flow, Volume 02

Transcription

flow, Volume 02

PETRONAS Upstream Magazine
Volume 02
PETRONAS UPSTREAM MAGAZINE
Molecules to
Market
A mid-life crisis for PETRONAS’
oil and gas business?
Unconventional
Thinking
It’s more than Technology
Drama!
The return of marine
life to Sarawak shores
2015 PETROLIAM NASIONAL BERHAD (PETRONAS)
VOLUME 02 APRIL / MAY 2015
C
FEATURE FOCUS
All rights reserved. No part of this document may be reproduced, stored in a retrieval
system or transmitted in any form or by any means (electronic, mechanical,
photocopying, recording or otherwise) without the permission of the copyright owner.
www.petronas.com.my
THE STORY BEHIND PETRONAS’ JOURNEY TO LAUNCH THE WORLD’S
FIRST FLOATING LNG PLANT
COVER STORY: PF LNG
Volume 02
PFLNG:
O
N
T
E
N
T
S
Changing the
Landscape
for LNG
6
With two Floating
Liquefied Natural Gas
(FLNG) facilities under
its wings, PETRONAS is
boldly pursuing gamechanging technology
to mark its leadership
position in the global
LNG arena.
Production of the first drop of onspecification LNG is expected to be in
Quarter 4, 2015.
The development of a 360 metre LNG
FPSO that will be able to process,
to the source of the hydrocarbons or
the gas field, allows natural gas located
hundreds of miles away from land to
be monetized without the need for
4
Newsbriefs
PETRONAS reports
full-year earnings and
other industry news and
other exciting highlights
“This isn’t only a breakthrough for
PETRONAS and Malaysia, but is
also a significant game-changer
for the oil & gas industry globally.
For PETRONAS specifically, an
operational FLNG facility is testimony
to PETRONAS’ capability in driving
excellence and engineering
solutions to meet energy demands.
Additionally, once PFLNG 1 achieves
First Drop of LNG and commercial
begins in early 2016, it strengthens
Malaysia’s position as the world’s
second-largest LNG exporter”, said
former President and Group CEO,
Tan Sri Dato’ Seri Shamsul Azhar
Abbas. Once on-stream, the facility
is expected to boost the country’s
LNG production capacity to about
27 million tonnes per annum.
For PETRONAS, the
conceptualisation of a floating
LNG facility was given serious
consideration beginning 2006.
At that juncture, with over 23 years’
experience in reliably delivering
LNG to customers, and over 15
years’ experience in shipbuilding,
PETRONAS was in a unique
position to push boundaries and
explore possibilities to expand its
monetisation opportunities by
turning the novelty of having an
LNG plant on a vessel into reality.
7
Cover Story
PETRONAS'
groundbreaking
floating LNG project,
PFLNG 1, will alter the
dynamics for gas
when it sets sail soon
IN TEGR ATED GAS MAN AGEM ENT
With end-to-end capabilities and the continuous
drive to maintain its technical edge in each aspect
of the value chain, PETRONAS is maintaining its
position as a key LNG supplier, one that can ensure
a stable, secure and reliable supply to LNG to buyers
around the world.
Integrated
Gas
Management
From Molecules to
Markets
Gas has been a key resource for PETRONAS
since its first solo field development: the
Duyong field. Since then, an integrated
approach to gas management has grown
to become a cornerstone of the company’s
operations.
Collector’s Item
Today, PETRONAS’ capabilities extend from the start to the end of
the gas value chain. A molecule of gas can stay under PETRONAS’
ownership from the moment it leaves the ground to the instant
value to our buyers globally.
18
Extensive gas reserves and the
potential for many more new
discoveries are just the beginning of
the story. From exploration in a wide
spread of field types and playtypes,
facilities, and transportation to markets,
PETRONAS is well entrenched at every
major point in the gas value chain.
With integrated end-to-end capabilities
and the continuous drive to maintain
its technical edge, PETRONAS is
maintaining its position as a key LNG
supplier; one that can ensure a stable,
secure and reliable supply of LNG to
buyers around the world.
18
TRANSPORTATION
Editor’s Note
Going the Distance –
commitment to
customers remain
unwavered
Located at the Kanowit gas field, 180
Before the end of 2015, the vessel,
currently being constructed at Okpo,
South Korea, is expected to make
its way to Kanowit, Sarawak, for
commissioning.
APR / MAY 2015
EXPLORATION &
PRODUCTION
3
6
pipelines, heavy infrastructure and
other CAPEX investments.
the PFLNG 1 facility will be producing
1.2 million tonnes of LNG over a
period of 20 years of its design life.
MARKETING
C
Tan Sri Dato’ Shamsul Azhar Abbas
Former President and Group CEO of PETRONAS
REGASIFICATION
Energy rocks.
PETRONAS is not in any race to being the world’s
first. The race is with ourselves; to let go of our own
inhibitions, and stretch the limits of our abilities.
COVER STORY
19
APR / MAY 2015
Integrated Gas
Management
PETRONAS' capabilities
across the gas value
chain underpin its
strength as an LNG
supplier
U N CO N V EN T I ON AL G AS
Volume 02
As a fresh-out-of-school
petroleum engineer
in Calgary in 1994,
Neil Horbachewski
was introduced to
“unconventional”
methods early in his
career.
The company he worked for had an
innovative idea to use concentric
coiled tubing to inject steam and
produce heavy oil from a single
wellbore.
Today, two decades later and in
Kuala Lumpur, the 46-year-old, Vice
President of the Unconventional
Division in PETRONAS’ Upstream
business, says that even though
Steam Assisted Gravity Drainage
(SAGD) is now a common or
‘conventional’ extraction method it
took an ‘Unconventional’ mindset
to be innovative and successful.
“Unconventional means to not be
bound by or adhere to accepted
practices. It is just in the last 10
years that the term has been used
to describe the resource”. What he
wants to instill is the mindset to think
unconventionally so that the team is
always ahead of the competition.
Unconventional
THINKING
Molecules to
Market
The mindset to be successful
in the Unconventional resource business.
A mid-life crisis for PETRONAS’
oil and gas business?
26
Unconventional Gas
New thinking for new
resources
32
On the World Stage
An interview with a
stalwart of the global
gas industry on putting
gas on the global
energy agenda
“What we do is very straight forward
– we all drill and frac wells” said
the Canadian native. “Industry
competitors basically do the same
thing but the distinguishing factor is
By JANE LEE
Unconventional
Thinking
the right mindset to achieve positive
results. This will be very important
to make PETRONAS a leader in
development of unconventional
resources.”
It’s more than Technology
26
Drama!
27
APR / MAY 2015
The return of marine
life to Sarawak shores
2015 PETROLIAM NASIONAL BERHAD (PETRONAS)
www.petronas.com.my
VOLUME 02 APRIL / MAY 2015
C
All rights reserved. No part of this document may be reproduced, stored in a retrieval
system or transmitted in any form or by any means (electronic, mechanical,
photocopying, recording or otherwise) without the permission of the copyright owner.
FEATURE FOCUS
THE STORY BEHIND PETRONAS’ JOURNEY TO LAUNCH THE WORLD’S
FIRST FLOATING LNG PLANT
Energy has spurred the growth of nations for decades and continues to fuel economies and human imagination. Rich
sources of energy can be found within layers of humble and seemingly ubiquitous shale rock, often in remote places
and in the toughest of terrains. People like Dr Chan Tuck Leong are traversing the globe to unlock this resource in
order to light up megacities, keep us cool on a sweltering afternoon and power the internet that keeps families and
friends connected. We’re going to need energy for the future. And we won’t stop looking. Empowering Lives.
Watch the full story at www.youtube.com/PETRONASofficial
www.petronas.com
Petroliam Nasional Berhad
PETRONASofficial
IR. DR CHAN TUCK LEONG
Pacific Northwest LNG
PETROLIAM NASIONAL BERHAD (PETRONAS) (20076-K)
O N TH E W O R LD S TA GE
COVER
This month's cover story goes
behind the scenes of
PETRONAS' first floating LNG
project, a technological and
engineering marvel that is set
to make waves in the global
gas industry.
MAKING
EVERY
CHANGE
COUNT
Putting gas on the global energy
agenda took perseverance and
clever persuasion.....
By CHRISTINE CHEAH
The afternoon flow sits
down with Datuk Ir (Dr)
Abdul Rahim Hashim, he
has just returned from
signing a Memorandum of
Agreement with University
of Cambridge Admissions
Testing Service in his
current role as Vice
Chancellor of Universiti
Teknologi PETRONAS.
The agreement is one
more of the forward
thinking and bold
initiatives that embodies
his approach in all things
– to always consider what
we can do that’s new,
push ourselves to a new
level of excellence.
The same energy and drive underpinned
his tenure as President of the Malaysian
Triennium for the International Gas
Union (IGU), from 2009 to 2012. The
three years marked a number of
new programmes, initiatives and
collaborations that helped bring
the importance of natural gas as an
important element of the energy mix,
pushing it into greater prominence
within the industry.
is not an option’. We decided that
if this is the only chance we had
“One of the things that changed
significantly during that time was the
positioning of gas. At the time it was
still considered very much a bridge
fuel. But with the ‘shale revolution’,
gas reserves are expected to extend
its sustainability for another 250
years, which is almost equivalent
to the supply for coal. Yes, there’s a
focus on renewable energy to reduce
carbon emissions, but hydrocarbons
will be around for a long time and
natural gas will play an important role
as source fuel to meet our energy
needs,” he says.
In the conversation, Datuk Rahim
gave us some of his insights on…
better make it work and work well.
That’s it. I think everyone rose to the
occasion and all in all it was a great
triennium.”
THE SHIFT OF GAS FROM BEING
A BRIDGE FUEL TO WHAT IT IS
TODAY...
At the WGC 2009 in Buenos Aires,
I remembered (then IHS Chairman)
Daniel Yergin’s speech: gas is a ‘Fuel
Without a Voice’. They lumped it
together with coal and the rest of
the hydrocarbon family. Gas was
positioned as a bridge fuel, between
oil and renewables, and it would
disappear in later years.
With programmes centered around
three core pillars of capability
development, youth involvement and
geopolitics, the Malaysian Triennium
set into motion initiatives that are
still being carried through today to
advocate natural gas.
But addressing energy requirements
against global population growth
and environmental concerns is
going to require a multi-pronged
strategy. Gas will continue to be
important because it is available,
“My motto, especially for the 2012
World Gas Conference, was ‘Failure
things which are now part of the
IGU gas advocacy strategy.
33
PETRONAS does not encourage the giving of gifts or the provision of gratuitous services by PETRONAS’ contractors or sub-contractors, suppliers, bankers, dealers, or customers to its employees.
1
EDI T OR’S N OT E
Volume 02
C
MAL AYSIA’S DEEPWAT E R FI EL D S
THOUGHT LEADERSHIP
O
N
T
E
N
T
S
42
36
Seeing The Unseen
Advanced geoimaging
technology is making the
search for hydrocarbons
less of a gamble
PERSONALIT Y SPOTLIGHT
“Near-term Malaysian deepwater
projects will not be deterred by low oil
prices” says Dylan Mair, Senior Director of
Upstream Research and Consulting.
By IHS ENERGY
42
43
APR / MAY 2015
IN N OVAT ION
Production Sharing Contracts have been
key in the growth of Malaysia’s petroleum
resources for the past two decades.
“The only physically-challenging parts of the job are having to climb on piles
of oil well casings, which can be quite scary as it gets higher and higher, and
using the rope to swing onto the platform.”
Penny Chan,
Drilling Supervisor
38
As PETRONAS first female drilling supervisor,
25-year old Penny Chan is bravely blazing trails for
women in the industry.
By BRIGETTE ROZARIO
When flow interviewed her for this
story, the 25-year-old was more
than happy to share her unique story
of life on an oil rig. Amusingly, she is
always mistaken for a trainee rather
than a supervisor by many of the
men who have not worked with her.
She admits that the conversation
around her makes her a tad
uncomfortable at times, but rather
MAKING A NAME FOR HERSELF
Name: Penny Chan
“That happens sometimes but I
would talk to them privately and
tell them that I am not comfortable
with the conversation. I have done
this before. It was okay because
the guy was open about it and he
understood. We were talking like
friends,” she explains.
Chan was in the first batch of
petroleum engineering graduates
from Universiti Teknologi PETRONAS
(UTP) in 2011. While some of her
friends decided to play it safe by
taking other courses which aren’t
so specialised, Chan decided to opt
for the newly launched course in
petroleum engineering.
May 2011
Graduated All Rounded Drilling
(ARD) programme: December
2013 (awarded top scorer)
What is a
PSC?
Assistant night drilling supervisor
for Sabah deepwater projects:
December 2013 – May 2014
Night drilling supervisor in
Myanmar land rig: June – October
2014
Sabah):
November 2014 – current
PSC or Production
Sharing Contract serves as
a vehicle for partnership for
PETRONAS and multnational oil
& gas companies in conducting
hydrocarbon exploration &
production activities in
Malaysia.
39
PSCs set out the arrangements
for co-operation between
PETRONAS, which assumes the
role of a regulator, with qualified
oil companies as contractors for
the exploration, development
and production of petroleum
in a contract area for a specific
duration.
It is used to engage capable oil
and gas companies to participate
in the development of Malaysia’s
petroleum blocks, covering the
entire upstream value chain.
Hobbies: Jogging, reading
(currently reading See Jane Lead:
99 Ways for Women to Take
Charge at Work by Lois P. Frankel)
APR / MAY 2015
38
Since its introduction almost 40 years ago,
Malaysia’s production sharing contract (PSC)
scheme has been a key platform for the growth of
the country’s oil and gas sector.
Joined PETRONAS: March 2011
O
makes her uneasiness known to her
colleagues.
48
Prior to 1974, the Government, under
a concession system collected, tax
from oil companies which were
granted rights to explore and develop
petroleum resources with leases of up
to 40 years or more.
In 1974, the Petroleum Development
Act (PDA) vested PETRONAS with
the ownership and control of all
hydrocarbon resources in Malaysia.
This led to the adoption of PSCs to
replace the Concession Agreement
in 1976 so that the nation could play
a more direct role in controlling
and managing its petroleum
resources. The first PSC was
awarded in 1976 to Esso for the
Duyong oil field in Terengganu.
Unlike the old concession
system, the key advantage
of the PSC is that it allows
PETRONAS to have input
in strategic and operational
decisions, ensuring that the
operations are aligned with the
group’s business objectives and
nation building agenda.
