances in drilling and completion technology, paved the way for Newfield to sign a PSC on PM323 in mid 2005.

The operator is developing East Belumut in two phases. In the first, the company plans to bring between five and seven horizontal oil producers online and monitor production while using gas injection for reservoir maintenance. In the second, Newfield plans to increase production capacity by drilling additional wells and boosting gas injection capability. Overall, the company expects to invest about $200 million to develop the pair of fields, with about two-thirds of the outlay – excluding drilling costs – allocated to East Belumut and the remainder to Chermingat. Around 2010, Newfield expects to drill 15 additional producers in the East Belumut field. These shallow wells will be 1200m below the mudline, but they will probably require about a kilometer of horizontal drilling to cope with the flat structure. The reservoir runs about 5km NS and about 3km E-W.

The Chermingat development, in 65m of water, is a fairly simple one, with one extended reach well and two directional wells expected to produce 8000b/d from the reservoir at peak to an unmanned platform tied back to East Belumut for processing and export.

‘Those three wells will fully develop the field,’ Schneider notes.

If Newfield had to be precise in the placement of its wells in the 14m reservoir at East Belumut, it had to redouble its efforts at Chermingat. The extended reach well, about 2400m long, drains a 750m-long 4m band of Miocene sands. Schneider says the drilling bumped up against the meandering upper and lower shale a few times but kept mostly within the sands using geosteering techniques.

Lerek and West Belumut are other discoveries on the acreage, and Newfield is preparing field development plans for begun ordering steel and is working to secure yard space with an eye to bringing those fields onstream in 2011 or 2012.

West Belumut will be a simple unmanned platform tied back to East Belumut. The more complex Lerek development, 50km distant from East Belumut, will be manned. The jackup Ensco 57, which is working on a Newfield joint venture project in neighboring PM318 acreage, is slated to drill an appraisal well on Lerek later this year.

Newfield, which operates PM323 with a 60% interest, Petronas Carigali holding the remainder, is evaluating other small discoveries in this 320,000 acre contract area. PM323 is located about 40 miles from the shallow water Peninsular Malaysia block PM318, which is operated by Petronas Carigali with Newfield as 50:50 partner.

In the 414,000 acre PM318 contract area, the Penara/North Lukut fields are producing 9000b/d to an FPSO and the Abu field is pumping 14,000b/d via a processing platform to an FSO. The Puteri field, a 2005 discovery east of Penara, came online in early July this year and will ramp up to rates of 6000- 7000b/d to an FPSO.

Elsewhere in Malaysia, Newfield operates shallow water area SK310 and deepwater block 2C.

This year, the company signed the PSC for SK310, which covers about 1.2 million acres. The commitment includes 500km² of new 3D data and three exploratory wells. Seismic activity is expected later this year with drilling potentially beginning in late 2009. Newfield operates the permit with 30%, and partners are Mitsubishi Corporation with 30% and Petronas Carigali with 40%.

Newfield signed the PSC for deepwater block 2C in 2004 and here the company has a 40% stake with Carigali holding 40% and Mitsubishi 20%. This block covers 1.1 million acres and has to-date seen 4200km2 of 3D seismic and a 2006 exploratory well. A second exploratory well will be spudded there in 4Q 2008 or 1Q 2009 using the Ocean Rover rig.

Overall, Newfield is producing about 34,000b/d offshore Malaysia, with output expected to reach 45,000b/d as fields ramp up to expected rates late this year.

The Houston-based independent had set its sights on the international arena, seeking oil prospects that it could test for about $20 million, which led to its 2004 entry into the Malaysian offshore. Along the way, Newfield in 2007 shed its North Sea fields and shelf properties in the Gulf of Mexico. The strategy was to offload the high rate but high decline properties to decrease the risk associated with reserves replacement.

Newfield has added to its deepwater Gulf of Mexico portfolio in several of the last lease sales. It has drilled three wells this year, and the company plans a more active drilling program next year because it will then have a rig under contract. OE

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