it SEAPER 4 | Presa SNE e issue 2 ere sii |Hydrocarbon Analysis — VernOREE Geoservices leading the world in Advanced Mud Logging - ALS NT". S..£ eoservices lf People, Knowledge & Technology www.geoservices.com * The system supports Windows NT China, Beijing Australia, Perth ‘auton ponnGoecsne com “Tel 61-88-2502010 Fax: 61-09-2502715 Australia, Adelaide Anissalaateiacageoaricom “Tol 61-0-61000611 Fox: 61-6-81862611 \ Fae Beslo-eaa7 3782 China, Tanggu Tels 86-22-25311647 Fax: B6-22-66010442 China, Shekou “Tel 86.755-6602641 Fax :86-755.6677922 India, Mumbai Tel: bt-22-6511192 Fax ‘5603677 Indonesia, Jakarta indonesia akariagngoosr.cam Tal: 6 Indonesia, Balikpapan indanseabalapopan@gecet con “el: 62-540-781008. Fax :62:542-764651 Malaysia, Kuala Lumpur ‘Tol 60-2-2065641 Fax "60-3-2066640 Pakistan, Islamabad Tel: 92-514445685 Fax: 92-514443602 Si Tol: 65-68425435, Fax :65-05427619 Thailand, Bangkok halons tanglokgaoer com Tel: 86-2-5700800. Fae B6-2.6700485 Fax: 66-74324099 Vietnam, Ho Chi Minh City “Tol: 84-00-002886 Fax :64-9-992907 Vietnam, Vungtau ‘Tel: 84-c-4038978 Fax: 4-5-4638377 Representative offices in Bangladesh, Japan, Myanmar, Philippines and Taiwan,Sponsors Geoservices Moyes & Co. IHS Energy TGS Nopec SEC 2005 Cambrian Getech SES - OSEA2004 Fugro Global Pacific & Partners IPA Symposium PESGB PGS Jason 45147 52/53 a7 IBC BC Contents President's Page In Memorium - Jim Blake Editorial Treasurer Webmaster Singapore Scout Check SEAPEX Meetings SEAPEX Council SEAPEX Regional Round-up SEAPEX Forum SEAPEX Conference DoIR Open Day Calendar of Events Overview of CBM The New Geophysics Scouting/Drilling Roundup Application Form a 12 14 16 18 20 24 26 28 32133 35 54 58Dear Membership, ell another few months have passed by and the oil price continues to surpass our wildest projects, with no slippage in sight. Indonesia has had its first month as a net importer, OPEC seems unable to form a consensus to increase output, and still we are faced with the daily gloom and doom from the areas west of SEAPEX. How long this will last is anybody's guess, but for now it seems certain to be the state of the world for at least a few months more. Maybe years? In this environment, SEAPEX continues to thrive with a full schedule of talks through the end of the year. Our December Forum is coming together nicely, and if any of you wish to present a paper in our April 2005 Conference, you'd better speak-up FAST, the program is near complete. As oil prices continue to soar, we can only hope that SEAPEX can track its rise in additional membership and activities. Please spread the word to friends and collegues that are not yet members of SEAPEX to join. We have a great organization! Richard Lorentz President SEAPEX SE —In Memorium James (Jim) Keith Blake (22 October 1923 - 12 May 2004) It is with deepest regrets that we announce the passing of a legend in the South East Asia oil and gas exploration industry. After a prolonged illness, Jim passed away peacefully in a nursing home in Arizona, USA on May 12. All of us at SEAPEX would like to express our sincere condolences to his family.This page left intentionally blank News of Jim’s death reached us too late for us to do anything really special for him in this issue, but we will be running a Jim Blake special next issue. Anyone with anecdotal information, comments or photos is asked to forward to Mark or George before 15 August. Mark Harris: mark harris@ihsenergy.com George Croy : gesak@starhub.net.sqs George (Editor of PetroMin and the guy \who puts this magazine together) Croy has often pointed out in the past, the existence of the SEAPEX Press depends entirely on contri- butions from SEAPEX members, whether through sponsorship or submission of articles. This is your magazine. Your help in keeping it alive will be much appreciated. The two of us can only do so much to keep it going Sponsorship levels are currently enough to keep us afloat but are largely based around a very generous ‘hard-core’ group of service compa- nies. Should we lose any of these regulars then the SEAPEX Press will suffer as our budget is very tight. We therefore appeal to all potential sponsors out there to lend a hand and ease the pressure on the regulars and enable us to main- tain the present level of quality and even ex- pand the newsletter. Our Sponsorship rate of $500 a full page has not changed since George started the AS edition ‘way back in June 1998 and you will never find such high level promo- tion at that price anywhere else in the world, More than 700 upstream professionals read SEAPEX Press! The 302004 issue will be concentrating on the forthcoming Vietnam deep water bidding round in the Phu Kanh Basin which is scheduled to open on 1 September. We have a range of origi- nal articles already lined up. This is also a great opportunity for potential sponsors with an inter- est in the Vietnamese oil and gas sector to tar get our membership. Details are available from myself or George. However, despite the apparently healthy state of SEAPEX Press, all is not well. The current issue contains two reprinted articles as no origi- nal work was submitted in time. Not only that, but several of our regular contributions were received after the deadline which delayed pub- lication by at least 10 days. We cannot sustain production of SEAPEX Press without sticking to deadlines which are set for good reasons and not arbitrarily (let's face it, if you miss your em- ployer's deadlines you'd lose your job - all we ask is to respect our deadlines as well) and if we do not receive original contributions then the quality of the newsletter is going to decline. At the moment we are depending mostly upon a dwindling core of contributors and regulars and the goodwill of other publications. We need to eradicate the apathy that seems to have devel- oped, or face returning to the two page fax that was SEAPEX's original Newsletter. The planned ‘Discoverers’ publication to cel- ebrate our 30" anniversary has been cancelled due to a shortage of submissions and the non- appearance of promised chapters by the 1 June deadline. Need | say more? (The authors who expressed interest are welcome to submit their papers for publication in SEAPEX Press). Mark