Kambuna Gas Field Malacca Straits, North-East Sumatra, Indonesia

Serica Energy plc, based in London, plans to start production by the end of 2008 from the Kambuna gas field, which lies in about 40m of water in the Malacca Straits, 40km off North Sumatra, Indonesia.

The company is the operator of the 380km² Glagah Kambuna technical assistance contract (TAC), in which Kambuna sits. It has a 65% working interest; Salamander Energy plc of London holds the other 35% of the block.

The Kambuna field was originally discovered by Bow Valley in 1986 but was not developed due to the then low price of gas in Indonesia and the block was relinquished. The present TAC contract was awarded by PT Pertamina, the Indonesian state oil and gas company, in December 1996 but Serica has only been an interest holder and operator since April 2005.

In September 2005, Serica started drilling its first operated well, the
Kambuna-2 appraisal well. This was drilled to a depth of nearly 8,000ft, and tested gas at 17.5mmscfd (million standard cubic feet per day) and more than 1,500bpd of 55° API gravity condensate on a restricted choke.

The field's proven plus probable reserves, on a 100% basis, are 29.7 million barrels of oil equivalent.

KAMBUNA GEOLOGY

The regional structure of the North Sumatra Basin shows three north-south trending uplifted features named the Pakol Horst, the Glagah Horst and the western margin of the Asahan Arch, which were initially formed in late Cretaceous to early Tertiary times.

A prominent north-south trending tectonic lineament, the Rayeu Hinge, divides the basin into northern and southern parts. The northern sub-basin consists of a number of depocentres where sediment thickness exceeds 30,000ft. Sediment thickness in the southern part of the basin is comparatively thin, except in the half-grabens next to the Palaeo-horsts.

The oldest sedimentary sequence drilled in the block is the late Oligocene to early Miocene Belumai Formation. These are underlain, however, by pre-rift-phase Tertiary sediments drilled in the Glagah-Kambuna TAC which, in turn, lie unconformably on Pre-Tertiary basement. The initial rift-phase sediments are represented by the lacustrine deposits of the Bruksah Formation and by the transgressive marine basinal shales of the Bampo Formation.

During the early Miocene sea level slowly receded, depositing carbonates and calcarenites of the Upper Bampo Formation, followed by the Belumai Formation. The low stand, shallow marine Belumai Formation consists of carbonates in the upper part with shales and dolomitic sandstones in the lower portion of the formation. These form a potential reservoir for the block, as well as time-equivalent sediments that on-lap the Pakol and Glagah Horst basement highs.

DEVELOPMENT

Serica's development plan for the $160m project was approved by Pertamina in 2006.

By late 2007 / early 2008, the wellhead support tower was in place, and the company was using a drilling rig sited over Kambuna-2 to drill two further development wells – Kambuna-3 and Kambuna-4 – which were complete by late April 2008. Kambuna-3 was drilled to a total depth of 7,483ft true vertical depth below mean sea level, while Kambuna-4 is a deviated well drilled from the wellhead platform at the Kambuna-2 to a subsurface location about 7,150ft to the south of Kambuna-2 and at a maximum deviation angle of 55° from the vertical.

By early June 2008 the three wells had been tested and showed that their total maximum stabilised gas rate was 114mmscfd, with an estimated 8,000bpd of condensate. Plateau production is expected to be 50mmscfd of gas and 5,000bpd of condensate.

After testing, the wells were shut in to allow development work to continue. The plan is develop the Kambuna field using a normally unmanned wellhead platform, located over Kambuna-2 and supported by a service / security vessel. The platform is fully self-contained with power generation from solar and utility gas.

ONSHORE TERMINAL

Well stream fluids will be exported from the platform, which is designed to support up to four wells, to a dedicated onshore terminal alongside state utility Pertamina's LPG plant at Pangkalan Brandan. The fluids will be commingled in a production manifold and exported to the onshore terminal via a 14in carbon steel pipeline, which will be in place by the end of 2008. The platform topsides will be installed when the offshore pipeline is laid. Wet gas meters will be provided on each flowline for flow control and reservoir management.

The terminal is designed to separate and condition the gas and the condensate to sales quality and will include pig receiver, inlet separator/slug catcher, dehydration, dew point control, condensate stabilisation, vapour recovery, water treatment and disposal, and sales gas and condensate metering. Space will be provided for the installation of a future booster compression system to enable delivery of the sales gas profile.

In late May 2008, Serica formally signed two contracts for the supply of gas from Kambuna, for the sale of 28mmscfd to the state electricity generator PT Perusahaan Listrik Negara (PLN) and for 12mmscfd to PT Pertiwi Nusantara Resources (Pertiwi).

Serica says the PLN contract will realise an initial price of about $5.40 per thousand standard cubic feet escalating at 3% per annum; the Pertiwi contract will realise an initial price of about $7, also escalating at 3% per annum.

In addition to these contracts, Serica expects to sign another one later in 2008 for some 10mmscfd, after a review of the reservior, bringing the total initial contracted gas sales to 50mmscfd. The company also expects that, when this third contract has been completed, the average realisation will be about $6 per thousand standard cubic feet. In addition to the gas, it initially expects to be marketing 4,000bpd to 5,000bpd of condensate at a price close to that of light crude oil.

Serica has dedicated drilling and project teams based in its office in Jakarta, Indonesia, through which the development subcontracts are managed. The wellhead support was designed by Icon Engineering of Perth, Australia, and built by PT H&H Utama International at its yard in Balikpapan, Indonesia. Several contracts will be awarded during the second half of 2008, including those for offshore and onshore pipelay and for construction and installation of the onshore facilities.