Malaysia has awarded over
150 PSCs since the inception
of the scheme in 1976, of
which more than 100 are
currently actively managed by the
Malaysia Petroleum Management
organisation in PETRONAS.
22.2
7000
22.2
330
100
PSC’s
10
320
132
4,000+
20%
GDP
1,587
100
PSC’s
14
215 billion
20,000
49
APR / MAY 2015
SUSTAINABILIT Y
Azizah Mohd Deli
Chairman of the BEACON Project Taskforce
Walk along the coastline
of Similajau National
Park, the beauty of the
blue skies and golden
sand can lull one into
a comforting sense of
serenity. The waters
postcard, however, tell
story.
For the past 20 odd years, the corals in
the waters here have been dying, the
number of fish dwindling and scores of
turtles found dead on the beach; and
all because of the fishing by trawlers
that takes place here. It didn’t use to be
this way.
this underwater paradise that led to
him become a marine biologist.
“Watching the ocean’s rich marine
life decline over the years really upset
me. The trawlers and their dragnets –
they’ve destroyed a lot of the corals
here,” he says.
Marine biologist James Anak Bali,
Corporation (SFC), remembers the first
time he dived at the age of 20. He was
exposed to marine life of all shapes,
sizes and colours; as well as corals that
appeared in hues that only seemed to
exist underwater. It was the allure of
“When the corals die, the marine
life goes with it. They’ve fished here
undeterred for so long, even the turtles
dragnets, they don’t stand a chance.
Fewer and fewer make it to shore to
lay eggs,” explains James.
A BEACON
HOPE
OF
Similajau National Park from trawlers’ nets is
already showing impressive results.
By BRIGETTE ROZARIO
54 Sustainability
Project Beacon looks
to save the corals and
marine life off Similajau
National Park
55
00
APR / MAY 2015
STAY IN TOUCH WITH US
D E E P WATE R
Get in with the flow
PROVING
ITS METTLE
IN THE
DEEP
if nothing was done to reverse the
situation.
Given the rapid production decline,
coupled with high operation
expenditure and decommissioning
costs, the field was expected to
reach its economic limit in 2013
The field was developed in two main
phases, using subsea wells located within
manifold-templates that are tied back
to a Floating Production Storage and
Significantly, PETRONAS’ operations
at Chinguetti were the first for the
company involving Subsea Production
systems (SPS). To boost production,
PCML implemented an aggressive
development and intervention program
involving both drilling and intervention
activities in 2008.
PETRONAS’ successful
intervention campaigns at the
Chinguetti field in Mauritania
have proven its ability to handle
deepsea operations under
challenging conditions.
PETRONAS
upstream.comm@petronas.com.my
2
When PETRONAS took over the running of the
Chinguetti field in Mauritania in 2007, production
had been falling rapidly and prospects for the
West African country’s only producing field
looked dire.
Chinguetti had achieved its first oil
on 24 February 2006, but within a
few months production rates had
plunged from 75,000 barrels per
day (bbl/d) to 30,000 bbl/d due to
a lack of pressure support. By the
time PETRONAS entered the picture
through it’s through its whollyowned subsidiary PC Mauritania 1
Pty. Ltd. (PCMPL), production had
fallen further to just 11,000 bbl/d.
APR / MAY 2015
60
00
APR / MAY 2015
61
00
The dramatic plunge in crude oil prices since June last
year has changed many assumptions about the energy
markets, and is impacting everything from investments
in new capacity to buying decisions.
The LNG market has not been spared,
with many projects now being held
back in view of softening prices.
However, even as the industry rides
out this current period of volatility, our
plans for gas at PETRONAS remains
unchanged, while keeping an eye on
cost efficiencies.
“By installing the reef balls, we hope to improve
the marine life and perhaps the local fishermen
can get more fish.”
Petroliam Nasional Berhad
(PETRONAS)
DISTANCE
Innovation
48 A snapshot on
Production Sharing
Contracts and insights
from an international
company doing business
in Malaysia
Personality Spotlight
Penny Chan goes where
no woman has gone
before
54
00
GOING THE
I N N OVATI O N
PARTNERING
FOR PROFIT
You don’t need to
behave like a man
to survive in a maledominated industry.
As the first female
night supervisor in
PETRONAS, Penny
Chan has sometimes
found herself the only
woman on an oil rig
with more than 150
men. But she has taken
it all in her stride. In
fact, the experience
has made her a better
communicator and
leader.
Market Analysis
IHS Energy make their
bet: the sharp decline in
oil prices is unlikely to
impact Malaysia's
deepwater projects in
the near term
60 Deepwater
PETRONAS has proven
its deepsea credentials
with its successful
intervention campaigns
in Mauritania
PETRONAS has been involved in
oil and gas for four decades, and
in that time we have developed a
track record of success across every
aspect of the value chain - from
exploration to trading and marketing.
This allows us to take a long-term
view of business, one that prioritises
the needs of the customer over the
short-term vagaries of the market.
One fact captures our commitment
to long-term customer relationships:
PETRONAS has not missed delivering
even one of the more than 8,500
cargoes it has pledged to its
customers since shipping its first one
in 1983.
This issue of flow is thus dedicated to
PETRONAS’ contribution to the global
energy market through our capabilities
in integrated gas management. This
is presented in our feature story
Integrated Gas Management.
our first female drilling supervisor,
25-year old Penny Chan who has to
hold her own with the men on an oil rig.
This year will see another milestone
in the development of our LNG
capabilities as we prepare for the
arrival of our first floating LNG plant,
PETRONAS FLNG 1, which is expected
to set sail towards the end of 2015.
We delve into the challenges and
technicalities of this groundbreaking
project with the people who had the
vision to bring this innovation to fruition
in this issue’s cover story.
Equally captivating is the tale of Project
Beacon, an initiative jointly led by
PETRONAS and Sarawak Forestry
Corporation that seeks to save the corals
and marine life from the damaging nets
of fishing trawlers that ply the waters
off the coast of Similajau National Park.
Using innovative solutions like artificial
reef balls, volunteers that include
PETRONAS employees are helping to
protect the rich biodiversity of the area.
flow also takes a look at PETRONAS’
successful Production Sharing Contract
(PSC) concept, which has proven to be
an important catalyst for the growth of
Malaysia’s oil and gas sector. Since it
was established to replace concession
agreements in 1976, over 150 PSCs
have been awarded. Amazingly, 100 are
still active today. We speak to one of
these contractors, Murphy Oil, about
the benefits they have enjoyed working
under this arrangement.
The oil and gas sector may be currently
undergoing a period of relative turmoil,
but our commitment to our customers,
the communities we operate in and
other stakeholders will remain, regardless
of the challenges that weigh down the
industry.
Dato Wee
We are also mindful of the diversified
workforce at PETRONAS. In particular,
Dato’ Wee Yiaw Hin
Executive Vice President &
CEO PETRONAS Upstream
3
N EW SBRI EFS
Newsbriefs
PETRONAS’ 2014 PRODUCTION BEATS TARGET
PETRONAS registered a 4 per cent
growth in revenue to RM329.1 billion for
the year ended 31 December 2014, up
from RM317.3 billion a year ago.
While net profit for the year fell RM18.0
billion to RM47.6 billion - largely as a
result of significant assets impairment
losses due to lower crude oil price
forecasts - EBITDA managed to gain
RM1.9 billion to RM 125.3 billion.
The Upstream division performed
well last year, achieving significant
milestones across a variety of metrics.
Production grew 5 per cent on the
back of 19 greenfields starting up, while
21 exploration discoveries and the
sanctioning of more enhancement and
improved oil and gas projects added to
the group’s resources.
PETRONAS’ portfolio of production
sharing contracts (PSC) continued to
grow during the year, with 101 PSCs
now active in Malaysia. (See PSC story
on page 48).
There were also new upstream ventures
in Argentina and Azerbaijan, extending
the group’s already sizeable overseas
presence.
Looking ahead, with average prices in
2015 expected to be significantly lower
than 2014, PETRONAS’ profitability
The partners, UOP, Twister BV, Generon
and Technip, will develop with PETRONAS,
technology related to CO2 separation
systems and the conceptual engineering
design for an offshore high CO2 field.
These technologies will be applied at the
K5 field, located 250 km offshore Bintulu,
Sarawak. K5 is a greenfield containing
approximately 217 cf of gas with 70 percent
CO2. Carbon dioxide separated at the K5
facility will be re-injected and stored in an
aquifer located 2.2 km below the seabed.
“The technology-centric program for
high concentration CO2 fields will delve
into both surface and subsurface designs,
4
APR / MAY 2015
will be impacted. To mitigate the impact,
PETRONAS is taking steps to reduce planned
CAPEX and OPEX spending for 2015.
UPSTEAM OPERATIONAL HIGHLIGHTS 2014
Production (kboe/d)
Q4
2013
2,213
Q4
2014
2,359
2,127
2013
2,226
2014

5% production growth

Production Enhancement

19 Greenfields Production
start up
Gas
Liquid
Resource Addition (mmboe)
2013
1165
 21 Exploration Discoveries
 22 EOR/IOR/IGR Projects
3223
385 21673
47%
2014
2014
2014 2014
53%
3382
sanctioned
 ORRR 3.1x 2C Resource Add 3.4
mmboe
Speaking at the LNG Supplies for
Asian Markets 2015 conference,
Ahmad Adly Alias, Vice President, LNG
Trading & Marketing, PETRONAS, said
that while Henry Hub-linked prices
for LNG was popular around a year
ago, the recent fall in crude prices
has changed market dynamics. As
such, buyers shouldn’t favour one or
the other, as both pricing methods
are complementary.
“The reality is that a significant portion
of contracts will remain indexed to
crude as the oil-linked pricing has not
lost its luster,” said Mr Adly.
 RRR 1.6x 2P Reserve Add 2.1mmboe
Uncon
Malaysia
Exploration
IOR/IGR/EOR
International
LNG Sales Volume (MMT)
Q4
2013
7.56
Q4
2014
7.77
2014
Traded Volume
PLC
 101 active PSC
in Malaysia
2013
 Higher Gas Supply & Plant
28.85
Performance
30.12
 New ventures - Argentina,
Azerbaijan
GETTING A HANDLE ON CO2 FIELDS
PETRONAS has joined hands with four
partners to develop specific technologies
for the development of fields with a high
concentration of CO2.
NEW PRESSURES ON LNG PRICING AND SUPPLIES
and is comprehensive across the
value chain for carbon separation,
transportation and storage,” said Dr
Nasir Darman, Head, Technology
Division, Technical Global, Upstream
Malaysia, PETRONAS.
 Record 423 cargoes
 100% PLC OEE
 Higher trading volume
 4th partner in Integrated Canada
LNG Project
More on the
K5 Cryogenic
Distillation Facility
on page 22.
“Most importantly,
it offers a
commercially viable
and environmentally
sustainable approach for these
challenging assets.”
PETRONAS Head of CO2 Management Upstream Malaysia, Encik Hatarmizi Hassan; Twister BV
CEO, Mr John Young; Technip Consultant (M) Sdn Bhd Chairman, Encik Syed Feisal Mohammad;
Generon Asia Sdn Bhd CEO, Mr John Jeffers; PETRONAS Senior Vice President Upstream
Malaysia, Datuk Mohd Anuar Taib; PETRONAS Executive Vice President & CEO Upstream,
Dato’ Wee Yiaw Hin; UOP Senior Vice President, Ms Rebecca Liebert; and PETRONAS Head of
Technology Division, Upstream Malaysia, Dr Nasir Darman.
He also noted that with oil being
half the level it was in July 2014,
some 100 million tonnes or so of
LNG capacity that analysts had
forecast to take a final investment
decision this year will be
unachievable, especially as the
LNG global market currently is over
supplied and costs for developing
challenging gas reserves remain
relatively higher than market prices.
In the current uncertainty, he believed
that PETRONAS’s value proposition in
the LNG market would continue to be
underpinned by its security of supply
and flexibility in meeting customer
demands.
Since shipping its first cargo in 1983,
PETRONAS has not missed delivering
a single one of the more than
8,500 cargoes it has pledged to its
customers, he added.
“In Malaysia, we continue to boost
our gas resources and we have
successfully grown it to more than 100
trillion cubic feet in 2014. This ensures
that we deliver 25.7 million tons per
annum of LNG from our complex in
Bintulu. The additional gas resources
discovered to date will ensure that we
can continuously sustain this level of
production for years to come.
“With differing degree of project
maturity in our portfolio, we
can offer differentiated terms
and varying degrees of tenure,
be it long term, medium term or
short term,” Adly said.
The company is developing
unconventional gas assets in
the extents of Australia and
Canada – in addition to the
conventional resources from
Malaysia and Egypt.
Malaysia is currently amongst
the world’s top three LNG
suppliers.
Find out how PETRONAS
works across the
Integrated Gas
Management chain on
page 18.
DR ILLING
NEW VESSELS TO SUPPORT LNG BUSINESS
PETRONAS LNG Sdn. Bhd. (PLSB)
has signed an agreement with MISC
Berhad for the charter of five newbuild
LNG ships for a firm period of 15
years with a charterer’s option for an
extension for the next five years.
Party (TCP) to be signed by PLSB and
the first moss designed vessels that
MISC Berhad will own and operate.
Cutting the aluminium plate at
Hyundai Heavy Industries, which
marks the start of construction for
the LNG Carriers
The new LNG ships will provide
additional shipping capacity to service
cargo deliveries from PETRONAS
LNG Complex (PLC), Gladstone LNG,
PETRONAS Floating LNG 1, PETRONAS
Floating LNG2 and PETRONAS LNG
Train 9. The vessels are expected
to be delivered sometime from
September 2016 to December 2017.
En. Ahmad Adly Alias, VP LNG Trading
& Marketing, and CEO of PLSB, said
that this was the first Time Charter
5
COVER ST ORY: P FL N G
COVER STORY
PETRONAS is not in any race to being the world’s
first. The race is with ourselves; to let go of our own
inhibitions, and stretch the limits of our abilities.
Tan Sri Dato’ Shamsul Azhar Abbas
Former President and Group CEO of PETRONAS
PFLNG:
Changing the
Landscape
for LNG
With two Floating
Liquefied Natural Gas
(FLNG) facilities under
its wings, PETRONAS is
boldly pursuing gamechanging technology
to mark its leadership
position in the global
LNG arena.
Production of the first drop of onspecification LNG is expected to be in
Quarter 1, 2016.