Harris Editor SINGAPORE SEAPEX MEETING, 2 April 2004 total of 73 members turned up for the regu lar SEAPEX bi-monthly Friday gathering on 2 April at the Orchard Hotel. Kindly sponsored by International Logging, the bar proved to be the early focal point along with host, IL’s Alan Morrison, new look. The evening's talk was entitled ‘Fractured Base- ment Reservoirs —An Exploration Strategy from the Mekong Basin in Vietnam’ by Dr Carlo Sand- ers, Structural Geologist, Petronas Carigali. Car- lo’s talk was very well received and provoked many questions and further discussion in the bar area. The gathering then adjourned to 'Ballymoon’ (up- stairs in Muddy's to you old timers) where finger food was provided to help soak up the Kilkenny before the crowd dispersed after midnight (or so | was told).We may be short of articles but we have been sent plenty of photos in re- cent months, some of which are actu- ally publishable. This rogues gallery was taken by Huw Evans at the Singapore rugby sevens tournament on 4 April, subsequently re- named the ‘SEAPEX Sevens’. Dave Ephraim later took the Fosters jug and some balloons to Huw's son's birthday party but hasn't been seen since. ET. Cartoon below donated by anony- mous member. This may have ‘done the rounds’ but apologies to Shell nonetheless. “I wonder if the Shell shareholders know about this. as wellDonated by Robert Winsloe is this rare shot of the ill-fated ‘Petromer V drillship, which unfortunately sank after a blow-out on Mobil's Banteng 1 wildcat in East Natuna in 1981 Can anyone enlighten us on the story behind this? (On closer inspection, my guess is it spontaneously disintegrated... GC) Te aed The following sequence, also donated by Robert Winsloe, shows a rare experimental amphibi- ous Pertamina-operated rig in North Sumatra in late 1982 or 1983 as it submerges. Can anyone name the well? Finally, lan Cross continues to seek out interesting stories in Texas, al- though his mission to locate the Crazy Horse field seems to have been a little off the mark.LETTER TO THE EDITOR Dear Sir, | noted with interest Bob Tate's review of Cecil T. Barber's excellent 1978 book ‘A Geologist in the Service of the Raj’ which was published in the December 2003 edition of the SEAPEX Press. Apart from reminding me that a former eminent member of SEAPEX forgot to return my copy in the 1980s, | noted a small error in Dr Tate's review which warrants correction. The Burmah (not Burma, as the H was deliber- ately added to avoid such confusion) Oil Com- pany did not “eventually become the British Petroleum Company”, in fact they were entirely separate entities until BP finally acquired Burmah’s remaining assets (primarily the Castrol brand name) in recent years.~ Burmah Oil was in fact formed long before Anglo- Persian by a group of Scottish merchants and by the early 1900s was well established as a producer in Burma with its Rangoon refinery sup- plying refined products to India. It was to re- serves constrained Burmah that William Knox d’Arcy turned when he ran out of money to ex- plore in Persia; consequently Burmah Oil be- came a shareholder in Anglo-Persian to finance his operation. After the success of the Persian venture, Burmah received large dividends from AP (lat- terly BP) but was a completely independent com- pany. Its theatre of operations was primarily the Indian subcontinent (e.g., Assam and latterly in East and West Pakistan), where BP were nota- bly absent. As BP became more successful, Burmah was content to continue receiving dividends and focussed on its Castrol marketing brand, with limited upstream activities (although it was a 70 Notable North Sea pioneer). In the 1970s Burmat’s fortunes were dealt a body blow (pri- marily due to its involvement in an ill fated LNG carrier contact) and it was forced to divest its BP shareholding to avoid bankruptcy, Unfortunately Burmah-Castrol never really re- covered and eventually became another of BP's scalps. Burmah did have one lucky break in 1971 how- ever when, as a fresh graduate, | attended an interview at i's Swindon headquarters. After be- ing quizzed on my (then non-existent) knowl edge of the geology of Pakistan, they politely declined to offer me a job. Luckily BP were more receptive and the rest is history as they say. This trip down memory lane brings me to the stark reality of the present however, and | would like to take this opportunity to infarm you of my recent exit from Nigeria (and impending exit from Total). As opportunities in Bristol for petroleum industry historians appear to be limited, | would be grateful for any suggestions anyone may have... (please note that my contact address reproduced in the same edition of the SEAPEX Press is no longer valid) Bob Pile (lenpile@btopenworld.com) (Here, Bob is absolutely correct. Burmah Oir’s only connection with Anglo-Persian was as a minority shareholder, although at that time it was left controlling the company. Through its (Anglo-Persian) Chairman Charles Greenway, AP acquired, in 1917 as part of war spoils, a German-owned distribution and sales company the name of which was British Petroleum. - GC)t the end of April 2004 the cash book clos ing balance was S$45,746. The bank state- ment in the Hawaii account was USS12,149. In addition, a sum of $$40,000 is still deposited in a fixed account in Singapore. Income was generated mainly from the evening talk on 2 April and from membership fees for both new memberships and renewals: the total income this month was S$3,980. The evening meeting on 3 April was barely in the black thanks to IL and their S$2000 spon- sorship. Expenses for the evening were in ex- cess of $$4000. The total expenditure in the month of April was ahefly $$21,457, resulting in losses of S$17,477 for the month. The reason for this unusually high loss is due to SEAPEX having signed a cheque for B$10,000 for Universiti Brunei Darussalam to sponsor an annual scholarship for one stu- dent to attend the one year Petroleum Geoscience Course of Dr Joe Lambiase. Since our last conference, which was very profitable, we have been investigating ways to contribute in the region and although many ideas were re~ ceived, most were not readily feasible due to difficulties in identifying