A subsidiary of state-owned energy giant Pertamina is slashing costs to make the most of themature, depleting Mahakam block in East Kalimantan, whose oil and gas reserves are expected to run out within the next 20 years, While hoping that higher oil prices will soon return.
Pertamina’s subsidiary PT Pertamina Hulu Indonesia (PHI) is due to take over the operations at the Mahakam block from French company Total E&P Indonesie and Japanese Inpex on Jan. 1, 2018. In order to maintain continuity and production levels after the takeover, PHI plans to drill 15 development wells this year at a cost of US$ 180 million.
the Mahakam block
PHI president director Bambang Manumayoso said the company had undertaken various efficiency measures to reduce its operating costs, including reducing the size of wells, connection pipelines and duration of well drilling. As a result, PHI has been able to reduce its well-drilling costs by around 20 to 25 percent, to between $ 140 million and $ 150 million.
“Therefore, we propose to drill an additional two wells this year, on top of the previous 15, in an effort to boost production in 2018,” Bambang told a press conference on Thursday.
His team are also reviewing 20 to 25 other items in PHI’s operations that could be the subject of further efficiencies. Such a move might pave the way for PHI to slash another $100 million to $200 million per year from its operating costs, he said.
At present, the cost recovery for the Mahakam block’s oil and gas production stands at $16.5 per barrel of oil equivalent. We aim to reduce this in 2018 through various efficiency efforts,” Bambang said.
By doing so, PHI expects it will be able to drill a total of 70 development wells next year, up from 55 wells stated in its previous work program and budget.
The company has allocated $ 1.7 billion to develop the Mahakam block next year. However, Bambang said it was possible for PHI to drill more wells if oil prices continued to improve, as the assumed price of oil used in its work program and budget for next year was only $ 48 per barrel.
The price of global benchmark Brent crude reached this years peak of $ 64.27 per barrel on Monday continuing its upward trend since falling to aslow as $ 44.82 per barrel on June 21. PHI needs to drill as many wells as possible to maintain oil and gas production in the Mahakam block’s deltaic environment, comprising multi-layer reservoirs. Otherwise, production will significantly drop each successive year.
“The Mahakam block currently faces a declining rate of 51 percent per year. We expect to reduce this to around 20 to 25 percent per year,” Bambang said.
In 2018, PHI aims to produce 48,000 barrels of oil per day (bopd) and 1,100 million standard cubic feet per day (mmscfd) of at the Mahakam block. Mean- while, this year’s production is estimated to reach 46,420 bopd and 1,309 mmscfd of gas.
Energy and Mineral Resources Minister Ignasius Jonan has pinned high hopes on Pertamina maintaining oil and gas production at the Mahakam block, which accounts for 24 percent of national production.
the Jakarta Post, Page-13, Friday, November 10, 2017
No comments:
Post a Comment