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Trends in Moving Towards Deepwater E & P in Malaysia
Trends in Moving Towards Deepwater E & P in Malaysia
Trends in Moving Towards Deepwater E & P in Malaysia
Trends in Moving Towards Deepwater E & P in Malaysia
Trends in Moving Towards Deepwater E & P in Malaysia
Trends in Moving Towards Deepwater E & P in Malaysia
Trends in Moving Towards Deepwater E & P in Malaysia
Trends in Moving Towards Deepwater E & P in Malaysia
Trends in Moving Towards Deepwater E & P in Malaysia
Trends in Moving Towards Deepwater E & P in Malaysia
Trends in Moving Towards Deepwater E & P in Malaysia
Trends in Moving Towards Deepwater E & P in Malaysia
Trends in Moving Towards Deepwater E & P in Malaysia
Trends in Moving Towards Deepwater E & P in Malaysia
Trends in Moving Towards Deepwater E & P in Malaysia
Trends in Moving Towards Deepwater E & P in Malaysia
Trends in Moving Towards Deepwater E & P in Malaysia
Trends in Moving Towards Deepwater E & P in Malaysia
Trends in Moving Towards Deepwater E & P in Malaysia
Trends in Moving Towards Deepwater E & P in Malaysia
Trends in Moving Towards Deepwater E & P in Malaysia
Trends in Moving Towards Deepwater E & P in Malaysia
Trends in Moving Towards Deepwater E & P in Malaysia
Trends in Moving Towards Deepwater E & P in Malaysia
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Trends in Moving Towards Deepwater E & P in Malaysia

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Frost & Sullivan presentation on trends moving towards deepwater E&P in Malaysia

Frost & Sullivan presentation on trends moving towards deepwater E&P in Malaysia

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  • 1. Trends in Moving towards Deepwater E & P in Malaysia Subbu Bettadapura Director, Energy & Power Systems Asia Pacific 27 th July 2011 Offshore Drilling Rigs Conference Singapore
  • 2. Malaysia as the Regional Deepwater and Oilfield Services Hub E & P Expenditure Table of Contents Trends in Moving towards Deepwater E&P in Malaysia Current drilling rig utilization situation and potential increasing investment in the rig sector Overview of major offshore E & P projects in Malaysia Moving towards deepwater – forecasting demand for deepwater drilling facilities 1 2 3 4 5
  • 3. Malaysia - E&P Expenditure Growing Complexity of Malaysia’s Reserves Source: PETRONAS <ul><li>Malaysia’s total reserves,(2010) ~ 20.56 bboe </li></ul><ul><li>Deepwater potential for oil & gas reserves is estimated to be 10bboe </li></ul><ul><li>Growing Complexity in extracting Malaysia’s reserves </li></ul><ul><ul><ul><li>Malaysia’s deepwater presents unique challenges such as complicated sea-bed relief with slope and stability issues </li></ul></ul></ul><ul><ul><ul><li>Shallow hazards </li></ul></ul></ul><ul><ul><ul><li>Hydrate management </li></ul></ul></ul><ul><ul><ul><li>High CO2 content in gas </li></ul></ul></ul><ul><li>Reserves estimate increase due to </li></ul><ul><ul><li>Additions from new discoveries </li></ul></ul><ul><ul><li>Revised estimates due to EOR </li></ul></ul>1 <ul><li>In Malaysia, deepwater definition ranges from depth of 200m to 1200m. Beyond 1200 meters is considered as Ultra deepwater </li></ul><ul><li>Generally accepted deepwater definition - greater than 300 metres depth up to 1500 meters; Ultra deepwater - greater than 1500 meters depth </li></ul>Deepwater Reserves, at ~ 3 bboe (2010), are 14.5% of total reserves
  • 4. Increasing number of PSCs and International Companies Participation 1 <ul><li>Number of active PSCs: 82 </li></ul><ul><li>Currently there are 33 exploration, 15 development and 34 producing PSCs </li></ul><ul><li>20 international oil & gas exploration companies are present in Malaysia </li></ul><ul><li>16 of these operate oil & gas assets in Malaysia </li></ul>Source: Petronas; Compiled by Frost & Sullivan Malaysia - E&P Expenditure
