A growth surge has started in Southeast Asia as supplies ramp up to meet demand.

Operators are ramping up operations in Southeast Asia and governments are putting out special efforts to make their offshore oil and gas operations attractive as high prices invigorate exploration and production markets.

Including Sakhalin Island, China, Australia, New Zealand and Papua New Guinea, "We expect the offshore industry in the Asia-Pacific region to have the highest rate of growth of all the eight regions in the world. Total offshore expenditure, for example, in the region is forecast to increase by 65% to reach US $29.9 billion in 2008. That is nearly twice the worldwide forecast growth of 34%," said Tony Mackay of the UK's Mackay Consultants in a report titled, "Prospects for the Offshore Oil and Gas Industry in the Asia-Pacific Region, 2004-2008."

Among Southeast Asian countries, Malaysia ranks 11th in the world in offshore oil production at 271 million bbl and fourth among gas producers at nearly 1.7 Tcf (47.9 Bcm) of gas.
Indonesia is in 15th place for oil with 195.7 million bbl and 13th for offshore gas at 459.1 Bcf (13 Bcm). Thailand joins the gas rankings in 10th spot with almost 635.7 Bcf (18 Bcm), according to Mackay.
Perhaps a tour would help explain some of the excitement.

Pakistan

Pakistan has no offshore industry at this point, but it has offered offshore blocks, and France's Total was one of the first companies to sign up.
Now, it plans to offer another five blocks in Zone O off the Indus area, including:
• Block 2266-4 (offshore Indus-J),
• Block 2266-5 (offshore Indus-K),
• Block 2265-2 (offshore Indus-L),
• Block 2366-4 (offshore Indus-M), and
• Block 2366-5 (offshore Indus-N).

India

India is the high-growth model for this part of the industry. It has had offshore production for some time, but operators in the area are now venturing into deep water with some outstanding successes.
The old-guard production comes from giant Panna/Mukta offshore field. India's Oil and Natural Gas Corp. (ONGC) operates the field, and it plans to raise production from the mature field from 85.5 million bbl of oil in fiscal 2003-2004 to 91.6 million bbl in fiscal 2004-2005. If the field responds as planned, it will reach its peak output in the 2005-2006 fiscal year at up to 102.6 million bbl, according to India Business Insight.
Following that, it should level off through 2011 and decline in the following year.

Moving into deeper water, ONGC has drilled a well to 9,869 ft (3,008 m) on its deepwater acreage in the Gujarat Sauratsra Basin off the west coast of India. The test was the GSDW-2A-1 well. It hasn't yet reported results from the well. ONGC has an extensive deepwater drilling program in the works off both the west and east coasts with three deepwater drilling rigs on contract.

The major exploration play these days is off the east coast of India in shallow water and deep water. That area had enjoyed some reasonably nice discoveries by companies such as the UK's Cairn Energy, but India's Reliance really opened the potential of the region with its discovery of the 14-Tcf Dhirubhai field in the D-6 block in the Krishna Godivari Basin off the coast of Andhra Pradesh.

The company has filed a plan with the government to invest $500 million into just the first phase of that project to produce 500 MMcf/d (14 MMcm/d) of gas, starting in August 2006. The second phase will take another $800 million to raise production to 1.4 Bcf/d (40 MMcm/d) in the 2008 to 2009 time frame. According to Business India Intelligence, most of that natural gas has been promised to National Thermal Power Corp. for its Kawas and Gandhar plants in the state of Gujarat at a delivered price of $2.97/MMBtu. The project will require a pipeline to Gujarat on the east coast.

Reliance was the operator with a 90% interest, while Niko Resources of Calgary held a 10% share.
Recently, Niko reported the companies came up with another major gas discovery on the same block. The M-1 discovery well is some 12 miles (19 km) southeast of Dhirubhai in 4,354 ft (1,327 m) of water. Reliance drilled the discovery well to 9,653 ft (2,942 m). It found approximately 509 ft (155 m) of net gas pay as the discovery tested at 23.7 MMcf/d of gas from a 509-ft (155-m) interval. This makes the 11th consecutive successful well in the 3,078-sq-mile (7,972-sq-km) block.