a local representative. This particular idea (from Robert Tate) had the attraction of being both very meaningful and quite straightforward for us to implement and we really hope that our future conferences and events will be as successiul as our past two, so that this scholarship can become a regular SEAPEX annual (or at least biannual) contribu- tion. A small ceremony was held on 24 May in Bru- nei to acknowledge SEAPEX for its contribution’ at this event we were represented by our mem- ber Herman Darman of Shell Brunei. Thank you so much Herman for your dedication! (See re- port elsewhere in this issue - Ed). In addition to this scholarship the council have approved another contribution of US$3000 for the AAPG Indonesian Student Chapters. The cheque will be sent as soon as we manage to Economics - Business PLanninc - Financin = MOYES & CO., INC. s Moye - cmoyes' moyesco.com Chris Moore - cmoore@moyesco.com Dee Pa. erson e Goff rson(@moyesco.com goff@moyesco.com InrernationsL Enercy Apvisors Dallas Phone (214) 363-9020 Houston Phone (713) 965-0200get Richard Lorentz to set foot in Singapore again so he can countersign it! While we are still discussing how to spend the extra funds from the last conference, we have also been working on the budget for the next one, which is less than one year away! We have already secured some of sponsorship and a first draft budget has been circulated. Jam sorry to say that this will be my last report as Treasurer of SEAPEX as on 20 June | will be leaving Singapore to return to Scotland after 5 wonderful years in SE Asia. | will be going back with many great memories, including my expe- rience with SEAPEX and its group of dedicated and resourceful council members! | will be forever grateful to SEAPEX for giving me the opportunity to meet so many people working in the same field and for helping me finding a job as welll Also thanks for entrusting me with being the treasurer for two years, de- spite my little previous experience. The require- ments to become treasurer at that time were a) being in Singapore at least 10 days a year and b) being able to count, both of which | fulfilled and that's how | got the job. Itwas a great experience which | enjoyed very much: it was especially very gratifying to see how well the conference in 2003 went and | am really sad to leave just when things are getting up and running for the preparations of the 2005 SEC. The good news is that we have found an ideal candidate for taking the position of Treasurer after my departure in Bill Latferandre of ConocoPhillips. Bill was already involved in SEAPEX as Webmaster so after he graciously accepted to become the treasurer we were left with the problem of finding a new Webmaster. Thankfully Alan Morrison of Intemational Log- ging stepped in and volunteered to become the new Webmaster. Thanks Alan for this and for being such a loyal supporter of SEAPEX through repeated and generous IL sponsorship of our events. Bill and | have already met together with our secretarial and accounting company (VHR) rep- resentative Valerie Chee to start the handover. | am grateful to Bill for accepting to take my place and for showing such dedication to SEAPEX. Also thanks to Valerie for both her past and fu- ture support. The Seapex meeting on Friday 11 June will be my last and | will therefore have the opportunity to personally thank all members and councilors present for their support. I wish SEAPEX a bright future and a record at- tendance at the 2005 conference. | will be fol- lowing events from Scotland, and who knows, | might be back soon to present a paper! Arrivederci! Laura Robertson $$ Tresor (Departing) 12 ‘he renovations of the SEAPEX website are underway, nearly complete. The upgraded site will offer a password protected, member's only area within which you will have access to the complete SEAPEX membership roster and past issues of the SEAPEX Press. You will also be able to update your personal details, renew your membership and search the membership roster. We will be testing the prototype site soon and expect to rollout the upgraded site within the next few weeks. Another change you can look forward to is a new Webmaster. Beginning June 1, Alan Morrison assumes the Webmaster responsibil ties and | will move over to try to fill the very large void left behind by Laura Robertson's de- parture as Treasurer. Alan has lots of energy and ideas for further refinements and improve- ments to the SEAPEX website. I'm sure you will enjoy working with him We hope that you will visit the new site soon (www.seapex.org), get a member's password and check out the member's area. If you have feedback about the site or ideas for further im- provements please let Alan know. Cheers! Bill Lafferrandre (ex Webmaster) Alan Morrison Webmaster alan@inter-log.comFrom drilling to well completion, field-data collection to reservoir analysis, from interpretation of 2 single well to the siudy of an entife country, THS. Energy. has aligned ‘ali proven produetS) Services and istlustry-leading consulting expertise = wittr your business. goals and work= flow process@sinm— == Whatever you needa know, whatever you need .tovinJerpret, whatever== = piston you Fave Ta. makewe hgl-you optimize yourasset, Sour peoplecand jourcepial 0 = cteale a competitive edge. New wentufes.-Exploration—Econoinies. =Minerals and Petroleum > Petroleum Exploration> Petroleum Open DayOverstretched? Managing an E&P operation or office in today's leaner, keener conditions can strain both budgets and nerves to breaking point. 