  • 5. Malaysia’s Upstream Expenditure – Increasing Trend <ul><li>Malaysia’s upstream expenditure has steadily increased over the years </li></ul><ul><li>The country’s upstream expenditure was 28.72 billion RM in FY 2010 </li></ul><ul><li>Malaysia Upstream Expenditure, FY 2011 ~ RM 34 Billion </li></ul>Malaysia Upstream Expenditure, FY 2001 to FY 2010 Total number of producing fields: 106 Oil : 68 Gas : 38 Oil and Gas Fields Discovered : 409 Oil: 167; Gas: 242 Malaysia - E&P Expenditure 1 Source: Petronas; Compiled by Frost & Sullivan
  • 6. Deep Water is the Final Frontier – Its true for Malaysia too Overview of major offshore E & P projects in Malaysia Increasing Depth <ul><li>Malaysia is faced with the prospect of declining shallow water reserves – a phenomenon true for most countries (except a few OPEC and Russia) </li></ul><ul><li>Global Drivers for DW projects </li></ul><ul><li>Decline in shallow water reserves </li></ul><ul><li>Strong growth in energy demand </li></ul><ul><li>Rising oil & gas prices </li></ul><ul><li>Long term sustainability </li></ul><ul><li>Technology now exists to tap oil at depths exceeding 3 km </li></ul><ul><li>Drivers specific to Malaysia </li></ul><ul><li>Capability development & local participation </li></ul><ul><li>Goal to grow competency to be DW regional hub and global player </li></ul>2010 2006 2002 1983 <ul><li>Deep water projects more expensive and carry more risks </li></ul><ul><li>Oil price estimates for project to break even - </li></ul><ul><li>Shallow water: $40 </li></ul><ul><li>Shallow water, marginal: $65 </li></ul><ul><li>Deepwater: $ 80 </li></ul><ul><li>Ultra deepwater: $80 to $100 </li></ul>2
  • 7. Deep Water PSCs in Malaysia Number of PSCs Source: Petronas; Compiled by Frost & Sullivan 1 2 3 4 5 6 Gumusut-Kakap, Malikai Kikeh Kebabangan Production Exploration Development Break-Down of Deep Water Blocks PSC (By Operator and Phase) Number of Open Deep Water Blocks: 8 <ul><li>19 Deep Water PSCs are currently active </li></ul><ul><li>8 open Deep Water blocks </li></ul><ul><li>7 international companies awarded operatorship in Deep Water blocks </li></ul>2 Overview of major offshore E & P projects in Malaysia
  • 8. 2 Source: Compiled by Frost & Sullivan Deepwater Fields Being Developed Gumusut/Kakap (Block J & K) Development Stage Recoverable: 620mboe Depth: 1,100m Onstream: 2011/2012 Operator: Shell Malikai (Block G) Development Stage Recoverable: 108mboe Depth: 480m Onstream: 2012/2013 Operator: Shell Kebabangan Development Stage Recoverable: 2.2tscf Depth: >200m Onstream: 2012/2013 Operator: KPOC Jangas (Block J) Pre-Development Stage Recoverable: 81mmboe Depth: >1000m Onstream: 2012/2013 Operator: Murphy Ubah Crest (Block G) Pre-Development Stage Recoverable: 215mmboe Depth: >1000m Onstream: 2013/2014 Operator: Shell Pisangan (Block J) Pre-Development Stage Recoverable: 56mmboe Depth: >1000m Onstream: 2013/2014 Operator: Shell Kamunsu Pre-Development Stage Recoverable: 2.2tscf Depth: >1000m Onstream: 2014/2015 Operator: KPOC North Siakap – Petai Pre-Development Stage Limbayong, Block G Pre-Development Stage Overview of major offshore E & P projects in Malaysia
  • 9. Deepwater Production Forecasts Malaysia Oil Production (%) <ul><li>Deep Water to contribute 30% of oil production in 2020 </li></ul><ul><li>Shallow water existing includes production from SW marginal fields and EOR additions </li></ul>2 Overview of major offshore E & P projects in Malaysia Source: Petronas; Compiled by Frost & Sullivan