The development of a 365 metre LNG
FPSO that will be able to process,
produce and offload LNG in-situ, close
to the source of the hydrocarbons or
the gas field, allows natural gas located
hundreds of miles away from land to
be monetized without the need for
6
APR / MAY 2015
pipelines, heavy infrastructure and
other CAPEX investments.
Located at the Kanowit gas field, 180
kilometers offshore Bintulu, Sarawak,
the PFLNG 1 facility will be producing
1.2 million tonnes of LNG over a
period of 20 years of its design life.
Before the end of 2015, the vessel,
currently being constructed at Okpo,
South Korea, is expected to make
its way to Kanowit, Sarawak, for
commissioning.
“This isn’t only a breakthrough for
PETRONAS and Malaysia, but is
also a significant game-changer
for the oil & gas industry globally.
For PETRONAS specifically, an
operational FLNG facility is testimony
to PETRONAS’ capability in driving
excellence and engineering
solutions to meet energy demands.
Additionally, once PFLNG 1 achieves
First Drop of LNG and commercial
begins in early 2016, it strengthens
Malaysia’s position as the world’s
second-largest LNG exporter”, said
former President and Group CEO,
Tan Sri Dato’ Seri Shamsul Azhar
Abbas. Once on-stream, the facility
is expected to boost the country’s
LNG production capacity to about
27 million tonnes per annum.
For PETRONAS, the
conceptualisation of a floating
LNG facility was given serious
consideration beginning 2006.
At that juncture, with over 23 years’
experience in reliably delivering
LNG to customers, and over 15
years’ experience in shipbuilding,
PETRONAS was in a unique
position to push boundaries and
explore possibilities to expand its
monetisation opportunities by
turning the novelty of having an
LNG plant on a vessel into reality.
7
COVE R STORY: P F L N G
PETRONAS FLOATING LNG AT A GLANCE
Key Design Parameters
A
PFLNG 2
Location
: Kanowit Gas Field,
180km offshore Bintulu
Rotan Gas Field,
240km offshore Kota Kinabalu
Hull Size
: 365m (L) x 60m (W) x 33m (D)
381m (L) x 64m (W) x 31m (D)
Capacity
: 1.2 MTPA
1.5 MTPA
LNG Storage
Capacity
: 177,000 m3
177,000 m3
60m
Level 80
LNG Offloading : Cryogenic marinised
loading arm
Cryogenic marinised
loading arm
C
FLNG Mooring
: External turret mooring
External turret mooring
Loading
: Side by side
Side by side
Water Depth
: 70m - 200m
500m - 1500m
Design Life
: 20 years
20 years
Inlet Design
Pressure
: 65 Bars atmospheric
65 Bars atmospheric
Accommodation : 100 – 150 personnel
100 – 150 personnel
Level 75
365m
PFLNG 2
PFLNG 1
E
PFLNG 1
64m
B
D
PFLNG 2
381m
PFLNG 1
PETRONAS Twin Towers
E
C
B
“There were many drivers for us to
pursue this endeavour. We have been
aggressive in our efforts to reverse the
natural decline in domestic production,
and while this has led to several new
and significant gas discoveries, FLNG
opens the opportunity to monetise
resources from remote marginal and
stranded gas fields, which would
otherwise be uneconomical to develop
via conventional means. With PFLNG 1
in particular, PETRONAS has positioned
itself as a forerunner in FLNG,
opening further prospects of FLNG
developments,” he added.
Benefits for the Nation
Apart from augmenting PETRONAS’
LNG portfolio, the PFLNG 1 facility
will be able to generate hundreds
of jobs and support services during
its operations. “Almost a majority of
8
APR / MAY 2015
our operators for PFLNG 1 will be
from Sarawak. This goes to show
PETRONAS’ commitment in nation
and capability building, whilst
embarking on a strategic project
of this scale for the interest of the
nation,” added Tan Sri Shamsul Azhar.
When asked about the competition,
he commented that PETRONAS is
not in any race to be the world’s
first. “The race is with ourselves; to
let go of our own inhibitions, and
stretch the limits of our abilities.
This is reimagining energy at work,
he said. The project now stands at
70% of overall progress. This is an
impressive achievement, given that
the keel laying for the hull was done
in January and the hull launching took
place in April 2014, both being key
milestones for the 45 month fast track
EPCIC project.
The PFLNG 1 EPCIC contract was
awarded to Technip & Daewoo
Shipbuilding & Marine Engineering
(DSME) (read more – our partners’
views, page 17) in March 2012.
PETRONAS is currently working
closely with its partners, Technip
and DSME, to ensure that the
project is delivered safely, in
accordance to project specification
and quality, within cost and on
schedule.
Almost all engineering and
procurement activities during the
12 month period for the PFLNG
1 Project were done in Malaysia.
PETRONAS played a leading role
in both phases given the nature
of alliance contracting with its
partners, with almost 5.5 million
manhours committed to these
phases of the project.
A
PETRONAS Floating LNG
D
ABOUT PFLNG 1 & 2
PETRONAS Floating LNG 1 (PFLNG 1) has a capacity of 1.2 million tonnes per annum (mtpa) and is targeted
for commissioning in the Kanowit Field offshore Sarawak in 2015. PETRONAS FLNG 2 (PFLNG 2), with a larger
capacity of 1.5 mtpa, is scheduled for commissioning in 2018 in the Rotan Field offshore Sabah.
Once operational, the facilities are expected to change the landscape of the LNG business where the
liquefaction, production and offloading processing of LNG, previously only possible at onshore plants, will be
carried out hundreds of kilometres away from land and closer to offshore gas sources.
Resource
Pre-Treatment
Liquefaction
Storage
Offloading
9
PFLNG In Brief
The PFLNG 1 facility consists of
22 modular systems, from gas
treating, liquefaction, storage and
offloading systems. All of these
systems will be placed within and
on top of the vessel which, in
comparison, is as long as the Eiffel
Tower in length.
The heart of the FLNG is essentially
the liquefaction system which
liquefies the natural gas to minus
162 degrees Celsius, a process
which shrinks its volume by 600
times. The LNG will be stored in
a dual row membrane type cargo
containment system (CCS) before
being offloaded to the LNG carrier.
10
APR / MAY 2015
The PFLNG 1 facility is able to
accommodate LNG carrier sizes
of between 150,000 m3 and
157,000 m3.
The facility will be powered by 100
megawatts of electricity through
the use of natural gas, enough
to power up a small town with
100,000 people. Its combined
weight of both topsides and hull is
132,000 tonnes, which is six times
the weight of an LNG carrier. The
facility has a total 1,600 kilometers
in length of electricity supply
and instrument control cables,
equivalent to the distance from
Kuala Lumpur to Kota Kinabalu.
11
Setting
Sail For A
Brave New
World
PETRONAS is ready to deliver a game-changer to the
LNG industry with one of the world’s first floating
liquefaction plants.
By Luke Roshan
Adnan Zainal Abidin
Vice President of Global LNG Projects, Upstream at PETRONAS
The development of
PETRONAS’ first
commercial floating
liquefied natural gas
facility (FLNG) has been
a labour of love for
Adnan Zainal Abidin.
Adnan oversees the multi-billion dollar
project, which will see a unique tanker
– more than 365 meters in length
and 60 meters wide - set sail soon.
PFLNG 1, as the massive facility
is known, is expected to be fully
operational by the first quarter of 2016.
With the end of an almost decadelong journey in sight, Adnan is in no
mood for chest thumping. Rather,
his team is fully focused on getting
this groundbreaking project past the
finish line.
12
APR / MAY 2015
“We are not out of the docks just yet,
and my current focus is to make this
happen and for us to be successful,”
says Adnan, who is Vice President of
Global LNG Projects, Upstream at
PETRONAS.
He adds: “I think you need to prove
what you have first and once you
have done that and shown your
experience and track record, then
you will be in a position to blow your
own trumpet.”
Unlocking Potential
monetize small stranded gas fields in
Malaysia. The world’s second-largest
LNG exporter after Qatar, PETRONAS
currently operates eight LNG trains
onshore with a total combined
capacity of around 25.7 million tonnes
per annum (mtpa).
The main reason PETRONAS is
launching this project is to unlock
fields that we previously were not able
to tap, fields that were stranded or
small in nature,” he explains.
If Adnan were to allow himself to take
a step back to reflect, he would likely
wonder at the game-changing nature
of this complex project on the global
LNG industry.
With PFLNG, we are basically able
to open up a new play for us in
monetizing fields which previously had
zero value. Besides, the days of big
fields are probably coming to an end,
or we are making fewer big discoveries
globally.”
But he believes that success will
ultimately be measured against
the company’s original goal: to
He adds that the timing of this project
is fortuitous as the industry is moving
towards maximising the potential of
13
Size Matters
Out in the open sea, PFLNG is BIGGER than a Nimitz-class aircraft
carrier, TALLER than the Eifel Tower, HEAVIER than
the Titanic
COVER
ST ORY:–Pand
FL N G
yet, SMALLER than a regular LNG processing facility.
Writing New Rules
The marinisation of equipment required new rules to be written, as an
FLNG is more complex than an FPSO.
MAKING IT WORK
Constructing one of the world’s first floating LNG vessels required the skills of many parties:
Resource owner, Operator,
Marketing & Trading
medium and small sized fields that
may not be near to shore. The FLNG
technology PETRONAS is developing
will help them tap into this potential.
operations, Adnan reveals that he has
already started fielding inquiries from
the multinational companies about the
possibility of chartering these vessels.
Unlike a conventional onshore gas plant
which requires the transfer to take place
via hundreds of kilometers of pipelines
connected to the offshore site, an FLNG
facility will now have an LNG plant
onboard the vessel with the capacity
to process, produce and offload the
product from the primary supply source.
Yet, he makes it very clear that the
primary focus is to first prove the
success of the technology PETRONAS
has developed by successfully
monetizing the fields in Kanowit and
then Rotan before embarking on other
commercial ventures with external
partners.
Proving its Worth
“Our priority, and I can’t stress this
enough, is to prove our worth and
hopefully this will open doors for us.
We have already been approached by
Although PETRONAS floating
liquefaction plants have yet to start
MNCs to use our floaters for one of
their fields, but for us the focus is to
get this out of the shipyard and have it
commissioned and run successfully,”
he says.
PFLNG1 Contractor
and Consortium Leader
PFLNG1 Contractor
Acid GasRemoval
Unit (AGRU) Supplier
Liquefaction Modules
Supplier
2-row LNG Membrane
Tank Supplier
Turbine Supplier
Kota Kinabalu
“Once we’ve done this we can show
the world this thing is happening
and I have no doubt in my mind
this will lead to other commercial
opportunities beyond Malaysia.”
Unique Challenges: Motion,
Space and Safety
As a typical first-of-its-kind
development, surprises along
the project development are not
“With PFLNG, we are basically able to open up
a new play for us in monetizing fields which
previously had zero value.“
Adnan Zainal Abidin
Vice President of Global LNG Projects, Upstream at PETRONAS
14
APR / MAY 2015
15
COVER
FEAT
ST ORY:
URE FOCUS
P FL N G
A
PIONEERING
Tuan Syed Feizal Syed
Mohammad,
uncommon. PETRONAS is confident
that the PFLNG 1 will be successfully
executed and operational as scheduled.
The challenges of getting a project like
FLNG 1 off the ground has tested the
limits of the engineering prowess of
PETRONAS and their partners.
For instance, there is the issue of motion
caused by being in the ocean that is
not present for a land-based plant. This
required the project managers to use
equipment that would be minimally
impacted by this movement.
Then there is the problem of space,
which would be limited on a ship
compared to an onshore facility.
“Previously we were building plants on
shore, so in that respect the real estate
was never a major issue to us as we
could build the facility based on safety
distances and a layout we were used
to,” explains Adnan.
16
APR / MAY 2015
“However when building a plant
on a ship, the real estate now is of
prime consideration as we have to
think about squeezing everything we
would normally do at an onshore
plant into a very tight space floating
on water.
His team was also careful to put
in place a more robust than usual
operational system that would
require less frequent maintenance.
“Unlike onshore plants if you have
maintenance issues you can’t just
pick up the phone and have your
contractor appear in a pick-up truck.
So we have to make all operating
systems as robust and reliable as
it can be so that the folks on the
floater can deal with this as much as
possible.”
Safety was another key consideration.
Once fully operational, Adnan says
that at any given point in time there
should be about 150 personnel on
board the PFLNG 1. As such, certain
safety features needed to be built
into the floating platform itself.
“In an onshore plant, the equipment
is well spread out and you have a
bit more leeway, but with the close
proximity of the equipment on a
small real estate, it was critical that
we had to pay special attention
in the installation of blast walls to
ensure necessary safety coverage.”
The team has employed a
combination of innovative flair and
technical excellence to overcome
the challenges, ensuring that the
dream of a floating LNG plant
remains on track to becoming a
reality. If all goes well and PFLNG
1 is a success, you can be sure
that Adnan and PETRONAS will be
celebrating this engineering Marvel.
EFFORT
Members of
the consortium
responsible for
the engineering
and construction
of PFLNG 1 share
their views on
the challenges
of taking on this
groundbreaking
project.
Mr Duck Yull Lee,
Chairman & SVP,
Malaysia, Technip
EVP, PFLNG Project Sponsor
for Daewoo Shipbuilding &
Marine Engineering Co. Ltd
(DSME)
Tuan Syed Feizal Syed Mohammad: Technip
in Malaysia is the leader of a consortium
with DSME, responsible for engineering,
procurement, construction, installation and
commissioning of the PETRONAS Floating
LNG 1.
Mr. Duck Yull Lee: My role in the project at
DSME is to lead, coordinate and mobilise the
necessary resources for smooth execution of
the project, and co-operating with consortium
partner, Technip. I am also representing DSME
as the project sponsor.
Tuan Syed: FLNGs are challenging projects,
placing gas liquefaction facilities on a vessel
directly over offshore gas fields is clearly
very demanding but at the same time it is
very exciting! To overcome the complexity,
Technip brings together its expertise, not only
in offshore but also in subsea and onshore.
your role in
the PFLNG 1
project?
how does this
project rank
in terms of
complexity?
On a scale of 1 to 10, I would rate it a 9. As a
comparative reference, a major FPSO would
rate a 7 or 8.
Tuan Syed: With the primary aim to achieve
safe operations and ease of operability, we
have to push the limits and in some areas
with novelties. A good example would be the
use of nitrogen as a refrigerant, giving ease
of operability which is a world’s first for this
capacity.