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UR «. nfoeecambricom 1. $44 (011291 673022 f $48 (031281 673023, HOUSTON - usa 16800 Greenspaint Pat D Suite 1685, Houston, Teas 7 {+1 el) 877 9400, f+] (a1) 877 9aga KUALA LUMPUR - MALAYSIA Unit 5A, Level 5 8 Jalan Amana 50450 Kuala Lumpur, Malaysia . inx@eambricom $60 (3) 2732 8272 £550 (3) 2752 8273DATE TITLE LOCATION Aug 15-19 ASEG-PESA 2004 - 17th Geophysical Conference & Exhibition Sydney Aug 24-25 3rd Asia Pacific Sand Control & Management Conference Kuala Lumpur Sept 1-2 The Good Oil Conference Fremantle, Australia Sept 5-9 19th World Energy Congress and Exhibition Sydney Sept 13-15 IADCISPE Asia Pacific Drilling Technology (APDT) Kuala Lumpur Sept 19-22 The Eastem Australia Basins Symposium (EABS II) 2004 Adelaide Sept 20-23 PetroMin Subsea Asia Conference cum Seminar Kuala Lumpur Sept 20-23 PetroMin/IEEE Diving & ROV Technology Conference Kuala Lumpur Sept 23-24 High Tan Crude Conference Singapore Oct 4-5 Asian LNG & Regasification Terminals Conference ‘Singapore Oct 11-12 Power Generation World Expo 2004 Melbourne Oct 11-13 Gas Australasia Pacific Exhibition and Conference 2004 Perth Oct 12-14 Chinese Petroleum & Gas Conference (CPGC 2004) Bejing Oct 18-20 SPE Asia Pacific Oil & Gas Conference & Exhibition (APOGCE) Perth Oct 27-29 Vietnam Oil & Gas Expo 2004 Ho Chi Minh City Nov 10-11 National Oil Companies Summit 2004 London Nov 29-30 PetroMin Pipeline Conference cum Seminar Kuala Lumpur Nov 29-30 PetroMin/Hydrocarbon Asia RAM (Reliability, Availability & Maintainability) Kuala Lumpur Nov 29-Dec 1 IATMI 7th Congress & 2004 Symposium Jakarta Dec 1-3 Saigon Oil & Gas Expo Ho Chi Minh City Dec 6-7 Condensate & Naphtha Forum Singapore Dec 7-8 Deepwater and Frontier Exploration in Asia and Australasia Jakarta Dec 7-9 Millennium Asia Petroleum (MAP) Week 2004 (held during OSEA) Singapore Dec 7-10 15th International Oil & Gas Industry (OSEA 2004) Singapore TRAINING COURSES AND WORKSHOPS Aug 9-13 3-D Seismic Interpretation Techniques Bali Aug 16-18 Cargo Shortage in the Petroleum Industry (Seminar) Singapore ‘Aug 19-20 Petroleum Trading and International Law Singapore Aug 19-20 Successful Strategies for Handling & Avoiding Bunkering Disputes Singapore Sept 5-9 ATW - High CO2 Gas Field Development & Production Hanoi Sept 6-10 Geological and Petrophysical Log Analysis To be confirmed Sept 8-10. Oil Price Risk Management Singapore Sept 14-15 Upstream Government Petroleum Contracts (GPC 2004) Singapore Sept 16-17 Pacific Petroleum Insiders (PPI) 2004 Sept 16-18 Production Sharing Contracts & Int! Petroleum Fiscal Regimes (PSC 2004) Sept 19-22 ATW - Water Control/Management Langkawi Sept 23-24 Crude Oil Marketing & Valuation Singapore Sept 30-Oct 1 Oil & Gas Finance and Accounting Strategies Kuala Lumpur Oct 6-7 Natural Gas Industry Fundamentals (NGIF 2004) - A Focus on Asia Perth Oct 31-Nov 5 ATW - Development Tech for Marine Carbonate Porous Reservoirs (Chengdu Nov 28-Dec 1 ATW - Production Optimisation Kota Kinabalu Dec 2-5 ATW - Well Stimulation in High Pressure and High Temperature Reservoirs Kota Kinabalu Dec-08 10th Annual Pacific Petroleum Insiders (Upstream Briefing) Singapore Dec 6-10 Seismic Reservoir Analysis Bali Dec 9-10 Pacific Gas Insiders (PG!) 2004 (Briefing) Singapore Details of other Exhibitions & Conferences can bt 32 ‘Any information relating to an Exhibition, Conference, Seminar or Forum you think should be listed should be sent in similar format to Simon Crellin at sicrellin@deloitte.comfeneenienitee Tee CONTACT DETAILS ASEG lagPc. RU World Eneray Congress SPE PESA PetroMin PetroMin Conference Connection EuroForum International Terrapinn Australia Pty Ltd CWC Associates Conference Connection ‘SPE CP Exhibition Global Pacific & Partners PetroMin PetroMin Muhamad Syuhada at Unocal CP Exhibition Conference Connection IPA Global Pacific & Partners Singapore Exhibition Services (SES) IPA Abacus International Abacus International Conference Connection SPE IPA Conference Connection Conference Connection Conference Connection Conference Connection SPE Conference Connection Marcus Evans Conference Connection SPE SPE SPE Global Pacific & Partners IPA Conference Connection | ‘TELEPHONE FAX/e-mail http:/www.aseg.org.au http:/Awww.iqpc.com.sg http:/www.riuconferences.com.au http:tiwww.tourhosts.com.au/energy2004 http://www.spe.org (61) 3 9270 3517 (61) 3 9270 3985 http://www.safan.com http://www.safan.com http://www.cconnection.org http://www.ef-commerce.co.uk (61) 2 9005 0731 (61) 2 9281 3950 hitp:tiwww.gaap2004.com http://www.cconnection.org http://www.spe.org http://www. cpexhibition.com http://www. petro21.com/events hitp://www.safan.com hitp://www.safan.com (62) 21 5797 2763 (62) 21.5797 2771 http:/www.cpexhibition.com hitp://www.cconnection.org hitp:fiwww.ipa.or.id hitp://www.petro21.com http://www.osea-asia.com http:/Awww.ipa.or.id hitp://www.abacus-int.com http://www.abacus-int.com http://www.cconnection.org hitp:/Awww.spe.org hitp://www.ipa.or.id http:/Avww.econnection.org hitp://www.cconnection.org hittp:/Avww.cconnection.org http:/Avww.cconnection.org hitp://www.spe.org hitp://www.cconnection.org http://www.marcusevans.com hitp://www.cconnection.org hitp://www.spe.org http://www.spe.org hitp://www.spe.org http://www.petro21.com hitp:/iwww.ipa.or.id http://www.cconnection.org found on www.safan.com under Events Calendar To keep this list updated, we seek your assistance in notifying us of changes, additions, deletions, etc. Send in similar format to Simon Crellinat —~ 33 SierealtsrtredNew company, familiar face hil Beale, a well known face around SEAPEX, has been appointed as regional director of oil industry technology company Gdegaard A/S, of Denmark. He will be respon- sible for expanding the company’s established reservoir characterisation expertise in extract- ing rock properties from seismic data using well log analysis, seismic inversion and time-lapse prediction. With this appointment, Gdegaard has estab- lished an office in Kuala Lumpur, Malaysia to meet demand for its services from the E&P in- dustry in Southeast Asia. Kim Gunn Maver, managing director, said: “Phil Beale has extensive experience in the Asia-Pa- cific market, and | am confident he will be able to grow our services in the region. With a local office in Kuala Lumpur, we will also be able to provide much closer collaboration with our cli- ents on specific projects.” Phil, an honours graduate in Geology from Not- tingham University, spent five years with the Scott Pickford Group in London focusing on mapping services and depth conversion soft- ware. Since then he has been based in South- east Asia, for four years with Paradigm Geo- physical and then for the last three years with Jason Geosystems where he was regional rep- resentative for reservoir characterisation services and software. Odegaard is a leading provider of software and service products for