KUCHING: Sarawak’s oil and gas (O&G) sector looks to be in for a fairly active future ahead as more activities are being lined up, with two notable developments coming along off the coast of Sarawak.
Chiong Tong Chai, an analyst from the research arm of BIMB Securities Sdn Bhd (BIMB Research) yesterday cited an industry-related media report which stated that O&G player JX Nippon was on track to develop the Layang field in Block SK10 field using a floating production, storage and offloading vessel (FPSO).
While tender for the front-end engineering and design (FEED) studies was expected soon, the operator had commenced its market survey for the FPSO, which was likely to be an Aframax-sized vessel, generally defined as being mid-sized between 80,000 and 120,000 metric tonnes.
“Formal tender for the FPSO is expected in the second half of this year with conversion scheduled to take place earliest end of 2013. The FPSO is also expected to be paired with a new wellhead platform.
“Processed gas will be sent through flexible pipelines from the production vessel to the nearby Helang platform before being exported to the Bintulu LNG plant. Crude and condensate will be offloaded using shuttle tankers,” the analyst stated in citing the report.
Remarking on the development, Chiong noted that although details remained sketchy on the size of the field’s reserves, given the estimated daily production of 75 million cubic feet per day of gas and 8,000 barrels per day of liquids and the Aframax size of the vessel, the FPSO leasing contract would likely to be less than RM1 billion.
“Development progress made for this field has been very encouraging since our last update in August 2011 and given the current market survey made by JX Nippon for the FPSO, it is likely that both the leasing contract for the vessel and the construction of the wellhead platform to be awarded earliest this year.
“As usual Bumi Armada Bhd, MISC Bhd, M3Nergy Bhd, TH Heavy Engineering Bhd (TH Heavy), Malaysia Marine and Heavy Engineering Bhd (MMHE) and SapuraKencana Petroleum Bhd are some of the names likely to benefit from the development.
“While the award of FPSO contracts was slow in 2012 both globally and locally, players within the value chain remain bullish on the demand for floating production solution with Hyundai Heavy and Samsung Heavy being the latest to come out projecting 52 per cent and 32 per cent increase in new order for 2013, with offshore drilling and production facilities being the main drivers,” the analyst stated.
In another development, national oil corporation Petroliam Nasional Bhd (Petronas) has reportedly issued a tender for a parallel conceptual study on the K5 – estimated recoverable gas resource of between three to four trillion cubic feet – high carbon dioxide (CO2) gas development that is being carried out jointly with France’s Total SA (Total), off Sarawak.
The project partners were understood to have started internal studies on a proposal to bring the K5 gas to an onshore facility near the Bintulu liquefied natural gas plant for processing. However, Petronas was said to have approached the market late last year for a second proposal calling for offshore development option.
The offshore development concept currently included a central processing platform, two gas compression platforms and two wellhead platforms; Petronas and Total would jointly evaluate the results of the conceptual studies on both the onshore and offshore proposals which would then follow up with a FEED. Sources had pointed development cost could hit US$2 billion.
“As CO2 is corrosive, the tubing, pipes and pumps for sour gas must also be made from special metals. Also, additional facilities are required to separate, process and re-inject the CO2 to ensure no/minimal carbon release to atmosphere as well as to support well’s pressure.
“As such, development cost is also higher than the normal gas fields (rank lower in terms of development priority). Future developments will continue to see more transfer of advanced technologies from established foreign players,” Chiong elaborated to The Borneo Post.
Noting that BIMB Research had previously mentioned commercialisation of K5 would be the first development in Malaysia with CO2 content of more than 50 per cent, Chiong said the current status was still at preliminary stage and would need to be further pushed to FEED level before local O&G services providers could see tender activities from this project.
“While tenders will also likely to see participation from foreign contractors, particular within fabrication space (Hyundai Heavy for one has recently indicated it will aggressively market its products to win more jobs), we still see local players naturally have a better chance of winning.
“Likely beneficiaries include, MMHE, SapuraKencana, TH Heavy (recently teamed up with McDermott to improve the company’s bidding strength), Wah Seong Corporation Bhd and Alam Maritim Resources Bhd,” the analyst opined.