  • 10. Kikeh Snapshot: First Deepwater Project in Southeast Asia Source: Compiled by Frost & Sullivan Overview of major offshore E & P projects in Malaysia 2 Field Depth (metres) Estimated Reserves (mmboe) On-stream Operator PSC Others holding interest in PSC Kikeh 1,340 400 to 700 Q3, 2007 Murphy 80% Petronas Carigali 20% The first deepwater oil discovery in Malaysia, Kikeh is located in 4,400 feet (1,341 meters) of water offshore Sabah, northwest of the island of Labuan, in the southern part of Block K. Considered a fast-paced project, field development was completed in five years following the initial discovery in July 2002, and production started in August 2007. Initial daily production started at a rate of 40,000 bopd. More wells were brought on-stream through the next two years, bringing daily production levels to 120,000 bopd. A total of 20 producing wells have been drilled, all completed on schedule and on budget. In the news recently: Apr 2011: Murphy awarded Seadrill an 18-month contract for the West Menang semi tender rig to operate on the Kikeh Spar deepwater field in Malaysia. The estimated contract value is about US $100 million, commencing Q2, 2011 Jun 2011: Kikeh is currently producing less than expected due to sand in the oil. This issue is expected to be resolved this year
  • 11. Development Solutions for Malaysia Deepwater Projects 2 Malikai North Siakap Petai Gumusut Kakap Kikeh Kebabangan Sub-sea TLP Fixed Platform SPAR FPSO FPS Sabah Oil & Gas Terminal Overview of major offshore E & P projects in Malaysia
  • 12. Rigs Currently Deployed in Malaysia (July 2011) 3 Current Drilling Rig Utilization Situation <ul><li>As of July 2011, 24 Rigs are drilling in Malaysian waters. One more Semisub, Atwood Falcon (managed by Atwood Oceanics), to be deployed in August 2011 </li></ul><ul><li>Atwood Falcon is currently drilling in the Philippines. Shell Malaysia has re-engaged Atwood Oceanics for drilling two wells with an option to drill 3 more starting August 2011 </li></ul><ul><li>Shell Malaysia also has an open drilling tender for a long term contract starting April 2012 </li></ul><ul><li>Drilling contractors expect demand for another 4 to 6 rigs in Malaysia, taking the total number of rigs deployed to around 30 by 2013. </li></ul><ul><li>Domestic drilling contractor, Kencana Petroleum, to invest in 3 more rigs </li></ul>Source: Compiled by Frost & Sullivan   Cold Stacked Ready Stacked Drilling Modification Under Construction Total Drill Ships 1 0 2 0 0 3 SemiSub 5 2 1 1 0 10 Tender 0 0 9 0 0 9 Jack-up 8 1 12 0 1 22 Total 14 3 24 1 1 43
  • 13. Rigs Currently Deployed in Malaysia (July 2011) Total Rigs Drilling (as of July 2011): 24 3 Current Drilling Rig Utilization Situation Source: Compiled by Frost & Sullivan
  • 14. Wells Drilling Forecast, Malaysia 4 Forecasting Demand <ul><li>Forecast includes both shallow water and deepwater (Exploration, Appraisal and Development) Wells </li></ul><ul><li>6 deep water fields (of the total wells forecast, 20% are in deepwater) </li></ul><ul><li>22 new Shallow Water Blocks </li></ul><ul><li>10 Marginal fields </li></ul><ul><li>6 fields identified for Enhanced Oil Recovery (EOR) </li></ul>Source: Frost & Sullivan Estimates
  • 15. Rigs Under Construction in South East Asia Region 4 Forecasting Demand <ul><li>Globally, international drilling companies are in investment mode </li></ul><ul><li>Pride International, Transocean, Diamond Offshore , Noble, Ensco have ordered new ultra-deepwater rigs in the last one last year </li></ul><ul><li>30 drillships rated for drilling in water depths greater than 9,800 feet were scheduled for delivery from 2010 through 2013 </li></ul><ul><li>24 semis capable of drilling in greater than 2,461 feet of water will be delivered from 2010 through to 2012 </li></ul><ul><li>Around 40% of drillships and semisubs ordered without contract in hand </li></ul>South East Asia Region Under Construction (as of July 2011) Managers (# of Rigs under construction) Drill Ship 2 Noble Drilling (2) Semi-Sub 7 Ensco (3), Seadrill (2), Songa Offshore (1), Atwood Oceanics (1) Jack-up 38 Noble Drilling (4), Standard Drilling (7), Transocean (3), Others (24) Tender Rigs 2 PV Drilling (1), Seadrill (1)