extraction of rock proper ties from seismic data through seismic inver- sion for seismic reservoir characterisation in hydrocarbon exploration and production. Through offices in Copenhagen, Aberdeen, Stavanger, Houston and its new location in Kuala Lumpur, the company offers globally optimised simultaneous seismic inversion of full stack, angle stack offset stack, intercept-gradient, 4D and 4C data in both the time and depth domain for porosity, fluid and lithology prediction. Through well log analysis, rock physics stud- ies, simulator-to-seismic analysis, siream-lines and AVO modelling the seismic inversion results are converted into reservoir parameters such as porosity, lithology, saturation and pressure. Until he updates his SEAPEX particulars, you can reach Phil at e-mail: kuala_lumpur@oadegaard.com ee global exploration starts here Data AND Services GLOBAL GRAVITY AND MAGNETIC DATA [UNIQUE DATABASE FOR SE ASIA Hl INTEGRATED EXPLORATION STUDIES ~ SEAMAGIC (BASINS), SEASTAR (REGIONAL) BeNerits NEW VENTURE OPPORTUNITIES ENHANCED BASIN EVALUATION MI EXPLORATION RISK REDUCTIONAn overview of coal bed methane and its effects on Queensland’s gas market Aen coal seam gas, or coalbed meth ne (CBM) is only a very small industry in most parts of the world, it accounts for a signifi cant, and growing, proportion of the gas market of Queensland, and increasingly, New South Wales, in Australia, This article attempts to demonstrate both what CBM actually is and also to show its increasing significance in the Australian gas market. CBM has become the major focus for gas ex- plorers in the eastern Queensland Bowen-Surat Basins, supplying around 25 Petajoules (PJ), or 25% of Queensland's gas demand in 2002. This represents @ dramatic increase from around 11PJ in 2001 and only 2PJ in 1998, which is set to increase further as drilling and production costs are reduced and new extraction techniques are demonstrated. These steps forward have led to a greater reliability of production, mean- ing that long-term supply contracts can be en- tered into. An insight into the possible future of the CBM industry in Australia can be gained by ooking at the USA. CBM production in the USA doubled from 600PJ/yr in 1992 to 1,200PJiyr in 2002. This production is based on both similar technology and geology as that found in Aus- tralia. Its increasing importance in Australia's gas markets has been reflected in the fact that larger oil and gas companies, such as BHP Billiton, Santos and Origin are all now getting involved alongside the existing smaller players such as CH4, Arrow Energy, Molopo and Queensland Gas. CBMis indistinguishable trom conventional gas and is typically: clean and of high quality, containing over 95% methane with small quantities of other gases. Currently, the main problem hold- cally over 100 in most cases). due to the large areal extent of the CBM reserves. However, much of Australia’s CBM reserves are located in close proximity to the population centres of Brisbane and Sydney, meaning that transport cost savings exist over many supplies of con- ventional gas — particularly that sourced from Northem or Western Australia. What is coalbed methane? CBM is gas that is trapped in the micropores of a coal seam. It is held in place by pressure from the overlying rock and water. Due to natu- ral fractures, called cleats, within the seam, coal has a large internal surface area and is there- fore capable of holding significantly larger gas reserves than a traditional sandstone reservoir. ‘The volumes of gas present depend on the depth of burial of the coal seam, its thickness and the extent to which the cleat system is intercon- nected. The gas is produced by releasing the pressure keeping it in place, which is achieved by the removal of the water. When water is pumped from the coal seam, gas flows through the cleats. As water production decreases, the flow of gas increases. Coalbed methane in Queensland Currently, the majority of CBM activity in Aus- tralia is confined to the easter states of Queens- land and New South Wales. The presence of high gas content coals in the Bowen Basin in Note, for the purpose of the graph, wells are grouped by a year, which runs from July to June. Queensland Coalbed Methane Drilling Activity ing back growth within the sector is the relatively high cost of pro- duction. Typically, delivered costs of CBM gas are AUS1 — 2/ gigajoule above that of conven- tional gas (VENcorp 1999). This is due mainly to the labour inten- sive methods of extraction and the large numbers of wells required for commercial production (typi- sot aot a4 4 1997-1998 feeptraton le AppraisalDevelonrent| 1988-1989 1999-2000 200-2001 2001-200236 —— casarane —s ounane ——> anenwomon — Se Giorconsmacton Vv aercamr [COAEED MEARE FEDS project will have the capa- bility to supply a significant percentage of the state's gas demand. An indication of how important the state be- lieves this project to be is the fact that ithas been awarded ‘Queensland has long been known, but the first CBM specific exploration didn't begin until 1976. However, these attempts were beset with tech- nical problems and were abandoned having achieved only intermittent production. It wasn’t until 1995 that the first CBM production licence was awarded over the Fairview field with a sec- ond award made over the Dawson River field in 1996. The first commercial production was achieved in late 1996 from the Dawson River field. Now, most of Eastern Australia’s coal bear- ing basins are covered by CBM permits. This increase in activity can also be seen in the number of CBM wells drilled in recent years. (see map) Although there is currently only pilot CBM pro- duction from New South Wales, the Camden Gas Project, operated by Sydney Gas, will have a big impact in the future. Located only 50 km south west of Sydney, it is being de- veloped in stages. It has been selling gas to AGL at increasing rates since May 2001 When fully developed, the AUS 100 million State Significant Develop- ment Status, which will help expedite and streamline the approvals process going for- ward. Grosvenor CBM project overview In terms of reserves, one of the largest CBM projects currently in production in Queensland