Tuan Syed: Because of the complexity of
this project, we have a contract structure
that gives us the flexibility to accommodate
changes along the way. We also adopted an
integrated team approach where we resolve
issues collectively, and we can share best
practices on a collaborative basis.
the unique
technical and
operational
challenges
and how did
you overcome
them?
Did you have to
change the way
you operate
Mr Lee: Considering the new technologies
being applied for this floating LNG such as the
liquefaction process, LNG offloading system and
LNG cargo containment system (CCS), among
other things, I would say this project should
be ranked very high in terms of complexity.
The physical size of this project is very similar
to several FPSOs already fabricated or being
fabricated by DSME.
Mr Lee: One of the technical challenges we
faced was how we could secure the necessary
time for CCS installation in cargo tanks. At
the engineering stage of the project, it was
understood that the CCS work needed to
commence only after the completion of the
topsides module lifting.
However, thanks to our in-depth research with
support from PETRONAS, we verified that CCS
works could start even before completion of
topsides module lifting. This allowed the CCS
works to be completed much earlier.
Mr Lee: DSME’s policy regarding topsides module
fabrication is to fabricate as many blocks as
possible at the DSME yard. Due to the large work
volume of the project as well as several other
offshore projects being executed simultaneously,
DSME had to fabricate more topsides blocks
using subcontractors, including DSME’s
subsidiary yards.
17
INTE G RAT ED GAS M AN AGEM EN T
With end-to-end capabilities and the continuous
drive to maintain its technical edge in each aspect
of the value chain, PETRONAS is maintaining its
position as a key LNG supplier, one that can ensure
a stable, secure and reliable supply to LNG to buyers
around the world.
Integrated
Gas
Management
From Molecules to
Markets
DR ILLING
Pacific NorthWest LNG,
British Columbia, Canada
Target FID - 2015
2 trains of 6 mtpa each
PETRONAS Floating
LNG 1 Malaysia
Target 2015 for PFLNG 1
of 1.2 mtpa
Gladstone Australia LNG
7.8 mtpa
18
APR / MAY 2015
Egyptian LNG, Idku 7.2 mtpa
LNG production
Peninsular Gas Utilisation
Project – 2,500 km of gas
pipeline
Sabah - Sarawak Gas
Pipeline - 512 km of
gas pipeline
Japan, South Korea,
Taiwan, China
30 Years of 100% on-time
& on-schedule deliveries for
8,500 + cargoes
MARKETING
With integrated end-to-end capabilities
and the continuous drive to maintain
its technical edge, PETRONAS is
maintaining its position as a key LNG
supplier; one that can ensure a stable,
secure and reliable supply of LNG to
buyers around the world.
MISC Fleet of 27 LNG
Carriers-World’s leading
owner-operator of
LNG carriers
Regas Terminal, Malaysia
Melaka - 3.8 mtpa
Pengerang 3.8 mtpa
REGASIFICATION
Today, PETRONAS’ capabilities extend from the start to the
end of the gas value chain. A molecule of gas can stay under
PETRONAS’ ownership from the moment it leaves the ground to
the instant that it is transformed into liquefied natural gas. The cost
efficiencies harnessed from this unique position enable us to offer
the best value to our buyers globally.
PETRONAS LNG Complex
(PLC) Bintulu 25.7 mtpa
LNG production
TRANSPORTATION
Extensive gas reserves and the
potential for many more new
discoveries are just the beginning of
the story. From exploration in a wide
spread of field types and playtypes,
facilities, and transportation to markets,
PETRONAS is well entrenched at every
major point in the gas value chain.
PETRONAS LNG Train 9 Project
Additional 3.6 mtpa
LNG production - Q1 2016
EXPLORATION &
PRODUCTION
Gas has been a key resource for PETRONAS
since its first solo field development: the
Duyong field. Since then, an integrated
approach to gas management has grown
to become a cornerstone of the company’s
operations.
Dragon LNG, Wales
5.4 mtpa regas terminal
19
INT E GRATE D GAS M A N AG EM EN T
Watch our Upstream
video on the PETRONAS
YouTube Channel
EXPLORATION & PRODUCTION
PORTFOLIO : PLAYTYPES
DISCOVERIES
Across geographies and geologies, our
exploration efforts over the past forty
years have yielded discoveries of huge
gas fields.
These major gas finds have contributed
to significant growth in our gas resources
in Malaysia, which now amount to 100
trillion scf, PETRONAS is well placed to
continue supplying natural gas to feed
growing global energy demand.
PETRONAS’ current global
portfolio of major gas fields
span a variety of playtypes:
onshore and offshore
fields, conventional and
unconventional gas, shallow
and deepwater plays.
It also has gas assets from
technically challenging fields,
including high pressure high
temperature (HPHT) drilling,
small and marginal fields, highly
contaminated gas and more.
New and innovative contracting
strategies in Malaysia have
opened up a range of small and
marginal fields for development
as well.
in January 2012 to 5.2
billion boe in 2013 with the
acquisition of Progress Energy
Canada Limited (PECL).
As we broaden our
experience in each of these
playtypes, we continue to tap
the potential of a range of
hydrocarbon opportunities
across the globe including
unconventional assets in
Canada (Shale) and Australia
(coal-bed methane).
PETRONAS has also built a track
record of working in fields with
increasingly high concentrations
of CO2 content.
DR ILLING
Meanwhile, our unconventional
resource base (2P + 2C) has
grown from 0.38 billion boe
PETRONAS PORTFOLIO: New Playtypes and Unconventionals
Maximising resources and developing new innovative solutions
Total gas resources
100
trillion scf
(2014)
New Playtypes
Turkmenistan
Iraq
Algeria
Egypt
Chad
Sudan
South Sudan
Cameroon
Gabon
Angola
Mozambique
China
•
Basement Oil
Vietnam, Malaysia
•
Carbonates and Pre-Carbonates
Malaysia, Indonesia
•
High Pressure - High
Temperature
Egypt, Malaysia, Turkmenistan
•
Pre-Salt
Angola, Gabon
Unconventionals
•
Shale Gas
North Montney , Canada
•
Coal Bed Methane
Bowen and Surat Basin, Australia
•
Shale Oil
Vaca Muerta , Argentina
PETRONAS Upstream
Presence
20
APR / MAY 2015
21
INT E GRATE D GAS M A N AG EM EN T
K5 Cryo-D Facility
World’s Highest
CO₂ Concentration Gas
Development Offshore
Cryo-D Facility
PROCESSING
2.0 bcf/d of
Concentrate
pad drilling of
approxi- the To maintain largest
in production
the region. The reserves of
mtpa
of liquefaction
capacity,
for 20 to 40 years of LNG operations
mately 1700 wells to increase sales
unconventional
gas in the area are
plant
boasts
a
100%
success
rate
in
by drilling 250 wells per year to offset
gas production from 0.4 bcf/d to 2.0
declines.
bcf/d for the
facility startvalue
up
expected
to be able to sustain an
delivering
allPNWLNG
its contracted
onthe well production
by 2019. Key focus on costs and
estimated 220 cargoes that will be
time
to its. clientele worldwide. The
efficiency
delivered in a year.
Train 9 LNG project will add another
3.6 mtpa of capacity to the location.
PETRONAS is building one of the first
PETRONAS has a
floating LNG vessels in the world.
The Gladstone LNG (GLNG) project
potential liquefaction
Located offshore Sarawak and Sabah,
in Australia will process Coal Bed
capacity of more than
PFLNG 1 & 2 will add a combined
Methane (CBM) gas into LNG for
2.7 mtpa of liquefaction capacity while
export
to
the
global
markets.
The
40 mtpa from facilities
enabling PETRONAS to monetize
plant has a liquefaction capacity of
strategically located
stranded gas with no value otherwise.
7.8 mtpa.
across the globe.
(cover story, page 6)
When built, the Pacific NorthWest
The Malaysia (MLNG)
Plant in
Bintulu
LNG Plant PROJECTS
will evacuate shale
PETRONAS
UNCONVENTIONAL
WORLDWIDE Regasification terminals in Wales and
is one of the largest plants in a single
Malaysia provide further monetisation
gas from British Columbia. The
location in the world. With almost 26
opportunities.
facility is expected to be one of the
Development of light tight oil in the
Expanding LNG
Capacity
Dunvegan
play. Progress is well
with 380,000
net acres
of
Embarking on positioned
world-scale
projects
to supply
land for future production growth.
Progress Sasol Montney Partnership
Development of Montney unconventional shale gas in partnership with
Sasol. Target
domestic
markets
energy
across
the gas
world
and potential supply to PNWLNG Train
3 expansion.
Gladstone LNG
The GLNG project is a pioneering
venture to convert coal bed methane
(CBM) into liquefied natural gas (LNG)
for export to global markets.
PETRONAS Floating LNG 1 & 2
Caprock
H₂S
Aquifer
Onshore
APR / MAY 2015
Maintenance Phase 2019-2038
Step-out drilling to have 15 TCF of 2P
reserves by the end of 2014. At the
end of 2013, 2P reserves stood at 7.9
TCF with an additional 20.4TCF of 2C
resource. Consists of drilling approximately 320 horizontal wells with 3
miles between pads.
Progress Alberta Deep Basin
The offshore facility serves as a testing
ground for a suite of CO2 separation
technologies and will boast the world’s
first offshore cryogenic distillation facility.
22
Development Phase 2015-2019
PRODUCTION Appraisal Phase 2013-2014
DR ILLING
The K5 High CO2 cryogenic
distillation facility extends
PETRONAS’ forays into
the world of highly
contaminated gas.
Cryogenic Distillation is a bulk CO2
separation method that has been
applied onshore. Through innovation
in process engineering and design,
we are overcoming the challenges
of space, weight and environment to
bring this technology offshore.
The North Montney Joint Venture (NMJV), operated by Progress Energy, will provide natural gas feedstock to its sister
company Pacific Northwest LNG (PNWLNG) for its proposed 12MTPA LNG export facility on the West Coast of British Columbia.
FACILITIES
World’s First
Offshore
The project will also be one of
PETRONAS’ first involving carbon capture
and storage, with all of the produced CO2
permanently stored in the reservoir.
NMJV PROJECTS
CO₂
CO₂
Hc Hg
N₂
PFLNG 1
Kanowit Gas Field
180km offshore
Bintulu
CO₂
Offshore
K5
PFLNG 2
Rotan Gas Field,
240km offshore
Kota Kinabalu
British Columbia
Gladstone
LNG,
Queensland
PETRONAS
LNG
COMPLEX
Bintulu
1.2 million tpa 1.5
12 million tpa 7.8million tpa 26million tpa
million tpa
Production of LNG
Production of LNG
Amongst the World’s
First
floating LNG structures
110 Tennis Courts
Pacific
NorthWest
LNG,
Production of LNG
35billion
USD
CAPEX
Production of LNG
Production of LNG
18.5
423cargoes
billion
USD
CAPEX
of LNG in 2014
23
I NTEGRATE D GAS MANAG EM EN T
INTE G RAT ED GAS MAN AGEM EN T
Nation Building
Our role is to promote a sustainable and an orderly
development of petroleum industry for the nation
TRANSPORT
MARKETING & TRADING
GAS TRANSPORT
In the Peninsular, gas from fields
offshore Terengannu is processed and
transported through 2,500 km of main
and lateral pipeline in the Peninsular
Gas Utilisation (PGU) project. The
gas is sent to end users in the power,
industrial and commercial sectors in
Peninsular Malaysia and power plants
in Singapore.
Reliability of Gas
Supply
PERLIS
Gurun
KEDAH
PULAU
PINANG
2,500km
PGU
TERENGGANU
PERAK
Kertih
512km
PAHANG
SSGP
Gebeng
A Buyer’s
Perspective
Tokyo Gas’ representative in Kuala
Lumpur, Yasushi Sakakibara, shares why
his company has been buying gas from
PETRONAS for the past 30 years.
SELANGOR
Spanning 512 km and two of the
largest states in Malaysia, the SabahSarawak Gas Pipeline feeds gas from
the Sabah Oil and Gas Terminal to
several essential integrated projects
including the Kimanis Power Plant and
the Samur Urea Plant in Sabah, ending
at the MLNG plant in Bintulu.
27 LNG
NEGERI
SEMBILAN
Vessles
MELAKA
JOHOR
REGASIFICATION
TERMINAL 1
(RGT-1)
Pasir Gudang
This, along with the spread of gas
sources across the globe, allows
PETRONAS to ensure reliable supply
to our customers worldwide.
Labuan
SOGT
SABAH
Miri
PETRONAS LNG
COMPLEX (PLC)
SARAWAK
MARKETING & TRADING
MARKETING &
TRADING
24
Integrated into the upstream value chain,
PETRONAS’ LNG trading and marketing arm offers a portfolio of
distinctive solutions to ensure the best value for its customers. With
security of supply from a variety of sources, a spread of pricing options,
and flexibility in contract duration, shipping and delivery, PETRONAS
ensures our customers get the best value.
APR / MAY 2015
DR ILLING
What has the experience of working
with PETRONAS been like so far?
PENGERANG
INTEGRATED
COMPLEX*
(PIC)
Kimanis
PETRONAS’ gas transportation
business is also supported by MISC
Berhad, which owns a fleet of 27 LNG
carriers. The partnership provides a
stable channel for the transportation of
gas molecules.
Yasushi Sakakibara
By LUKE ROSHAN
LNG Processing Plant
Petrochemical Plant
Refinery
Power Plant
LNG Regasification
Terminal
It is a good relationship. Sometimes we have
heated discussions over the price negotiations
but because of our strong relationship we
are always able to find some middle ground
that can satisfy both parties. In fact, Tokyo
Gas is the only company that has signed LNG
contracts with MLNG’s Satu, Dua and Tiga
projects.
The only
company that has
signed LNG
contracts with MLNG’s
Satu, Dua and Tiga
projects
What are PETRONAS’ strengths as an
LNG supplier?
Oil Fields
Gas Fields
* Under construction
First, PETRONAS has a huge natural resource
reserve as well as one of the biggest LNG
shipping terminals in the world, in Bintulu, and
a long history of safe operations. Malaysia is
in a good location, not too far away like the
Middle East. It is also politically very stable.
This allows us to have assurance that the
likelihood of our supplies being disrupted
is low. PETRONAS is a reliable and stable
supplier for over 30 years. The gas
composition is also of good quality and suits
our requirements.
