Oil Search uses technical innovation to tackle tough terrain

PAPUA New Guinea was once seen as an area of declining petroleum exploration and production activity, but Oil Search now sees many more opportunities for increasing oil and gas reserves in the Papuan Basin than it did 18 months ago. By RICK WILKINSON
<img src=http://www.energyreview.net/web_images/MNN_PNGResFocus_sm.jpg border=0 ><BR>
Oil Search uses technical innovation to tackle tough terrain <img src=http://www.energyreview.net/web_images/MNN_PNGResFocus_sm.jpg border=0 ><BR>
Oil Search uses technical innovation to tackle tough terrain <img src=http://www.energyreview.net/web_images/MNN_PNGResFocus_sm.jpg border=0 ><BR>
Oil Search uses technical innovation to tackle tough terrain <img src=http://www.energyreview.net/web_images/MNN_PNGResFocus_sm.jpg border=0 ><BR>
Oil Search uses technical innovation to tackle tough terrain <img src=http://www.energyreview.net/web_images/MNN_PNGResFocus_sm.jpg border=0 ><BR>
Oil Search uses technical innovation to tackle tough terrain

At the front of the development queue, the South East Mananda oil field development is nearing completion.

South East Mananda illustrates Oil Search’s growing confidence in the region and its ability to tackle the precipitous highland terrain. It is significant on several fronts.

For a start it is PNG’s first new oil field development in a decade. It is also the company’s first new oil field development as an operator in the region since buying Chevron Niugini’s assets for US$97 million in October 2003.

In addition, it incorporates a technical audacity that stands out even in a region where amazing engineering feats are now commonplace.

South East Mananda was found by Chevron in 1991 and confirmed with a second well soon after. But reserves were disappointingly small and the prospect was considered too topographically challenging to enable economic development.

When Oil Search took over in 2003 it reassessed the reserves and came up with a figure of 30 million barrels of oil in place, a third of which could be considered recoverable. Ordinarily this would make the field marginal at best. But then a shift in PNG’s tax regime to enable pre-2001 undeveloped discoveries to receive a 30% tax rate, rather than the previous 50%, put the economics on a better footing.

Nevertheless, the field’s viability still depended on a low-cost development technique that was innovative enough to overcome the physical barrier of Hegigio Gorge – a gaping chasm half a kilometre deep and 470m wide that separates the field from the existing Agogo field facilities and the link to Kutubu production hub.

The answer has been the cable suspension bridge that will be completed this week. Helicopters flew the initial cables across the gap earlier this year. The pipeline on its supporting deck, hung from hundreds of individual strands attached to the main cables, was then pushed out one section at a time. Each section of pipe was welded to the one before as the operation progressed, much like work on an offshore laybarge.

The bridge is not for vehicle or foot traffic, although access will be possible for inspection and maintenance purposes via a gondola slung underneath.

With the field being more 1600 metres above sea level, bad weather and thick cloud prevented helicopter access and delayed progress during August and September. But October has had clearer weather and South East Mananda is now expected to come onstream early in 2006.

Three wells will produce at around 10,000 barrels a day. This is expected to boost overall PNG oil production from the current 55,000 b/d to more than 65,000 b/d for several years at least.

The bulk of South East Mananda is in development licence PDL2, but a recent survey suggests it may extend into adjoining exploration permit PPL219. This permit also contains the two large undrilled prospects known as Mananda Attic and Mananda Footwall, the potential of which has been enhanced by the new pipeline link to Kutubu. Mananda Attic will be slotted into Oil Search’s drilling program for the next 12-18 months.

Tomorrow – Oil Search looks at more exploration opportunities in PNG

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