is CH4's Grosvenor Gas Project near Moranbah in the Northern Bowen Basin. The com- pany, which was established in 2000, acquired the explo- ration rights to an area of 6,150 sq km from BHP Coal Pty Lid. Since 2001, it has drilled 33 exploration wells and six production wells and has gained sufficient techni- cal data to classify reserves in excess of 1,000 PJ of 3P gas reserves. CHA formed an alliance with Worley to develop the project, located in production licence PL 191. Under the terms of the agreement, Worley will provide engineering procurement and construction management for the project. The design stage of the project is already nearly complete. CH4 is shortly due to commence a large drilling programme with 45 new wells eventually expected to be brought nto production. The field has been producing gas from pilot wells since April 2001 at rates in ex- cess of 1.5 MMofid. To develop the field, CH4 developed a new drilling and extraction tech- nique. This is based on existing in-seam drain- age, where gas extraction is undertaken from guided horizontal in-seam boreholes. It requires the drilling of a connected pair of wells, each of which comprises an in-seam horizontal well drilled from the surface to the coal seam. The horizontal well is orientated down-dip to provide a pathway for gas and water to drain to the ver-The Next eRe In Asia’s Oil & Gas Industry WWw.0Sea-asia-com OSEA2004 ecco Erratic tare our Oblezlve and ante: (65)'6835-9028/ 8700 6776 5 "Name: Postion ‘Digsheaton: 2 bakes Tel ra38 tical well, which acts as the production well Water is pumped through tubing and the gas flows to the surface through the annulus between the tubing and casing. Neither well in the pair is fracced or cavitated. The first pair of wells was successfully drilled in April 2003, The Grosvenor project received a massive boost in June 2002 when it was selected to supply gas to the North Queensland Power Project, based around a gas-fired power station in Townsville. The project involves the construc- tion of a 391 km long, 250mm diameter pipeline from the field to Townsville and nearby Yabulu and the conversion of the existing open cycle peaking plant at Yabulu to a 220 MW combined cycle, base-load gas-fired power station, The pipeline will initially be configured for a capacity of 20PJiyr, but with additional compression, this could be expanded up to as much as 50P/yr in the future, if such demand exists. Once built, this pipeline will provide a possible strategic link to other markets, such as Rockhampton and Gladstone. CH4 will supply a maximum of 290 PJ of gas to be delivered over 15 years, com- mencing on 7 February 2005, at an initial rate of 12.6 Puiyr, increasing to as much as 20.4 PJiyr by 2009. This makes it the largest gas sales agreement ever signed in Queensland. When compared to the current total size of Queens- land's gas market, at about 90 Ply, it shows how significant CBM is becoming. Itshould also be noted that the Grosvenor field beat off com- petition from Papua New Guinea to win this gas supply contract. This project is the first step in the development of pipeline links from the Bowen Basin coalfields into existing pipelines or mar- ket centres, which are vital for the full potential of CBM to be realised. The 3,200 km pipeline from Papua New Guinea (PNG) to Queensland has long been under con- sideration, but has been beset with problems establishing enough gas sales to make the project viable. Operator ExxonMobil has re- ported that it requires gas sales in the region of 100 - 150 Pulyr before it will commence FEED studies. It has currently provisionally signed in the region of 96 - 155 Puliyr, with a 12— 20 PJ/ yr deal signed with WMC Resources Ltd at the end of 2003 bringing the totals very close to those required. From these figures, it is clear how much of a blow losing up to 20.4 Pulyr was for this project and the PNG gas industry as a whole. During 2001 and 2002, there were two other gas supply contracts signed, which covered the sup- ply of CBM gas. Firstly, contracts between CS Energy and Santos and Queensland Gas final- ised the supply of CBM to the Swanbank Power Station. Secondly, Oil Company of Australia signed a deal to supply the BP refinery in Bris- bane from its Peat field. In December 2003 Ar- row Energy entered into a Heads of Agreement with Wambo Power Ventures Ply Lid for the development of a 50MW gas fired electricitiy generation plant, located to the west of Dalby, with associated gas supply arrangements. Ar- row will supply 3.97 PJ per annum of CBM from the Tipton West project for a minimum period of 15 years. Supply of the gas is due to commence in early 2006. Queensland's Gas Market One unusual aspect of Queensland's gas mar- ket is that a small number of mainly industrial users account for the majority of gas use. This small group, which is supplied by dedicated pipe- lines, accounts for around 82% of the total an- nual gas demand. Residential end users make up no more than 13% of total demand. Within the state's gas market as a whole, competition is stil dominated by the existing oil majors, with the majority of the supply sourced from the Santos-operated acreage in the south west of the state. However, competition is increasing, with the emergence of a number of small inde- pendents. Supplies from Papua New Guinea and the Timor Sea will also provide additional supplies in the years to come, however, this will not affect the Eastern Australian market in the near future. This being the case, CBM is emerg- ing as a realistic alternative to fill this increasing short-term gap. Future growth in the market will be fueled by large industrial users, which also form the bulk of current demand. According to Australia's National Institute of Economic and Industry Research, Queensland has the largest forecast growth in gas consumption of any Aus- tralian state. The graphs demonstrate histori- cal growth as well as forecast future growth. The forecast figures are based on a conserva- tive growth rate of around 3.4% per annum. Conclusions Growth in Queensland's gas demand is ex- pected to be underpinned by increasing gas use in electricity generation and other industrial us-ers such as mining. In order