The companies have a lot more exploring to do. All of the wells drilled to date have been on the original 695-sq-mile (1,800-sq-km) survey. The companies are processing an additional 965-sq-mile (2,500-sq-km) survey to look for future drilling sites.

In the shallower Block NEC-OSN-97/2 (NEC-25) area off the coast of the state of Orissa in southeastern India, again with Reliance as operator, the companies drilled the A4 discovery well. Shortly afterward, they drilled the A2 well in 230 ft (70 m) of water for 15.8 MMcf/d of gas. Reliance estimated 131 ft (40 m) of potential net gas pay and the companies plan to take a fast track to production of the discovery, Niko said. So far, the companies have drilled three wells in the NEC-25 area in water depths to 276 ft (84 m) and found approximately 960 Bcf (292 Bcm) of gas in place. Potential gas in place, based on seismic, could reach as much as 5 Tcf, according to Niko.

Reliance has asked for expressions of interest for feasibility studies, techno-commercial studies and front-end engineering and development for mobile production facilities using a new-build or converted jackup, semisubmersible or floating production, storage and offloading (FSO) vessel to work with a wellhead platform, including topsides, with minimal facilities. The design should also include storage options.
Reliance isn't the only active operator in the area. Gujarat State Petroleum Corp. has started drilling its KG #1 well, also in the Krishna Godavari Basin, on exploration block KG-OSN-2001/3, the KG block. This is Gujarat State's first well in a four-well series that will be drilled on the block in the next 200 days with Saipem's Perro Negro 3 rig, according to interest holder GeoGlobal Resources. Water depth at the site is about 230 ft (70 m), and the company plans to drill to approximately 10,827 ft (3,300 m). This series of wells is also based on 3-D seismic.

The companies knew the block had high potential when they went in. It's adjacent to Block KGO-2, where ONGC has made recent gas discoveries, and to KG-DWN-98/3, where Reliance has made its prolific D-6 discoveries.

The deepwater wells gave India another potential source of hydrocarbons. Some deepwater well cores showed gas hydrates from drilling operations.

Beginning in December this year, India plans to map its hydrate resources in a 2-month program concentrating on ocean-bottom cores taken offshore Andhra Pradesh, Goa and the Andaman Islands.
It will look for a drillship to handle the tasks in water from 3,281 ft to 6,562 ft (1,000 m to 2,000 m). The survey includes five locations in the Krishna Godavari Basin, including two cores in the Reliance-Niko KG-DWN-98/3 block.

Myanmar

Myanmar hasn't been a focal point of Southeast Asia exploration, but the nation's offshore is far from stagnant.

Daewoo of South Korea plans a $40-million drilling program to confirm reserves gas reserves already discovered at its A-1 block offshore western Myanmar as 60% owner and partner with ONGC Videsh, Gas Authority of India Ltd. (Gail) and Korea Gas as partners. The money should pay for eight exploration and appraisal wells between October this year and March next year, according to Ogilvie's E&P Daily.
In addition, Gail (India) Ltd and ONGC Videsh plan exploration work on Block A-3 offshore Myanmar. The block is adjacent to Block A-1. Daewoo has an ownership interest in the A-3 block, too. The countries are close enough that gas could be exported to India for sale.

Thailand

Although the water isn't deep, the hydrocarbon resources are plentiful in the Gulf of Thailand. The area has been under development for years, but discoveries such as ChevronTexaco's Block G 4/43, about 125 miles (201 km) south of Bangkok, continue to please operators. Subsidiary Chevron Offshore (Thailand) Ltd drilled the Lanta No. 1 discovery to a measured depth of 10,358 ft (3,159 m) to find 280 ft (85 m) of oil and gas pay. The Lanta No. 2 appraisal well drilled to 10,040 ft (3,062 m) reached 194 ft (59 m) of oil and gas pay. The wells are in 250 ft (76 m) of water on a block adjacent to existing ChevronTexaco production. The company plans a 3-D seismic survey and two more exploratory wells next year.