PETRONAS is also quick to make good
decisions for investments.
PETRONAS is a
reliable and stable
supplier for over
years
30
PETRONAS have
a long history of
energy supply,
capable employees
and long relations
with players like
Tokyo Gas
What are some of the new needs
and challenges that you see arising
for LNG buyers and suppliers in the
future?
The market is changing. Shale gas in the US is
coming onstream, and other suppliers from
Africa are emerging. PETRONAS is facing
the challenge of meeting the needs of more
demanding customers, but they have a long
history of energy supply, capable employees
long relations with players like Tokyo Gas.
If PETRONAS continues to discuss openly with
the buyers it will be win-win for all.
Do you see potential for further
collaboration between yourself and
PETRONAS?
Definitely. Tokyo Gas and PETRONAS have
a long relationship and there are certainly
opportunities for collaboration. Not just for
the existing LNG contracts but joint marketing
on some new projects further downstream
like power plants.
25
UN CON VEN T I ON AL GAS
As a fresh-out-of-school
petroleum engineer
in Calgary in 1994,
Neil Horbachewski
was introduced to
“unconventional”
methods early in his
career.
The company he worked for had an
innovative idea to use concentric
coiled tubing to inject steam and
produce heavy oil from a single
wellbore.
Unconventional
THINKING
The mindset to be successful
in the Unconventional resource business.
By JANE LEE
26
APR / MAY 2015
DR ILLING
Today, two decades later and in
Kuala Lumpur, the 46-year-old, Vice
President of the Unconventional
Division in PETRONAS’ Upstream
business, says that even though
Steam Assisted Gravity Drainage
(SAGD) is now a common or
‘conventional’ extraction method it
took an ‘Unconventional’ mindset
to be innovative and successful.
“Unconventional means to not be
bound by or adhere to accepted
practices. It is just in the last 10
years that the term has been used
to describe the resource”. What he
wants to instill is the mindset to think
unconventionally so that the team is
always ahead of the competition.
“What we do is very straight forward
– we all drill and frac wells” said
the Canadian native. “Industry
competitors basically do the same
thing but the distinguishing factor is
how to execute efficiently and have
the right mindset to achieve positive
results. This will be very important
to make PETRONAS a leader in
development of unconventional
resources.”
27
UNCONVE NT ION A L G A S
“It doesn’t all just hinge on technology. It’s everything
from the processes and policies to a way of operating.
We have to have a manufacturing mindset.”
Neil Horbachewski
Head, Unconventional Division at PETRONAS Upstream
NMJV PROJECTS
NMJV PROJECTS
Appraisal Phase 2013-2014
Development Phase 2015-2019
Maintenance Phase 2019-2038
end of 2013, 2P reserves stood at 7.9
resource. Consists of drilling approximately 320 horizontal wells with 3
miles between pads.
Concentrate pad drilling of approximately 1700 wells to increase sales
gas production from 0.4 bcf/d to 2.0
bcf/d for the PNWLNG facility start up
efficiency.
To maintain 2.0 bcf/d of production
by drilling 250 wells per year to offset
the well production declines.
PETRONAS ventured into
“Technology application is just
“It doesn’t all just hinge on
unconventional oil and gas development
but one part of it,” Horbachewski
technology. It’s everything from
via its coal-bed methane venture in
said. “Exploration of shale is not
the processes and policies to a way
GLNG in Australia in 2008 and shale
about finding the reservoir. It’s
of operating. We have to have a
gas through the acquisition of Progress
about vastness of the resource and
manufacturing mindset.”
PETRONAS UNCONVENTIONAL PROJECTSleveraging
WORLDWIDE
Energy Resources in Canada in 2012
efficiencies to drive down
(now known as Progress Energy Canada
costs.”
Riding the Shale Boom
Ltd). The company is seeking to expand
itsProgress
reserves beyond
theDeep
conventional
The growth in
North American shale
Shale
production
of oil and
gas
Progress
Sasol Montney
Partnership
Alberta
Basin oil
Gladstone
LNG
and gas at home in Malaysia and in
oil and gas production came about as
has taken off in a big way in North
Development of Montney unconvenThe
project is a pioneering
of light tight oil in the
3 Development
other countries.
largeGLNG
new conventional
discoveries
America
and the result is a large
tional shale gas in partnership with
Dunvegan play. Progress is well
became hard to find. At the same
supply of oil that puts the United
Sasol. Target domestic gas markets
positioned with 380,000 net acres of
Horbachewski, who’s relocating his
time, a very competitive oil and gas
States
almost supply
on par to
with
Saudi Train
and potential
PNWLNG
wife and two daughters to Kuala
industry that pushed innovation,
Arabia
in
terms
of
daily
production.
3 expansion.
Lumpur from Calgary by mid-2015, is
extensive infrastructure including
determined to see through a change in
a large network of pipelines and
While some analysts credit the U.S.
PETRONAS’ thinking that began in 2008,
an easily accessible market helped
for having the technology to develop
in paving the foundations to achieve
create the right atmosphere for an
its unconventional resources, the
a thriving unconventional resource
expansion in the unconventional
nation has more than a few other
business.
resource output.
factors that led to the shale boom.
28
APR / MAY 2015
In the background, certainty for
resources but its surface foot print
Maintenance
Phase
2019-2038
Development
2015-2019
Appraisal
Phase
investors
came
in the2013-2014
form of firm
should
be smaller
with the
use of
“Industry Phase
competitors
regulatory
frameworks
that
were
horizontal
drilling.
PETRONAS
through
To maintain 2.0 bcf/d of production
Concentrate
pad drilling
approxibasically
doofthe
provided
by
federal,
state
and
its
affiliate
Progress
Energy
Canada
mately 1700 wells to increase sales
provincial
governments.
works
very 250
closely
with
same thing
but
the
end of 2013,
2P reserves stood at 7.9
by drilling
wells
perstakeholders
year to offset
gas production
from 0.4
bcf/d
to 2.0
and
or Firstdeclines.
Nation groups
the aboriginal
well production
bcf/d for the PNWLNG facility start up
distinguishing factor is
resource.the
Consists
of drilling
Winning
Public
Over approxiin building a strong relationship and an
mately 320 horizontal wells with 3
efficiency
how
to. execute efficiently understanding of the benefits of this
miles
pads.
“Not
to between
be underestimated
is the role
development.
and have the right mindset
of the public, one with a sophisticated
enough understanding of the oil and
to achieve positive results. PETRONAS is currently producing the
gas sector,” Horbachewski said.
equivalent of more than 500 million
This will be very important cubic feet of gas a day from its North
Keeping the public informed is
Montney Joint Venture alone.
to make PETRONAS a
crucial, especially with the U.S. and
leader in development
Canada’s developed and thriving oil
As a result of the large number of wells
and gas industry. Shale oil and gas
needed, shale reservoir development
of unconventional
production may need more wells
is very capital intensive. The risk is no
resources.”
drilled compared with conventional
longer about inability to find the gas in
DR ILLING
PETRONAS UNCONVENTIONAL PROJECTS WORLDWIDE
Progress Alberta Deep Basin
Progress Sasol Montney Partnership
Gladstone LNG
Development of light tight oil in the
Dunvegan play. Progress is well
positioned with 380,000 net acres of
Development of Montney unconventional shale gas in partnership with
Sasol. Target domestic gas markets
and potential supply to PNWLNG Train
3 expansion.
The GLNG project is a pioneering
29
U N CONVE NTION A L G A S
EXTRACTION METHODS & PROCESSES
Technological breakthroughs in horizontal drilling steam assisted gravity drainage and fracturing
have made shale and other unconventional hydrocarbon supplies commercially viable
A
SHALE GAS / OIL
B
TIGHT GAS/ OIL
C COAL BED METHANE
D
OIL SANDS
Source
Shale
Shale
Coal
Reservoir
Shale
Low Quality sandstone
or Dolomite
Shallow Coal
High quality shallow
sandstone
Natural Gas / Oil
Natural Gas
Bitumen (Very Heavy Oil)
Fluid
Extraction
Methods
Natural Gas / Oil/
Condensate
As rock quality is poor, horizontal
drilling is used to contact as much
reservoir as possible
Hydraulic fracturing , uses a fluid
slurry, pumped at extreme pressure,
to fracture the reservoir
High well densities – pad drilling
Horizontal wells
Hydraulic fracturing technologies
Horizontal or multi-stage
vertical wells.
Hydraulic fracturing and acidizing
using leading edge fluid system
DIRECTIONAL DRILLING
Central site wells and
facilities
Shale
Vertical wells for shallow coal
seams
Fractured horizontal wells to
access deep coal seams
Dewatering reservoir usually
required to desorb gas from coal.
Stimulation techniques:
• Cavitation
• Hydraulic fracturing
Steam assisted gravity drainage
(SAGD)
Consists of 2 horizontal wells
Steam is injected in the upper well
to lower the bitumen viscosity
The lower well is used to pump
the oil to surface
COALBED METHANE
Wellbones
PRODUCTION OF
Processed water
Gas to pipeline
Tubing
Submersible
pump
Gas
450 550 m
5m
Coalbed
800 - 900 m
Gas filled rock
Water filled rock
Special
Requirements
Excellence in water
handling and lean
operations to
optimize costs
the reservoir. “The risk is whether
it can be extracted at a cost that
provides an economic rate of
return to continue re-investing,”
Horbachewski said.
Thinking like a Utility
As PETRONAS marches towards
a final investment decision on the
Pacific Northwest LNG (PNWLNG)
facility to be located at Prince Rupert
on the west coast of Canada, the
project has entered the development
phase for its Upstream business.
In this next stage, the North
Montney Joint Venture will be
aiming for a production target of
2 billion cubic feet a day. “100%
Deep understanding of
petrophysical parameters
and geology to optimize
recovery
Lean operations, handling
of large volumes of water
at surface for disposal
reliable delivery of natural gas to
PNWLNG at the lowest supply cost”
is the target that the team is striving
to achieve.
“Now the mindset has to shift to
thinking like a utility service provider,’’
Horbachewski said. “Like utilities, we
have a customer in PNWLNG that
requires proven reliability with cost
efficiency.”
Focusing on unconventional
resource development means
that PETRONAS can’t be bound
by or required to conform to
conventional methods. Stepping
beyond conventional thinking is key
to ensuring unconventional resource
development takes off.
Complex surface facilities
to generate steam at
low cost. Addition of
diluent required for
transport of oil at surface
DR ILLING
“It’s about an attention to detail and
doing what is right versus what is easy,”
Horbachewski said.
The North Montney
Joint Venture will
be aiming for a
production target of
2 billion
cubic feet a day.
To deliver essential energy to a growing population, PETRONAS constantly examines new ways
to unleash gas resources. From the furthest corners of the globe, deep into shale and coal-bed
formations and out in remote and difficult fields, we are applying new and innovative technologies
to monetize hydrocarbon molecules. Building on 40 years of oil and gas experience, PETRONAS is
developing one of the world’s first floating LNG and other large scale liquefaction facilities to reliably
and safely supply the energy needed to light up megacities like Tokyo, Seoul and Shanghai.
www.petronas.com
30
APR / MAY 2015
31
ON T HE WORL D STAGE
MAKING
EVERY
CHANGE
COUNT
Putting gas on the global energy
agenda took perseverance and
clever persuasion.....
By CHRISTINE CHEAH
The afternoon flow sits
down with Datuk Ir (Dr)
Abdul Rahim Hashim, he
has just returned from
signing a Memorandum of
Agreement with University
of Cambridge Admissions
Testing Service in his
current role as Vice
Chancellor of Universiti
Teknologi PETRONAS.
The agreement is one
more of the forward
thinking and bold
initiatives that embodies
his approach in all things
– to always consider what
we can do that’s new,
different and distinctive to
push ourselves to a new
level of excellence.
The same energy and drive underpinned
his tenure as President of the Malaysian
Triennium for the International Gas
Union (IGU), from 2009 to 2012. The
three years marked a number of
new programmes, initiatives and
collaborations that helped bring
the importance of natural gas as an
important element of the energy mix,
pushing it into greater prominence
within the industry.
is not an option’. We decided that
if this is the only chance we had
to make a difference, then we had
better make it work and work well.
That’s it. I think everyone rose to the
occasion and all in all it was a great
triennium.”
“One of the things that changed
significantly during that time was the
positioning of gas. At the time it was
still considered very much a bridge
fuel. But with the ‘shale revolution’,
gas reserves are expected to extend
its sustainability for another 250
years, which is almost equivalent
to the supply for coal. Yes, there’s a
focus on renewable energy to reduce
carbon emissions, but hydrocarbons
will be around for a long time and
natural gas will play an important role
as source fuel to meet our energy
needs,” he says.
In the conversation, Datuk Rahim
gave us some of his insights on…
With programmes centered around
three core pillars of capability
development, youth involvement and
geopolitics, the Malaysian Triennium
set into motion initiatives that are
still being carried through today to
advocate natural gas.
“My motto, especially for the 2012
World Gas Conference, was ‘Failure
the shift of gas from being
a bridge fuel to what it is
today...
At the WGC 2009 in Buenos Aires,
I remembered (then IHS Chairman)
Daniel Yergin’s speech: gas is a ‘Fuel
Without a Voice’. They lumped it
together with coal and the rest of
the hydrocarbon family. Gas was
positioned as a bridge fuel, between
oil and renewables, and it would
disappear in later years.
But addressing energy requirements
against global population growth
and environmental concerns is
going to require a multi-pronged
strategy. Gas will continue to be
important because it is available,
accessible, affordable and all those
things which are now part of the
IGU gas advocacy strategy.
33
O N T HE WORLD S TAG E
ON T HE WORL D STAGE
LNG for transportation is coming up in a big way
for sure. If you have the option of cleaner burning
natural gas for transport, countries are going to
say, “Look, you are not going to come into my port
while you’re still burning fuel oil and sputtering
smoke around.”
Datuk Ir (Dr) Abdul Rahim Hashim
Past IGU President, Malaysian Triennium (2009-2012)
When we took over the triennium,
we knew that we wanted to make a
difference, not just maintain the status
quo and go about business as usual.
The greatest change through those
years was the positioning of gas. In
2013 when Obama released the US
Blueprint for a Clean and Secure Energy
Future, gas was a significant part of the
strategies involved in providing a source
of clean energy for the U.S. It’s come
quite a long way from being a bridge
fuel.
how no man, or organization,
is an island...