  • 16. Offshore Potential in the Asia Pacific Region; Offshore Prospects 5 Source: Compiled by Frost & Sullivan KG Basin 6.76 TCF Offshore Sabah (10 TCF) & Sarawak (45 TCF) 4.2Bboe proven; 8Bboe potential Gulf of Thailand Arthit 1.9TCF Bohai Bay 7.35 Bboe Carnarvon 95.5 TCF East Kalimantan 47 TCF Makassar Strait 6 TCF Kikeh 700 mmboe Masela 10 TCF Phu Khanh Basin 2.48Bboe Shwe Gas Field 8 TCF Browse 30.3 TCF M9 Field, Gulf of Martaban 1.76 TCF Bonaparte 29.5 TCF Gippsland 10.65 TCF <ul><li>Asia Pacific – a significant deepwater region </li></ul>Malaysia as the Regional Deepwater and Oilfield Services Hub
  • 17. Key Success Factors for a Deep Water Services Hub 5 Malaysia as the Regional Deepwater and Oilfield Services Hub Infrastructure Government Policies Location 1 2 3 Cost Competitiveness 4
  • 18. Development of Labuan and Sabah Region as the Deep Water Services Hub 5 <ul><li>Labuan and Sabah region has the potential to be developed into a deep water services hub </li></ul><ul><li>Drivers for Development of Labuan and Sabah </li></ul><ul><li>Gumusut / Kakap, Malikai, Jangas, Ubah Crest, Pisangan and Kamunsu deep water fields are being developed </li></ul><ul><li>Sabah Oil and Gas Terminal (SOGT) </li></ul><ul><li>Development of logistics - MOU between Labuan Shipyard & Engineering (LSE) and Asian Supply Base (ASB) </li></ul>Important to leverage the deepwater oil & gas reserves, operators, specialised equipment manufacturers, service providers and offshore engineering companies Malaysia as the Regional Deepwater and Oilfield Services Hub
  • 19. Oil & Gas Companies in Labuan Source: Compiled by Frost & Sullivan Oil & Gas Majors in Labuan <ul><li>Baker Hughes (M) Sdn Bhd </li></ul><ul><li>Cameron (Malaysia) Sdn Bhd </li></ul><ul><li>Delcom Services Sdn Bhd </li></ul><ul><li>FMC Technologies </li></ul><ul><li>Halliburton Energy Services (M) Sdn Bhd </li></ul><ul><li>Halliburton Services (M) Sdn Bhd </li></ul><ul><li>MISC Integrated Logistics Sdn Bhd </li></ul><ul><li>Petra Resources Sdn Bhd </li></ul><ul><li>Schlumberger WTA (M) Sdn Bhd </li></ul><ul><li>Sobena Offshore Inc. Sdn Bhd </li></ul><ul><li>Scomi Oiltools Sdn Bhd </li></ul><ul><li>Scomi OMS Oilfield Services Sdn Bhd </li></ul><ul><li>Scomi Sosma Sdn Bhd </li></ul><ul><li>UMW Oiltools Services Sdn Bhd </li></ul><ul><li>BHP Billiton Petroleum (Sabah) Corporation </li></ul><ul><li>ExxonMobil Exploration and Production Philipines B.V </li></ul><ul><li>Hess Oil & Gas Sdn Bhd </li></ul><ul><li>Petronas Carigali Sdn Bhd </li></ul><ul><li>Sabah Shell Petroleum Company Ltd </li></ul><ul><li>Murphy Sarawak Oil Co., Ltd </li></ul><ul><li>Newfield Sarawak Malaysia Inc </li></ul><ul><li>Nippon Oil Exploration (M) Ltd. </li></ul><ul><li>PCPP Sdn Bhd </li></ul>Support & Services Companies in Labuan 5 Malaysia as the Regional Deepwater and Oilfield Services Hub
  • 20. Petronas Aspires to Transfer Development and Operation Activities to Malaysia 5 Malaysia as the Regional Deepwater and Oilfield Services Hub Source: Petronas Key Activities Kikeh Gumusut Kakap Malikai Kebabangan, North Siakap–Petai, UbahCrest, Pisangan, KemunsuEast All future deep water projects Subsurface Studies/Field Development Plan Malaysia North America Malaysia Malaysia Malaysia Engineering • pre-FEED • FEED • Detail Design Malaysia North America Europe Malaysia North America Malaysia Malaysia Malaysia Procurement Malaysia North America Europe Malaysia North America Malaysia Malaysia Malaysia Fabrication • Topside • Hull • Subsea Malaysia Europe Malaysia Malaysia Malaysia Malaysia