Vietnam

Vietnam's offshore industry has injected resources for increased industrial development in the nation, and Vietsovpetro, a joint venture between Russia and Vietnam, plans a $2 billion infrastructure program by 2007 to increase industrial potential. Vietsovpetro produced 96.1 million bbl of oil last year, most from Bach Ho (White Tiger) field. The company also claimed a discovery at its Dragon-23 well, which flowed at a rate of 1,100 b/d. The well is in Block 09-1.

In another joint effort, Thailand's PTT Plc plans to work with Petrovietnam to expand the southern Vietnam gas pipeline network, including a 286-mile (460-km) gas pipeline network from the offshore Nam Con Son Basin to Ho Chi Minh City.

The UK's Premier Oil Plc will help with supplies. It has started exploration on its 12E and 12W blocks off the southeast coast of Vietnam in the Nam Con Son Basin. The blocks are close to Vietnam's border with Indonesia in the West Natuna Sea.

Meanwhile, BP's $1.3-billion Nam Con Son production system and pipeline to shore has piped more than 70.6 Bcf (2 Bcm) of gas to shore in its first 18 months of operation, according to Asia Pulse. Tha gas fuels the Phu My electrical generation plant.

Malaysia

Murphy Oil and Shell both have found large reserves off the coasts of Sarawak and Sabah, Malaysia, off the northwest coast of Borneo near the border with Brunei. Malaysia and Borneo are still committed to finding a peaceful solution to their boundary problems.

Meanwhile, China has big plans for the Malacca Strait between Peninsular Malaysia and Indonesia's island of Sumatra.

Indonesia

Unocal Corp.'s subsidiary Unocal Makassar Ltd. has completed 20 wells that averaged 24,000 boe/d in June and still has six to eight wells to go at its West Seno field in the Makassar Strait east of Kalimantan, Indonesia, the first deepwater field in the nation. It recently turned down bids for the second phase, which also includes a tension-leg platform producing to an FSO, because the bids were too high. The field is in 3,200 ft (976 m) of water.

West Seno is just the beginning of the action in deep water in the Makassar Strait. It plans to bring on Gendalo field in 2007 with partner Eni to produce up to 300 MMcf/d.

The Gehem-Ranggas joint development will combine two discoveries. Unocal anticipated filing a development plan next year after analyzing a 3-D seismic survey.

Meanwhile, Unocal continued to drill appraisal wells in both fields. In Gehem, the Gehem-3 appraisal 1.7 miles (2.7 km) north of the discovery and 3.2 miles (5.1 km) northwest of the Gehem-2 appraisal reached 232 ft (71 m) of net gas pay and 8 ft (2.4 m) of net oil pay on the way to 16,424 ft (5,009 m).

The Ranggas-7 well in 5,394 ft (1,645 m) of water went to 14,402 ft (4,393 m) vertical depth to encounter 167 ft (51 m) of net gas pay and 52 ft (16 m) of net oil pay.

The company also continued appraisal work at its Gula discovery where the Gula-3, drilled more than 1,000 ft (305 m) deeper than the Gula-1 discovery, found 327 ft (100 m) of net gas pay and 6 ft (1.8 m) of net oil pay.

North and west in the Natuna Sea, ConocoPhillips apparently has pared the candidates for the world's first liquefied petroleum gas FSO to one. Modec appears to be the choice for the offshore production and processing complex at Belanak field in Natuna Sea Block B, said Ogilvie's E&P Daily. After many delays, first production from the complex probably won't occur until the middle of 2006.

Spratly Islands

The Spratly Islands remain off limits to oil and gas exploration by international agreement to a peaceful solution to the boundary dispute, but China, one of the claimants to ownership of the islands, plans a well close to Spratly waters. The other claimants, including the Philippines, Indonesia, Malaysia, Taiwan, Brunei and even Japan, will keep a close eye on the drill site. China maintains the site is not in Spratly territory. The US Geological Survey estimates reserves of 28 billion bbl in the Spratlys, while China puts the estimate at 213 billion bbl.

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