Committee or Council meetings. There
was a lot more knowledge sharing and
a lot more workshops throughout the
three years, which also continued well
after the Malaysian Triennium.
Shale gas was also in play and there
were some controversies. We tried
to coordinate with the various
organisations in the United States such
as the American Natural Gas Alliance
that were doing advocacy for that.
Gradually, people grew more and
more excited to get involved because
they realized that something new was
happening.
The IGU was more of a fraternity
within the industry, but to properly
brand something we need buy in from
key global organisations like the World
Bank, the United Nations, Regulatory
Bodies and the International Energy
Agency. We also focused on attracting
the big multinationals and getting
them involved in the Union.
the next technological
frontier for natural gas...
We established regional coordinators
who would attend Executive
If it works well then it will be the next
area of gas development. It is just like
34
APR / MAY 2015
One thing to watch is FLNG, which
monetises marginal fields and stranded
gas. It needs someone to start it off
and I think PETRONAS has the right
strategy to kick start development in
this area.
the Floating Processing Storage
Offloading (FPSO) units, where
once it’s been proven, a new service
industry emerges.
Another area is shale gas. The U.S.
has a lot of factors contributing to
their success in that area, including
the market, infrastructure, service
providers and so on. The question
is whether it can be replicated
elsewhere. If that happens, a lot
more countries will have gas
available to them.
LNG from coal-bed methane (CBM)
is also under close observation. There
are three huge projects on CBM to
LNG currently ongoing in Australia
and it will be equally interesting
to see how the upstream industry
overcomes the challenges and
monetise the resource.
LNG for transportation is coming up
in a big way for sure. If you have the
option of cleaner burning natural
gas for transport, countries are going
to say, “Look, you are not going
to come into my port while you’re
still burning fuel oil and sputtering
smoke around.”
Slightly further on, another
interesting area of innovation will
be methane hydrates. There are
some pilot, experimental work
going on at the moment trying to
commercialise it. If that happens,
and is competitive, then the whole
world’s energy dynamics will change
drastically.
getting the next generation
aware and involved...
You have to start early with the
teaching of science, technology,
engineering and mathematics, then
gradually let the children become
more aware of what gas is all about
and why it’s so important.
Secondly, I think the industry needs
to come out more collectively
to reach out to school children.
There also needs to be consistent
messages, so that it doesn’t matter
which company does it, the
message is always the same.
Initiatives and achievements during the
2009 – 2012 Malaysian Triennium of the
International Gas Union
•
Moving the organization to be
more strategic in its outlook
while keeping the legacy work
intact
v Established Regional
Coordinators in four
regions worldwide
v Increased participation
of members in technical
committees up to more
than 900 people
v Introduced a Youth
Programme in World Gas
Coference (WGC) 2012
v Getting the organization
to be more active during
the triennium with
forums, roundtables,
seminars, workshops and
publications
v Publish more publications
to reflect IGU’s mission –
including 17 reports and 32
studies, in the three years
v
•
Increased IGU memberships
with the addition of nine
new Charter members and
14 Associate members
Making a case for gas through
advocacy
v Linking up with other
multilateral agencies
including the World
Bank, United Nations,
International Energy
Agency, Regulatory
Bodies, Eurogas and
American Natural Gas
Alliance to increase
visibility of natural gas
v Enhanced the
transformation journey
for the organization with
a new vision, a new logo
and the publication of the
Global Gas Vision
35
S imp l i f yi n g T echn ology
Proprietary in-house technologies have enabled us
to tackle some of the more difficult problems and
provide significant improvements in the quality of our
geophysical data.
Seeing The
Unseen
By Professor Helmut Jakubowicz
Going into the
‘underworld’ in search
of hydrocarbons is now
much less of a guessing
game thanks to the
latest advancements in
geophysical technology.
Uncertainties relating to geological
structure, the presence or otherwise
of hydrocarbons, as well as the
movement of fluids during production,
are the bane of oil and gas companies.
Geophysics plays a vital role in reducing
these uncertainties, but also faces its
own challenges in terms of different
geological settings and their impact
on geophysical data. This means
exploration and development often
take place without properly “seeing”
and understanding the subsurface, and
puts projects at high risk – especially
when determining the optimum
placement for wells.
The use of proprietary in-house
technologies developed by
PETRONAS’ GeoImaging group has
enabled us to tackle some of the
more difficult problems and provide
significant improvements in the
36
APR / MAY 2015
quality of our geophysical data. Recent
achievements include the following:
Gas Clouds
Problem: Shallow gas obscures deeper
targets, often making them invisible in
seismic images.
Solution: New workflows,
methodologies and tools based on
advanced theoretical concepts which
either compensate for the effect of the
gas on seismic data, or use special data
acquisition arrangements to avoid the
problem.
Result: Dramatic improvement of
images in areas affected by gas clouds,
eg. Bujang field.
Pre-Salt/Pre-Carbonate
Targets
Problem: Carbonates and salt bodies
act as lenses for sound energy,
resulting in poorly-focused seismic
images of deep targets.
Solution: First use full waveform
inversion to determine the structure
and properties of the lenses
from the seismic data, then use
this information to remove the
distortions using advanced imaging
methods such as full waveform
redatuming.
Result: Clearer images of deep
geological formations and features,
eg. Sepat.
Conventional seismic attribute display of the Angsi I-35 field (left) compared to a new enhanced RGB
attribute developed by GeoImaging (right). The new attribute provides much more information on
important channel features than the standard version.
Standard variance image of the Enau-ArengaPalma I-35 (top) compared to the new
GeoImaging Laplacian filter (bottom). The
new filter extracts significantly more detail on
subtle features than the standard approach.
DR ILLING
Seismic Reservoir Characterisation
Problem: Seismic data contain
important information and details that
cannot be seen directly using standard
interpretation techniques.
characterisation technologies that
highlight and enhance subtle features
related to facies and fluid changes.
Result: Application of a proprietary
Laplacian filter for enhanced
Solution: Advanced seismic
subsurface imaging of the Angsi
field and Enau-Arenga-Palma
prospects, as well as use of a new
waveform classifier to delineate
compartmentalisation in the
Bujang and Angsi fields.
Reservoir Monitoring
Problem: Technologies for time-lapse
surveillance and monitoring EOR
programs are not readily available,
resulting in inaccurate predictions of
fluidfront movement and bypassed oil
Solution: Geophysical reservoir
characterisation/imaging and fluid
prediction/monitoring using 4D timelapse seismic and/or non-seismic
technologies.
Result: The ability to delineate facies
distributions not normally seen in
conventional legacy seismic data, as well
as the determine fluidfront movement
and locate bypassed/undrained oil.
The incremental
water saturation
in the reservoir
at Mid 2006 in the
dynamic model
showed quite a
good agreement
with the 4D seismic
result.
Horizon slice of seismic data from the Bujang field showing the effects of shallow gas clouds
(left). The display on the right shows the waveform classification result for the same horizon after
implementation of a GeoImaging workflow. The new result reveals important details under the gas
cloud which were not evident in the original data.
Facies reservoir characterization provides more accurate information on producer-injector performance and infill well locations. Correlation and
integration between 4D time-lapse seismic data with dynamic reservoir model enhances prediction and imaging of fluid fronts from the injector wells.
37
PERSON AL I T Y SP OT L I GHT
“The only physically-challenging parts of the job are having to climb on piles
of oil well casings, which can be quite scary as it gets higher and higher, and
using the rope to swing onto the platform.”
Penny Chan
Drilling Supervisor
DR ILLING
38
As PETRONAS’ first female drilling supervisor,
25-year old Penny Chan is bravely blazing trails for
women in the industry.
You don’t need to
behave like a man
to survive in a maledominated industry.
As the first female
night supervisor in
Petronas, Penny
Chan has sometimes
found herself the only
woman on an oil rig
with more than 150
men. But she has taken
it all in her stride. In
fact, the experience
has made her a better
communicator and
leader.
By BRIGETTE ROZARIO
When flow interviewed her for this
story, the 25-year-old was more
than happy to share her unique story
of life on an oil rig. Amusingly, she is
APR / MAY 2015
always mistaken for a trainee rather
than a supervisor by many of the
men who have not worked with her.
She admits that the conversation
around her makes her a tad
uncomfortable at times, but rather
than just suffer in silence, she
makes her uneasiness known to her
colleagues.
“That happens sometimes but I
would talk to them privately and
tell them that I am not comfortable
with the conversation. I have done
this before. It was okay because
the guy was open about it and he
understood. We were talking like
friends,” she explains.
Chan was in the first batch of
petroleum engineering graduates
from Universiti Teknologi Petronas
(UTP) in 2011. While some of her
friends decided to play it safe by
taking other courses which aren’t
so specialised, Chan decided to opt
for the newly launched course in
petroleum engineering.
MAKING A NAME FOR HERSELF
Name: Penny Chan
Joined Petronas: March 2011
Offshore trainee: May 2011
Graduated All Rounded Drilling
(ARD) programme: December
2013 (awarded top scorer)
Assistant night drilling supervisor
for Sabah deepwater projects:
December 2013 – May 2014
Myanmar land rig: June – October
2014
Wakid-3 project (offshore Sabah):
November 2014 – current
Hobbies: Jogging, reading
(currently reading See Jane Lead:
99 Ways for Women to Take
Charge at Work by Lois P. Frankel)
39
PERSONALIT Y S P OTL I G H T
Oil in her blood
Her career choice becomes less
surprising when you find out that
her father has been working with
PETRONAS for more than 25 years
at one of its subsidiaries – Asean
Bintulu Fertilizer - and Chan had
her sights set on the national oil
company from a young age. She
received PETRONAS scholarships
after both her PMR (Penilaian
Menengah Rendah) and SPM (Sijil
Pelajaran Malaysia) exams.
Beyond legacy, Chan’s desire to take
on new challenges was also behind
her decision to become a driller.
“When I was studying in UTP, I had
not decided to go into petroleum
engineering or drilling. At that point
I just wanted to be in the oil and gas
industry. I love challenging myself so
hearing that it was a male-dominated
industry made me wonder why it was
a career for men,” she says.
On graduating from UTP, Chan
was offered a job at Petronas in
40
APR / MAY 2015
PE RS O NALIT Y S PO TLIG HT PERSON AL I T Y SP OT L I GHT
the drilling department as a well
engineer. She admits to being
disappointed initially as she had
hoped to become a petro-physicist
and have an office job.
She pondered asking for a change,
but after speaking with then general
manager, Rahimi Abdul Wahab,
she got a clearer picture of the job
scope, challenges and opportunities,
as well as potential career path.
Chan hasn’t regretted her decision.
The eldest of three siblings has been
working with PETRONAS for almost
four years now.
“I know that I made the right choice
because I really like it. Petronas
operates globally, so we have
the opportunity to travel. I was in
Myanmar last year for six months on
and off for two hitches,” she says.
Missing her family
Being one of the few women
onboard a rig, usually alongside
female trainees, is not as tough as
it seems. She explains that there
is now a separate bedroom with
attached bathroom just for women,
and all the new rigs now come with
a separate changing room for the
ladies.
In addition, the job is no longer as
physically-demanding as it was in
the past, as many of the processes
are automated.
“The only physically-challenging
parts of the job are having to climb
on piles of oil well casings, which
can be quite scary as it gets higher
and higher, and using the rope to
swing onto the platform. If the seas
are rough and you miscalculate the
swing, you may very well end up in
the sea instead!”
That’s basically what happened
while Chan was undergoing BOSIET
(basic offshore safety induction and
emergency training) in order to get
her licence to go offshore.
“I fell into the water three or four
times! Luckily, it was held indoors
DR ILLING
and it was just a swimming pool, and
not the sea!” recalls Chan, laughing.
The bigger challenge is being away
from family and friends and missing
important occasions. She had a
bitter taste of this sacrifice when her
grandmother died in September.
“I didn’t manage to go home in
time because it was tourist season
in Myanmar and it was hard to get
an air ticket. I ended up missing
her funeral. These are some of the
sacrifices that we need to make
sometimes. We will face hardship;
it’s up to us in how we cope with it.
Family support is very important,”
says Chan, who managed to find the
time to get married to her university
coursemate last year.
Her husband, who is with another
oil and gas company naturally
understands the nature of her work
and her passion for it.
“We haven’t had the conversation
about what to do when we have
kids,” she adds, giggling.
“I am looking forward to
leading in the complex
and challenging well
drilling situations,
and at the same
time developing and
mentoring the new batch
of young engineers.
Of course, there is still a
lot for me to learn before
I can go down that path.
I will have to work harder
for that.”
Winning respect
For now, she is focused on her job and, in
particular, winning the respect of her peers.
Chan believes it’s just a matter of using her
talent and skills to prove her worth.
“From being on the rig you will learn
about rig psychology. From there
you will learn how to get along with
everyone else and talk with them.
Slowly, they will show you respect
and you will know each other’s
strengths and weaknesses,” she says.
Chan is determined to be
PETRONAS first female drilling
superintendent and help the
company become more efficient.
She adds: “There is always new
technology coming in so we are
constantly thinking of how we can
drill a well safer, cheaper and faster.
I wouldn’t mind being in the role of
superintendent for a long time as it
would be challenging.”
“I am looking forward to leading in
the complex and challenging well
drilling situations, and at the same
time developing and mentoring
the new batch of young engineers.
Of course, there is still a lot for me
to learn before I can go down that
path. I will have to work harder for
that.”
41
MARKET AN ALYSI S
MARKET ANALYSIS
“Near-term Malaysian deepwater
projects will not be deterred by low oil
prices” says Dylan Mair, Senior Director of
Upstream Research and Consulting.
By IHS Energy
42
APR / MAY 2015
43
MARKE T ANALYS I S
MARKET AN ALYSI S
37% of the projects are expected to
Deepwater Production And Operating Coast In Asia Pacific
mboe/d
fall below positive development forward NPV.
E&P companies worldwide have already begun
implementation of strong cost cutting measures.
800
India
600
Malaysia
400
Indonesia
$13.60/boe
2000
2003
2006
This resulted in relatively unchanged
margins for the operators during
the high oil price environment. As
improvement in technology led
to significant volumes of shale oil
production from North America which
drove oil prices down, E&P producers
are now reacting by reassessing their
global portfolio and reducing capital
APR / MAY 2015
2009
2012
$12.90/boe
2015
spending. We look at the impact this
has on deepwater developments in the
Asia-Pacific (APAC) region and more
specifically its impact on Malaysia.