  • 21. What works for Malaysia……. 5 Malaysia as the Regional Deepwater and Oilfield Services Hub <ul><li>Exploration & Development </li></ul><ul><li>Exploration blocks are well defined </li></ul><ul><li>Malaysia continues to attract a significant level of interest among foreign companies to bid for and operate blocks in Malaysia </li></ul><ul><li>First deepwater project in the APAC region. Malaysia is one of the currently only five proven deepwater areas in the world – this gives more leverage for higher exploration investments. </li></ul><ul><li>Early entry of deep water service players into the Malaysia. Technology import gaining ground </li></ul><ul><li>Production </li></ul><ul><li>Malaysia’s offshore producing fields are more mature than those of its Southeast Asian neighbours (i.e., Indonesia, Thailand and Vietnam) </li></ul><ul><li>A vast pool of field operators who are of international standards </li></ul><ul><li>Good understanding of type of reservoir and its production strengths and constraints </li></ul><ul><li>Good understanding of production facilities constraints </li></ul>Malaysia is a veteran in offshore production activities <ul><li>Growth in the domestic capabilities to service the oil & gas value chain </li></ul><ul><ul><li>Malaysian fabricators are able to meet international standards at competitive prices. Increased reputation internationally </li></ul></ul><ul><ul><li>Domestic companies are growing to become integrated service solution providers </li></ul></ul><ul><ul><li>Malaysian companies collaborating with international companies are able to provide full EPCIC service </li></ul></ul>
  • 22. Aspects to be worked on….. 5 Malaysia as the Regional Deepwater and Oilfield Services Hub <ul><li>Malaysia relies heavily on foreign partners to invest in exploration. Petronas does not bear the bulk cost for exploration activities until reserves are proven by awarding the exploration rights to international companies </li></ul><ul><ul><li>Malaysian companies do not have enough experience leading projects for the entire value chain of major exploration, development & production of an oilfield. Service providers entered the market and mostly remained as sub-contractors </li></ul></ul><ul><li>Limited high-end technology owned by Malaysian companies for exploration and limited experience can slow development of exploration skills especially for deep water </li></ul><ul><li>Over focus on support services and fabrication could slow down growth of domestic players in other areas </li></ul><ul><ul><li>Fabrication yards are scattered all over the country. More advantages to have them in a few strategic locations </li></ul></ul><ul><ul><li>Local companies lack better control over rig schedule and therefore development activities </li></ul></ul>Local Players Not Taking a Leading Role in Exploration
  • 23. http://twitter.com/frost_sullivan Follow Frost & Sullivan on Facebook, LinkedIn, SlideShare, and Twitter http://www.facebook.com/FrostandSullivan http://www.linkedin.com/companies/4506 http://www.slideshare.net/FrostandSullivan
  • 24. For Additional Information Donna Jeremiah Corporate Communications Asia Pacific +603 6204 5832 [email_address] Carrie Low Corporate Communications Asia Pacific +603 6204 5910 [email_address] Subbu Bettadapura Director Energy & Power Systems +603 6204 5800 [email_address] Jessie Loh Corporate Communications Asia Pacific +65 6890 0942 [email_address]

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