to support such an increase, the state will need to find new sup- plies. Much of this may be sourced from North- em Australia, from the Greater Sunrise Project, for example, or piped from Papua New Guinea. However, for these developments to become reality, huge investment is required to build the pipeline infrastructure to get the gas, firstly to shore and then onwards to the actual markets — no small feat when the distances involved are Historical Gas Demand By State 350 Ss fn NSW s le Vic a z @ Queensland 2 It WA 5 a ja SA 2 8 =NT 1974-75 1979-80 1984.85 1989-90 1994-95 1999-00 2000-01 Year Source: ABARE (2002) Australian Forecast Gas Demand Growth by State 700 = 600 é a NSW (ee @ Vic = 400 = Queensland 5 bs WA, 3 300 in SA : = Tas z 200 le NT coatreip of 1999-2000 2008-10, Year 2019-20 Source: ABARE (2002) 3940 The New Geophysics: implications for hydrocarbon production Recent theory and observations show that the fluid-saturated microcracks in hydrocarbon reservoirs (and most other in situ rocks) are so closely spaced that they are critical sys- tems on the verge of fracturing. This means that the reservoir may respond to small changes with ‘butterfly’s wings’ sensitivity, but the effects cannot be imaged with conventional tech- nology: you only suffer the complications when recovering hydrocarbons. his critical behaviour leads to a New Geo- physics, where the response to changes in fluid-saturated rock (during hydrocarbon produc- tion) necessarily varies from place to place and from time to time so that detailed measurements degrade with time and behaviour cannot be av- eraged. This means that many (perhaps most) standard oilfield procedures are not wholly or Strictly valid. The typical (and extraordinarily low) 30% recovery from most oil reservoirs is prob- ably at least partly explained by the sensitivity ofreservoirs with behaviour inexplicable in terms of conventional geophysics. The New Geophys- ‘esis the reason for at least some of the difficul- ties in standard oilfield procedures, and offers enormous potential advantages. This article dis- cusses new ways of monitoring production, where the response of the reservoir to produc- tion procedures can be caloulated, possibly pre- dicted and even potentially controlled by feed back. This paper should be read by anyone whose res- ervoir has not behaved as expected. Thats any- ‘one whose boreholes produce either much more oil or much less oil than estimated. The paper suggests why reservoirs may surprise you and proposes a new technology for gaining a better image of the movement of fluids in largely inac- cessible deepwater reservoirs. Stress-aligned shear-wave splitting (illustrated schematically in Figure 1) is seen in almost all rocks in the Earth's crust (including almost all hy- drocarbon reservoirs). The observed shear-wave velocity anisotropy (% difference between the two velocities) can be inverted for the crack distribu- tions in Figure 2. It shows that microcracks, even in unfractured rocks (two left-hand diagrams), are so pervasive that the rocks are close to fracture- criticality and failure by fracturing. Just nudge a rock and it fractures, as witness the acoustic events heard whenever sensitive instruments listen to reservoirs during oil recov- ery. The effects are much more than easy frac- turing. The microcracks make rock extraordinar- ily compliant and sensitive to small changes in stress and pressure. It can be shown that seis- mic shear-wave splitting, also known as seis- mic birefringence, monitors the low-level deformation of the reservoir before fracturing takes place. Theory suggests and observations confirm (see Figure 4, below) that crustal rock is so compliant and sensitive that it responds to minor disturbances at substantial distances. This has serious consequences for monitoring hydro- carbon production. Our understanding of shear-wave splitting (Fig- ure 1), the key observable, has advanced sub- stantially in the past few years. Crampin & Chastin (2003), Paper", reviews these ad- vances, which are based on many thousands of observations. Note that all statements in this article are supported by numerous research papers published in international journals (see end references). The mechanism of rock deformation, Figure 3 shows how distributions of fluid-satu- rated microcracks evolve with small changes of stress (or any other change in conditions) dur- ing hydrocarbon production. The driving mecha- nism for this model of deformation, known as Anisotropic Poro-Elasticity or APE, is fluid move- ment along pressure-gradients between neigh- bouring grain-boundary cracks and pores at different orientations to the stress field"! This leads to the aligned cracks and shear-wave split- ting illustrated in Figures 1 and 2. Figure 3 is a simplified (but quantitatively accurate) illustra- tion of the effects of small changes in differen- tial stress on an initially random distribution of fiuid-saturated microcracks. APE is an almost parameterless model, yet, assuming a critical- system of fluid-saturated cracks, matches the behaviour of a huge range of different phenom-Figure 1. Schematic illustration of stress-aligned seismic shear-wave splitting!”. Transversely polarised seismic shear- waves propagating near-vertically through distributions of vertical parallel fluid-saturated microcracks split into two orthogonal phases polarised parallel to the direction of maxi- mum horizontal stress. Such stress-aligned shear-wave split- ting is observed in almost all reservoirs and rocks in the Earth’s crust. The microcracks tend to be aligned (like hy- draulic fractures) parallel to the direction of maximum hori- zontal stress, 6,, Several features of the observations are remarkable. As crack density & equals one hundredth of the percentage of the maximum shear-wave velocity anisotropy, it is easy to estimate crack density from observations of shear-wave spliting (Figure 2). Crack density 4 is equal to Nav/v, where Nis the number of cracks of radius a in volume v. Observations of 1.5% to 4.5% shear-wave velocity- anisotropy indicate a narrow range 0.015 < 8 < 0.045 of the inferred crack density in ostensibly intact rock. This range is independent of geology (similar in sedi- mentary, igneous, and metamorphic rocks), porosity (simi- lar effects in 1% porosity granites as in 30% porosity sandstones), and tectonic history with only a few well-understood exceptions. Fracture criticality is associated with the percolation threshold which can be determined theoretically for @ distribution of aligned cracks as 4= 0.055 (5.5% shear-wave velocity anisotropy). The limited range of crack density means that the cracks in all in-situ rock are cntical systems verging on criticality and failure (Figure 2). 