SHORT AND LONG
Short-term regional production is
likely to remain unchanged. Projects
in production or in development,
where significant capital costs have
been sunk (i.e. in construction), are
expected to proceed as planned. Only
when oil price is persistently below
operating costs, which is estimated to
be below $15/boe for the APAC region,
is production from this category
expected to be impacted.
In the longer-term, sustained low oil
prices could potentially delay project
sanction of deepwater and complex
field developments such as high CO2
and HT/HP, which in turn will impact
the long-term deepwater production
outlook.
Source: IHS
In Malaysia, commitment from
PETRONAS and its partners coupled
with favourable development costs
are likely to mitigate the impact of
low oil prices on major deepwater
developments. The lesser capital
commitment required for EOR will
raise the priority of such projects
here.
A more immediate impact of low
prices would be the reduction in
exploration activities. In the current
price environment, it may be harder
for international oil companies to
justify undertaking exploration risk,
especially in technically challenging
and frontier plays. This, coupled
with distressed assets potentially
coming on sale, is likely to limit
exploration drilling to fulfillment
of work commitments. Looking
beyond upstream, low commodity
prices provide an opportunity for
Southeast Asian governments to
reduce subsidies without hurting
consumers, which ameliorates
the impact of low commodity
prices on revenues for integrated
National Oil Companies (NOC).
ASIA-PACIFIC DEEPWATER ECONOMICS ($70/BBL OIL)
100%
Sharp decline in oil price
unlikely to impact shortterm deepwater production
Global demand for energy is not
expected to increase significantly
despite low oil prices. Thus, the
burden of a correction lies in
supply. The short-term deepwater
production outlook for APAC
is not expected to undergo
significant changes from earlier
projections as producing projects
and developing projects almost
onstream remain on target. With
significant capital cost accrued
at the beginning of the project,
suspension or termination of
existing projects is only expected
if oil price stays persistently below
operating cost.
80%
Percentile
Australia
Rising oil prices over
the past decade have
incentivised Exploration
& Production (E&P)
companies to target
frontier plays such
as deepwater, the
arctic, East Africa, and
unconventional resource
plays as conventional
onshore and shallow
water plays mature.
44
$11.40/boe
Philippines
200
0
$12.30/boe
60%
40%
20%
0%
-$4.00
$0.00
$4.00
$8.00
Development Forward NPV ($/boe)
Unsanctioned
Sanctioned
$12.00
Producing
Source IHS
Source IHS
45
MARKE T ANALYS I S
MARKET AN ALYSI S
Among a sample pool of 20 deepwater projects
in Asia-Pacific, Malaysia also boasts the lowest
average operating cost of $11.40/boe.
DEEPWATER PROJECTS IN ASIA PACIFIC
Malaysia is forecast to be the
largest source of APAC deepwater
production growth in the shortterm, underpinned by the Shelloperated Gumusut-Kakap project
and PETRONAS joint-operated
Kebabangan Gas Project that was
successfully brought onstream in
December 2014. Among a sample
pool of 20 deepwater projects in
Asia-Pacific, Malaysia also boasts
the lowest average operating cost of
$11.40/boe.
Sustained low prices
potentially impact long-term
production growth
The impact of sustained low oil
prices on NOCs is less severe within
integrated domestic operations.
However foreign-run upstream
projects may face greater scrutiny.
NOC drivers include national social
46
APR / MAY 2015
and energy security commitments;
thus, domestic investments are more
likely to continue. This, combined
with relatively lower development
cost compared to other countries
in the region suggest that there will
be minimal project deferments in
Malaysia.
Exploration to be impacted by
low prices
IHS believes is that given the current
low price environment, companies
will continue to target low cost
and low risk drilling prospects
while fulfilling their exploration
commitments.
For example, PETRONAS and
its partners are expected to drill
additional exploration wells in
deepwater block CA2 in Brunei in
the near-term, seeking upsides to
the Kelidang Northeast 1 discovery.
In November 2014, PETRONAS
launched a licensing round where
three deepwater (W, X and 2K) blocks
located in offshore Sabah were
offered.
While domestic exploration is
not immune to cost controls, it
is expected that PETRONAS will
continue its domestic exploration
programmes in pursuit of reserve
replacement.
Deepwater remains critical to oil
and gas production in Malaysia,
forecasted to provide 30% of national
oil production in 2020. Sustaining
activity through a period of low
oil price will require commitment
by PETRONAS and partners
to exploration and long-term
developments through effective and
efficient collaboration.
47
INNOVATION
I N N OVAT I ON
Partnering
for Profit
Production Sharing Contracts have been
key in the growth of Malaysia’s petroleum
resources for the past two decades.
Since its introduction almost 40 years ago,
Malaysia’s production sharing contract (PSC)
scheme has been a key platform for the growth
of the country’s oil and gas sector.
What is a
PSC?
PSC or Production
Sharing Contract serves as
a vehicle for partnership for
PETRONAS and multnational oil
& gas companies in conducting
hydrocarbon exploration &
production activities in
Malaysia.
PSCs set out the arrangements
for co-operation between
PETRONAS, which assumes the
role of a regulator, with qualified
oil companies as contractors for
the exploration, development
and production of petroleum
in a contract area for a specific
duration.
It is used to engage capable oil
and gas companies to participate
in the development of Malaysia’s
petroleum blocks, covering the
entire upstream value chain.
48
APR / MAY 2015
Prior to 1974, the Government, under
a concession system collected, tax
from oil companies which were
granted rights to explore and develop
petroleum resources with leases of up
to 40 years or more.
In 1974, the Petroleum Development
Act (PDA) vested PETRONAS with
the ownership and control of all
hydrocarbon resources in Malaysia.
This led to the adoption of PSCs to
replace the Concession Agreement
in 1976 so that the nation could play
a more direct role in controlling
DR ILLING
and managing its petroleum
resources. The first PSC was
awarded in 1976 to Esso for the
Duyong oil field in Terengganu.
Unlike the old concession
system, the key advantage
of the PSC is that it allows
PETRONAS to have input
in strategic and operational
decisions, ensuring that the
operations are aligned with the
group’s business objectives and
nation building agenda.
Malaysia has awarded over
150 PSCs since the inception
of the scheme in 1976, of
which more than 100 are
currently actively managed by the
Malaysia Petroleum Management
organisation in PETRONAS.
MALAYSIA: SOCIO
ECONOMIC BENEFITS
MALAYSIA: UPSTREAM
KM
of Upstream
Pipeline
billion BOE
of Discovered
Resources
billion *
of Total
Upstream
Investment
OVER
7000
22.2
330
22.2
billion BOE
of Discovered
Resources
100
PSC’s
10
132
Producing
Fields
4,000+
20%
Contribution to
GDP
(2012)
100
Oil and Gas Service
Companies
PSC’s
14
billion BOE
Production
Terminals
320
Offshore
Platforms
1,587
WORLD
RANKING
#34 Oil
#21 Gas
KBOE/D
Annual
Production
Rate
in 2012
215 billion
Kilometres traveled in a car
20,000
From 27 PSC
Contractors
(Proven Reserves)
49
INNOVATION
I N N OVAT I ON
“PETRONAS has shown tremendous growth
in its employees’ technical capabilities. The
company is bold and willing to take calculated
risks in unconventional energy. It is also a
professionally-run organisation that operates
like an international oil company.”
A Fruitful
John James
Vice President, Murphy Malaysia
Relationship
flow speaks to Mr John James, Vice President,
Murphy Malaysia, about his company’s experience as
one of the contractors under Malaysia’s PSC scheme.
DR ILLING
1.Tell us how your
partnership with
PETRONAS came about?
50
APR / MAY 2015
In the late 1990s, Murphy was
looking to expand its business
into Asia and was looking for
a strategic partnership in the
region. At the time, PETRONAS
was encouraging participation
from small to medium
sized independent oil & gas
companies and focusing on
development of marginal and
deepwater fields.
Murphy wanted to leverage on
its deepwater experience in the
Gulf of Mexico. Malaysia has
the geographical advantage:
large reserves, a well-defined
oil and gas ecosystem, political
stability, sound economic
policies, good regulatory
framework and well-developed
infrastructure. It was a good
business fit. All these factors
combined made it ideal for
us to enter Malaysia. As such,
we signed our first PSC with
PETRONAS on Jan 27, 1999
for Blocks SK309, SK311 and
Deepwater Block K.
2. Can you describe the
terms of the PSC and how
has it performed since its
inception?
The PSC created by PETRONAS
is a comprehensive and dynamic
document which provides
fair opportunities for both the
investor and the owner of the
resource. Its terms promotes
sustainable exploration,
development and production of
natural resources. It also covers
the long term development of
the country’s petroleum resource
for the benefit to the nation and
is a good way to bring in foreign
investment and technology.
field, which began production
in 2003, two and a half years
after discovery, which was a
benchmark for us.
The Kikeh deepwater field
offshore Sabah, the first
deepwater development for
Malaysia, came onstream 5
years from discovery – another
benchmark.
In all of our development
projects, we have received
tremendous support from
PETRONAS, which assisted us
significantly in making these
projects successful.
3. What has the experience
of working with PETRONAS
been like so far?
4. What have been the some
of the challenges under
the PSC and how were they
overcome?
It has generally been good.
PETRONAS Carigali is a strong
partner and a professionally
run company. PETRONAS as a
regulator has been supportive of
our ongoing activities.
Murphy’s initial success in
Malaysia was the West Patricia
Undertaking the first deepwater
development in Malaysia, Kikeh,
was very challenging. We were
managing one of the largest
resource developments in
Southeast Asia and bringing in
deepwater technology which
was then new in the country
and region.
51
INNOVATION
I N N OVAT I ON
PETRONAS has
shown tremendous
growth in its
employees’ technical
capabilities. The
company is bold
and willing to take
calculated risks in
unconventional
energy.
How is a PSC signed?
How is a PSC signed
52
There were a lot of unchartered
territories and new engineering
challenges; contracting work
was being carried out on a
global scale in a multitude of
places. PETRONAS’ support was
vital in making the project a
success.
In overcoming these challenges,
effective project management
is key. There were synergistic
efforts between partners and
Murphy in sharing of best
practices and knowledge. These
include a small team approach
that allows for timely decision
making and accountability. This
work culture allows us to come
up with innovative methods and
technology application.
More recently, one of the
main challenges in 2013 was
bringing five fields under our
Sarawak Development team
into first production. In the
face of multiple deadlines, the
application of lessons learned
from Kikeh, West Patricia, and
APR / MAY 2015
establish
contact
data
review
the SK Gas Phase 1 project
into these projects’
execution strategy and
operational philosophies were
instrumental in bringing these
fields online.
5.How has the structure
of the PSC benefited
your company?
The PSC provides for an
equitable partnership. It is
also well defined in terms
of contractual period,
management of operations,
cost recovery, division of profit
and obligations of parties. It is
structured in such a way that
it provides a fair risk-reward
scenario.
However, I think we need
to continue to look at more
innovation in terms of sharing
risks and rewards, especially
now that exploration and
production efforts are
becoming increasingly
challenging and complex.
bidding
award
PSC
signing
For shallow water
development, the Revenue
Over Cost concept is
good and innovative – it
encourages the PSC to
continue investing in the
development of both green
and brown fields.
For deepwater development,
the fiscal terms provide fair
returns relative to the risk
taken in the exploration and
development of a deepwater
field.
6.
What do you think are
PETRONAS’ key strengths
as a partner?
PETRONAS has shown
tremendous growth in
its employees’ technical
capabilities. The company
is bold and willing to
take calculated risks in
unconventional energy. It
is also a professionally-run
organisation that operates like
an international oil company.
TYPES OF PSCs IN MALAYSIA
PETRONAS has introduced a variety of PSCs including
contracts for Deepwater, Revenue-over-Cost (R/C), HighPressure/High-Temperature (HPHT) and Progressive
Volume Based (PVB).
1976 PSC – Used as a contractual
vehicle to convert pre-1974
concession agreements into
Production Sharing Contracts, in line
with the enactment of PDA 1974.
1985 PSC – Incentives to attract
more foreign investments, which
included a higher cost ceiling
and sliding scale profit split, were
introduced. For the first time, the
contract also mandated a minimum
level of PETRONAS’ participation,
through PETRONAS Carigali.
DR ILLING
All decision making on oil
and gas matters rests with
PETRONAS, unlike some
countries where decision
making lies with multiple
parties, such as the national
oil company, a host of
ministerial departments and
government agencies.
Being a global player as well
as an operator, PETRONAS
understands the perspective
of an investor.
7.How do you see your
partnership with
PETRONAS evolving?
We are partners with
PETRONAS in Brunei and
also in Suriname. We would
like to extend this working
relationship to other parts of
the world.
This dovetails with Murphy’s
strategy of being a preferred
partner to national oil
companies.
Deepwater PSC – Introduced
to spur and intensify activity
in deepwater blocks where
prospectivity is higher compared
to shallow water but also riskier.
More technology and capital
investments are also required. The
PSC features a higher cost ceiling
to accommodate higher capital
costs and better profit split to PSC
Contractors to encourage major
players with deepwater experience
to invest.
Progressive Volume Based (PVB)
PSC – The PVB PSC was recently
introduced to encourage
investments in the redevelopment
of matured fields. This fiscal
arrangement is volume-based
and progressively increases profit
sharing in favour of PSC Contractors
based on cumulative production
volume. This mechanism ensures
PSC Contractors are given sufficient
incentives to pursue further upsides
in matured fields in the most cost
efficient manner.
Revenue-over-Cost (R/C) PSC –
This was introduced to encourage
PSC Contractors to be more cost
effective in view of increasing
cost of materials, as well as
to promote the application of
new technologies for higher
risk plays. Profit split and cost
recovery tranche for R/C PSC
are determined by a profitabilitybased sliding scale fiscal regime.
High-Pressure/High-Temperature
(HPHT) PSC – An enhancement to
the R/C PSC, this contract includes
reservoir depth as a trigger for
better profitability sliding scale.
It was introduced to attract
investments from technologydriven multinational oil companies
to explore deeper reservoirs that
are high risk as it typically operates
at extremely high temperatures
and pressures.
53
SUSTAI N ABI L I T Y
Watch the BEACON
project video on PETRONAS
YouTube Channel
“By installing the reef balls, we hope to improve
the marine life and perhaps the local fishermen
can get more fish.”
