The two-phased development is the largest proposed investment to date in the Timor Sea.

After a 3-year exploration program, the Bayu-Undan field was discovered in early 1995 by a Phillips Petroleum Co.-led joint venture with the drilling of the Bayu 1 well in area 91-13 in the Timor Gap Zone of Cooperation (ZOC). Another joint venture drilled the confirmation well (Undan 1) in neighboring area 91-12.
The field is about 310 miles (500 km) northwest of Darwin, Australia, and 155 miles (250 km) south of Suai on the southern coast of East Timor. Measuring 15.5 miles by 7.5 miles (25 km by 12 km) with moderate water depths of about 260 ft (80 m), it is estimated to contain reserves of 400 million bbl of condensate and 3.4 Tcf of gas, the energy equivalent of 1 billion bbl of oil.
The Bayu-Undan Gas Recycle Project is one of the most innovative and technically complex offshore facilities ever undertaken in the petroleum industry. Responsibility for this massive undertaking has been awarded to a subsidiary of Phillips Petroleum Co. as project operator on behalf of several participating companies. The Bayu-Undan co-venturers include three Phillips subsidiaries, Santos (ZOCA 91-12) Pty. Ltd., Inpex Sahul Ltd., Petroz (Timor Sea) Pty. Ltd., Emet Pty. Ltd., Kerr-McGee (ZOC) Energy Pty. Ltd. and Agip Australia 91-13 Ltd.
The project involves a two-phase development of the field's gas and gas liquids resources. Following the participating companies' approval of the first phase of development in November 1999, an initial expenditure of about US $1.5 billion on the liquids stripping and lean gas recycling phase makes it the largest investment proposed in the Timor Sea. The field life is estimated to be 25 years, with first liquids production planned to begin in late 2003.
The first phase of the Bayu-Undan Gas Recycle facility will produce and process wet gas; separate and store condensate, propane and butane; and reinject dry gas back into the reservoir. At maximum design rates, this facility will produce 1.1 Bcf of gas; separate and market 115,000 bbl of condensate, propane and butane; and recycle 950 MMcf of dry gas into the reservoir on a daily basis.
The central production and processing complex (CPP) will comprise two central platforms supporting drilling, production and processing equipment (DPP) as well as gas compression, utilities and accommodation facilities (CUQ). In addition, other key surface facilities will include an unmanned wellhead platform (WP1) and a purpose-built floating storage and offloading facility (FSO).
The DPP platform is a three-level integrated deck and contains most of the process equipment for dehydration and fractionation of liquids-rich gas produced from wells about 10,170 ft (3,100 m) beneath the seabed. The DPP deck weighs more than14,000 tons and measures nearly 210 ft by 190 ft (64 m by 58 m). It accommodates 16 well slots and supports the risers for the pipelines to and from the WP1 and to the FSO. One well will be dedicated to the disposal of produced water. Twenty-two wells necessary for production and processing will be drilled from the DPP and WP1 centers. Both facilities are designed for drilling using a jackup rig in cantilever mode.
The CUQ platform has similar dimensions to the DPP. It includes fully integrated three-level living quarters, a helideck, two crane pedestals, power-generation and waste heat recovery units, and reinjection compressors. This deck weighs about 11,000 tons.
The CUQ and DPP decks will be bridge-linked and installed over their jackets by a float-over method. Each platform's supporting substructure weighs about 10,000 tons and includes eight massive legs 295 ft (90 m) tall permanently installed on the seabed. The substructures have been designed, using high-strength steel, to withstand extreme cyclone and earthquake events as well as accidental boat collision.
Consisting of a single integrated module, the WP1 will be erected 4 miles (7 km) from the central platforms. It will weigh 3,000 tons, including the deck and substructure. The platform will have a 14-slot wellbay area. Liquids-rich gas will be exported from the WP1 for processing on the CPP. The platform also houses a helideck and a 28-ton capacity pedestal crane.
As the first facility of its kind to store three separate products, the Bayu-Undan FSO facility will have the capacity to store up to 820,000 bbl of condensate, 300,000 bbl of propane and 300,000 bbl of butane at a sales-quality standard. The FSO will be permanently turret-moored 1.2 miles (2 km) from the CPP and linked to it by pipelines carrying butane, condensate and propane as well as fuel gas for power generation. The FSO topsides includes a liquefied petroleum gas refrigeration plant. A reliquefaction plant handles the boil-off from the butane and propane storage tanks. Dimensions for the FSO are 814 ft by 177 ft (248 m by 54 m).
Engineering, procurement and construction of the Bayu-Undan project is well under way. More than 90% of the detailed engineering design work is complete, and supply and equipment contracts worth almost $1 billion have been awarded with all major facilities under construction. Sembawang Marine and Offshore Engineering are constructing the WP1 deck and jackets in Singapore with sail-away scheduled for March 2002. The DPP and CUQ jackets are under construction in Batam, Indonesia, by J. Ray McDermott Industries with the sail-away to coincide with the WP1. Hyundai Heavy Industries is constructing the corresponding DPP and CUQ decks in Ulsan, Korea, with completion scheduled for early 2003. Responsibility for building the massive FSO in Koje, Korea, was recently awarded to Samsung Heavy Industries to be completed by May 2003. Installation of the processing facilities will be completed in 2003, and full commercial production will begin in 2004.
Phillips also recently executed a notice of award for a long-term contract for its ultrapremium jackup drilling rig Chiles Discovery, under construction at the Keppel FELS Shipyard in Singapore. The Chiles Discovery is expected to be delivered from the yard during the second quarter of 2002 and is scheduled to commence work prior to the end of June 2002 in Phillips' Bayu Undan Gas Recycle Project. The contract is expected to last a minimum of 600 days (15 wells). Phillips will have options to extend the contract for an additional five wells (estimated up to 200 days). Assuming work is performed under the contract for 600 days, contract revenues will be about $60 million, exclusive of mobilization and demobilization fees. The Chiles Discovery will incorporate such state-of-the-art technologies as large mud-pumping capacity, 70-ft (21-m) extended cantilever, large drilling fluid storage capacities, digital drilling controls and automatic pipe-handling equipment.
It is possible to follow the progress of this project at www.phillips66.com/bayu undan, which includes the use of site cameras to track activities at all the major construction sites on an hourly basis.
Phillips, through various subsidiaries, holds interest in several petroleum permit areas in the central Timor Sea. Phillips Petroleum (91-12) Pty. Ltd. is operator of the Elang-Kakatua-Kakatua North oil fields in permit area 91-12 and the larger Bayu-Undan gas and gas liquids field. Another Phillips affiliate hold a 30% interest in the Greater Sunrise gas field operated by Woodside.
Phillips has been working to progress the gas export phase of Bayu-Undan as a part of a regional gas development strategy. This work has included engineering of a pipeline from Bayu-Undan to Darwin with potential to interconnect gas from Greater Sunrise. Phillips has signed an in-principle agreement with Woodside and Shell to evaluate cooperative opportunities between Bayu-Undan and Greater Sunrise field that ultimately will enhance the value to all stakeholders. Gas market development is focusing on domestic gas customers in the Northern Territory and south and eastern Australia along with liquefied natural gas and greenfield opportunities.
The recent announcement by Phillips to defer indefinitely the Bayu-Darwin Pipeline Project was due to critical legal, fiscal and taxation uncertainties still remaining in the development area and the lack of transparency of the future business environment. The Timor Sea Arrangement addressed several key issues and was an important step forward; however, several outstanding issues remain. Resolution of these issues to the satisfaction of the investors is a prerequisite before further investment in the offshore pipeline or any gas development can occur.

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