Azizah Mohd Deli
Chairman of the BEACON Project Taskforce
Walk along the coastline
of Similajau National
Park, the beauty of the
blue skies and golden
sand can lull one into
a comforting sense of
serenity. The waters
off this picture-perfect
postcard, however, tell
an entirely different
story.
For the past 20 odd years, the corals in
the waters here have been dying, the
number of fish dwindling and scores of
turtles found dead on the beach; and
all because of the fishing by trawlers
that takes place here. It didn’t use to be
this way.
Marine biologist James Anak Bali,
an official with the Sarawak Forestry
Corporation (SFC), remembers the first
time he dived at the age of 20. He was
exposed to marine life of all shapes,
sizes and colours; as well as corals that
appeared in hues that only seemed to
exist underwater. It was the allure of
this underwater paradise that led to
him become a marine biologist.
“Watching the ocean’s rich marine
life decline over the years really upset
me. The trawlers and their dragnets –
they’ve destroyed a lot of the corals
here,” he says.
“When the corals die, the marine
life goes with it. They’ve fished here
undeterred for so long, even the turtles
have suffered. Once tangled in the
dragnets, they don’t stand a chance.
Fewer and fewer make it to shore to
lay eggs,” explains James.
A BEACON
HOPE
OF
An ambitious project to save the corals off
Similajau National Park from trawlers’ nets is
already showing impressive results.
By BRIGETTE ROZARIO
54
00
APR / MAY 2015
55
00
SUSTAINABILIT Y
7
9
1
8
6
1 Displaying the reefballs
2 BEACON Project divers cleaning up the reef
3 Participant at the Friends of Nature camp
in 2014
4 The team building turtle hatchery
5 A reefball being lowered into the sea
2
5
6 Mind-mapping and preparing for a
presentation at the Friends of Nature camp
7 Friends of Nature participants shoveling
Similajau National Park
8 MLNG staff shaveling sand for the
construction of the hatchery
9 BEACON Project members cleaning up the
beach
He sits on the taskforce committee
of the Biodiversity, Environment &
Conservation (BEACON) Project, an
initiative aimed at saving the corals
from the trawlers. The project was
initiated by the Malaysia LNG Group
of Companies (MLNG), with the SFC
providing technical expertise and
consultation.
Says Oswald Braken Tisen, the general
manager of SFC’s Protected Areas and
Biodiversity Conservation division:
“We had a high number of dead turtle
reports per year, in the region of about
100 in Sarawak alone, and the main
cause was illegal trawling. The turtles
would get caught in the trawlers’
dragnets and they would drown.”
56
3
4
Reef Balls to the Rescue
In the 1990s, the SFC discovered
artificial reef balls – big and heavy,
and made of a special material that
mimics natural limestone. Their rough
texture encourages corals, algae and
other micro-organisms to settle and
propagate on them. More importantly,
the reef balls act as a deterrant to
56
APR / MAY 2015
trawlers because their dragnets get
caught on their rough surface and tear.
These artificial reef balls have been
placed in various areas along the
Sarawak coastline, and now through
the BEACON Project, which was
conceptualised in 2012, they want to
do the same in the waters off Similajau
National Park.
Azizah Mohd Deli, chairman of the
BEACON Project Taskforce and
also a staff engineer at MLNG’s HSE
Department, Environment Section,
explains that the project consists of
two parts. The reef ball deployment is
a three-year project that aims to place
1,500 reef balls, while the Conservation,
Education, Promotion and Awareness
(CEPA) programme will last the duration
of the whole project. A total of RM4.7mil
is being invested for the three-year reef
ball deployment project alone.
According to Azizah, 1,000 reef balls
have already been planted in the
Similajau National Park in the past two
years. This year, another 500 balls will
be deployed.
Not All Smooth Sailing
There were some early teething
problems, such as getting the two
partners behind the BEACON Project
on the same page. SFC consists
primarily of environmentalists and
conservationists, while MLNG staff
speak the language of the oil and
gas industry. Previous initiatives to
minimize environmental impact were
centred around improving plant
operations.
“Now, if you talk to MLNG, they talk like
me; they are very much focused on
conservation,” says SFC’s Braken.
Planting reef balls is also a lengthy
process as divers need to survey the
area, find the right spots and mark
them. Typically, the entire process of
dropping a total of 250 reef balls can
take up to 10 days.
Finding sufficient numbers of qualified
divers was another challenge. To
overcome this hurdle, MLNG has been
providing diving lessons to get its staff
certified as licensed divers. The divers
57
SUSTAINABILIT Y
“Places like the Similajau National Park are part of the turtle highway. So the
conservation of turtles is not just local work; it’s about regional work as well
as international collaboration.”
Oswald Braken
General Manager of SFC Protected Areas
were mainly members of MLNG’s I
LOVE Volunteering group, passionate
people from MLNG who had been
giving their time to a variety of causes
before the BEACON Project began.
One such volunteer is MLNG fire marshal
Wahed Kep, 54, who always wanted to
learn to dive. He started diving at the
age of 10, albeit in the “kampung” style.
It was only in April 2013, at the age of 52
that he became a certified diver because
of the BEACON project.
“I was very nervous. The first time I hit
the water, I was very, very unlucky. My
adjustment was incorrect, and I only
had a half metre of visibility. I could
not enjoy the experience much, but I
enjoyed my nervousness in the water,”
says Wahed light-heartedly. Thankfully,
he was not deterred and after several
dives, he is now looking forward to
his next big underwater challenge –
decoration and landscaping. The divers
will have to manually lift the 2.5 tonne
reef balls using air bags, in limited
visibility conditions underwater, all to
create a landscape with the best value
for marine life.
According to Azizah, BEACON
is MLNG’s first Corporate Social
Investment project that focuses on
environmental conservation. “By
installing the reef balls, we hope to
improve the marine life and perhaps
the local fishermen can get more fish,”
she says.
“Divers say Bintulu has beautiful corals
so we should protect the marine life
here. MLNG has been operating in
Bintulu for more than 30 years and this
is part of PETRONAS’ contribution for
the people of Bintulu.”
Building Awareness
Education and awareness through the
CEPA programme is equally important,
she adds. One of its initiatives is a
three-day long programme for Form 4
students called Friends of Nature, where
the children are exposed to nature and
taught about conservation.
The results of BEACON’s reef ball
project have been positive so far. The
number of dead turtles on the beaches
has been reduced to less than 10 a year.
Last year, turtles were spotted feeding
very close to the coastal area; a rare
sight as recently as five years ago.
Various species of dolphins were also
spotted in the waters, including the
Indo-Pacific bottlenose, Long-Snotted
Spinner, Pan-Tropical Spotted and
Dwarf Spinner. This is the first time that
the Dwarf Spinner dolphin has been
reportedly sighted in Sarawak waters.
“Places like the Similajau National Park
are part of the turtle highway. So the
conservation of turtles is not just local
work; it’s about regional work as well
as international collaboration,” says
Sarawak-born Braken.
He adds: “One of the important aspects
of conservation is education and
awareness. Once you appreciate the
gift, you will protect it. Conservation
is a very simple thing that people can
contribute to, for example by not
littering. Things like plastic end up in the
ocean, where fish, birds, turtles or even
crocodiles eat them, mistaking them
for food. The plastic would clog their
digestive system and kill them in the
process.”
BEACON AT A GLANCE
BEACON Reef Ball Project
• 1,500 reefballs over 3 years
(2013-2015) amounting to
RM4.7 million
Conservation, Education,
Promotion and Awareness
Programme
• BEACON Cetacean Aerial and
Boat survey
• Friends of Nature
• BEACON Divers Training
• Turtle Hatchery & Conservation
Programme
• Beach & Reef Cleaning
Programme
58
APR / MAY 2015
59
DEEP WAT ER
PROVING
ITS METTLE
IN THE
DEEP
When PETRONAS took over the running of the
Chinguetti field in Mauritania in 2007, production
had been falling rapidly and prospects for the
West African country’s only producing field
looked dire.
Chinguetti had achieved its first oil
on 24 February 2006, but within a
few months production rates had
plunged from 75,000 barrels per
day (bbl/d) to 30,000 bbl/d due to
a lack of pressure support. By the
time PETRONAS entered the picture
through it’s through its whollyowned subsidiary PC Mauritania 1
Pty. Ltd. (PCMPL), production had
fallen further to just 11,000 bbl/d.
Given the rapid production decline,
coupled with high operation
expenditure and decommissioning
costs, the field was expected
to reach its economic limit in 2013
if nothing was done to reverse the
situation.
Significantly, PETRONAS’ operations
at Chinguetti were the first for the
company involving Subsea Production
systems (SPS). To boost production,
PCML implemented an aggressive
development and intervention program
involving both drilling and intervention
activities in 2008.
The field was developed in two main
phases, using subsea wells located
within manifold-templates that are tied
back to a Floating Production Storage
and Offloading (FPSO), the Berge
Helene.
PETRONAS’ successful
intervention campaigns at the
Chinguetti field in Mauritania
have proven its ability to handle
deepsea operations under
challenging conditions.
60
00
APR / MAY 2015
61
00
DE E PWAT E R
DEEP WAT ER
To boost production, PETRONAS implemented
an aggressive development and intervention
program involving both drilling and intervention
activities.
More on PETRONAS
Deepwater projects on our
YouTube channel
Firsts for PETRONAS at Chinguetti
1
Deepwater subsea
development well
(infill) drilled
1
Deepwater subsea
Christmas tree installed
1
Deepwater well with
level 1 smart well
technology (Permanent
Downhole Gauge)
installed
st
st
st
Well intervention activities.
Chinguetti SPS facilities layout
Effective Teamwork
Key to the project’s success was the
support rendered by PETRONAS’
Projects & Engineering Division in the
form of subsea engineering resources
and capabilities to PCMPL.
Through effective planning,
collaboration and teamwork between
PCMPL, the subsea engineering team
and facilities team in Mauritania’s
capital Nouakchott and in Kuala
Lumpur, the decline in production was
slowed to just 7 per cent a year instead
of 26 per cent previously.
The first campaign in 2008 consisted of
drilling an exploration well in Sub-Block
C6 and two appraisal wells in Banda
gas field. A development campaign
of Chinguetti field was also executed,
involving drilling two infill wells and the
intervention of three wells to increase
the production to 15,000 bbl/d.
62
APR / MAY 2015
PCMPL had set-up a multi-disciplinary
Project Management Team (PMT) to
manage this first campaign, comprising
of members from the drilling, facilities,
subsea and the petroleum engineering
disciplines. The Subsea Engineering
team was established in Nouakchott
in March 2008 to plan and execute
the well intervention and infill well
development activities.
This team consisted of two dedicated
subsea engineers and two underwater
engineers based in-country who
were supported by another team in
Aberdeen, UK, made up of two subsea
supervisors, two underwater engineers
and a subsea package engineer. The
team members worked on a rotational
basis with engineering support
provided by the Subject Matter Experts
(SMEs) based in Kuala Lumpur.
The well intervention program offered
a great opportunity for PETRONAS’
young subsea engineers to participate
and gain first hand experience in the
planning and execution of the well
intervention activities. Additionally,
the engineers were also involved in
the infill development campaign that
included drilling and well completion
activities for the two infill wells.
The successful completion of the
campaign resulted in the increase
of the crude oil production for both
wells by 2,400 bbl/d and 3,500 bbl/d
respectively, which contributed
significantly to the overall production
levels of the Chinguetti field. Notably,
this was achieved without any
recorded Loss Time Injury (LTI).
The successful execution of the first
campaign resulted in similar programs
by PCMPL in 2009, 2010 and 2012,
aimed at sustaining production levels
and maintaining the economic viability
of the field.
1
Run Anchors
6
Run & Set
HPI Plug
2
Rig Up &
Run
CDP / LRP
7
Run E-Line
Dump Bailer
3
Slick Line
Drift Run
4
Change GLV
5
Rig Up
E Line
8
Bullhead
Water Glycol
to EDP / LRP
Conduct Test
9
Disconnect
EDP / LRP
10
Disconnet
Achors
Activities involving Subsea Engineers
Rig Up &
Run
EDP / LRP
• Subsea team’s preparation work prior to the execution of well intervention scope.
• This includes ROV readiness, inspection of final valve position on the XMT, removal of XMT cap, installation of annulus reeler,
deployment of EDP (Emergency Disconnect Package) / LRP (Low Riser Package) assembly, locking of assembly to XMT and
testing activities.
Bullhead
Water Glycol
to EDP / LRP
Conduct Test
• Activities carried out after the completion of well intervention scopes.
• This ensures that all well protection barriers (XMT valve and SCSSV (Surface Control Subsurface Safety Valve) are intact and in
good condition before being handed over to Operations (FPSO)).
Disconnect
EDP / LRP
• Final handover activities performed prior to ‘releasing’ the well back to Operations (FPSO).
• This consists of the disconnecting of LRP EFL (Electrical Flying Lead) from the XMT, unlocking of EDP/LRP from XMT, recovery
of risers, installation of the XMT Cap and installation of EFL from manifold to SCM (Subsea Control Module) at XMT and lastly,
monitoring of the XMT and manifold valves commissioning from FPSO.
63
DE E PWAT E R
Christmas Tree being installed through the rig’s moonpool
Overcoming Challenges
The key challenge in operating
the Chinguetti field was its
geographically remote location,
and the limited availability of local
resources. This meant that technical
support services and vessels required
for the intervention campaigns had
to be sourced from other regions.
Despite this and other challenges,
the planning and execution of the
development and intervention
campaigns were conducted
successfully. The completion of the
subsea intervention work, ahead of
schedule and below budget, was
64
APR / MAY 2015
PETRONAS Subsea Engineering Team in Chinguetti Field
attributed largely to the dedication
and hard work of the team comprising
of the PMT, subsea engineers and
operations team.
For PETRONAS, the experience
at Chinguetti has benefitted the
company not only in terms of
asset value but also in capability
development, particularly in the area
of subsea engineering capability,
which was key to supporting
deepwater operations. On a broader
level, PETRONAS’ achievements in
Mauritania have demonstrated the
company’s ability and readiness
to handle any other deepwater
operations in the group’s portfolio.
The
Chinguetti
field lies 80 km
offshore Mauritania and
lies in water depths of between
700 to 960 meters, qualifying it as
a deepwater operation. PETRONAS
acquired its stake in the asset from
Woodside Petroleum in December
2007. It currently holds a 47.38 per
cent share, with the remainder
owned by Tullow Oil, Kufpec,
Premier Oil and an entity
owned by the Mauritanian
Government.
65

flow, Volume 02

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