45% FRACTURE CRITICALITY < INTACT ROCK >i< HEAVILY FRACTURED ROCK Figure 2. Schematic interpretation of observed % shear-wave velocity anisotropy". ais crack density and a is crack radius. The nerrow range of observed crack density in intact rock below fracture- criticality (2= 0.055) demonstrates that all rocks are so heavily microcracked that they verge on enttcality and failure by fracturing. ena in geology and geophysics". Note that testing (calibrating) APE in deep rocks is difficult because high temperatures and pres- sures and toxic environments prevent direct measurements of in-situ rocks. There are many indirect demonstrations of APE modelling!"! and the associated rock mass and reservoir compli- ance and sensitivity, in particular, there are many determinations of stress directions from shear- wave polarisations by industry. However, there are only three comparatively-direct demonstra- tions of APE-modelling and the compliance of the crack-critical rock mass 1) The most accurate calibration was APE- modelling matching the seismic response of both high-pressure and low-pressure CO,-injections in a carbonate reservoir in New Mexico. The injection pressures inserted in APE simulated almost exactly the observed shear-wave re- sponse. 4142 Figure 3. The Anisotropic Poro-Elastic (APE) model of rock deformation”, APE models the response of cracked fluid-saturated rocks to small changes of sires. Stress-Induced variations to microcrack geom- etry are driven by pore-fluid movement along pressure- gradients between neighbouring microcracks at different orientations to the stress field. The modelling is fully 3D, but the figure is a simple schematic (quan- titatively accurate) 2D illustration of the effects of APE on a vertical distribution of cracks with a constant po- rosity of p= 6%, where » is percentage by volume. Top-left: @ cross-section of a small selection of ran- domly oriented vertical cracks (hexagons are elasti- cally isotropic). Under zero differential stress s,, = s, Oand all cracks have equal aspect ratios (equal widths) and there is no shear-wave velocity anisotropy in the horizontal plane. Top-right: the effects of a small increase of differential stress, s,, Some fluid adjusts to the change of stress by changing crack aspect-ratios but all cracks remain open and there is still no shear-wave velocity anisotropy. Bottom-left: the response when the critical stress s, (normalised to one) is sufficient to close cracks normal to the stress. The shear-wave velocity anisotropy is actually observed in the Earth (Figures 1 and 2). S505 © P x s yv S.=3_W zx A Normalised 00 1.23 AspectRatio 95 4.5 ae 073—— 20 —— 10 —— 30 — about 1%, approximately the 1.59% minimum Bottom-right: as stress increases, cracks begin to line up with an average normal in the direction of minimum principal stress. Eventuelly at fraciure-cnticality (equivalent to the percolation threshold of through-going fractures), shear strength is lost and the rock fractures. Theoretically this comparatively simple model is independent af porosity, and similar effects are ob- served in 1% porosity granites, as in 30% porosity sandstones. 2) APE suggests that increases of stress should cause changes in shear-wave splitting in specific stress-oriented directions", Such changes have been recognised, with hindsight, before some dozen earthquakes worldwide, and the time and magnitude of an M=5 earthquake in Iceland was successfully stress-forecast Note that shear-wave splitting carries no spe- cific information about impending earthquake locations. However, if it is known that a large earthquake is approaching, other precursory effects may indicate the epicentre, as happened with the successful stress-forecast ". (Similar changes are also seen at substantial distances, up to. 240km, before a volcanic eruption '*,) 3) The most direct confirmation of rock mass compliance and sensitivity is from a seismic crosshole experiment. Figure 4 shows variations over 13 days of travel times of P-waves, SH- and SV-waves, and SV-SH anisotropy at 500m- depth between boreholes 315m-apart. The travel times show well-recorded variations of 6ms, 2ms, 2ms, and 0.2ms, respectively, correlating with a swarm of small earthquakes at 70km dis- tance. The total energy release by the earth- quakes is less than the energy of one M: earthquake. This is a comparatively small seis- mic disturbance and the observed sensitivity (in layered basalts in Iceland) at several hundred times the likely source dimensions is far beyond that expected in the conventional geophysics of a brittle-elastic crust. This extraordinary sensitivity is the response of a critical system of fluid-saturated microcracks to small disturbances. If the effects of a M=4 earthquake can be seen at 70km in relatively brittle basalts, the effects of larger M=8 earth- quakes, releasing at least 10,000 times more energy, can probably be seen worldwide, par- ticularly in more compliant reservoir rocks. The variations in Figure 4 are a direct demonstra- tion that detailed seismic measurements, re- sponding to changes in microcrack geometry, are sensitive to very small disturbances at sub-Indonesia South Makassar Fugro Multi Client Services, in conjunction with Patra Nusa Data EEO eee tte Meares cI) RENEE CEES EL Gen) (4x4 km grid) JNOC seismic Eines snd (-4,715 kms). The data is being reprocessed with and various offset stacks are being produced as an optional deliverable ea Te Roan ares) eee) Sean 00P.wave travel time (ms) S-wave travel time (ms) S-wave time delay (ms) Seismicity (No in 12hrs) Figure 4. Anomalies in seismic travel times cor- relating with seismicity at 70km'*. Seismic travel times variations (11 to 24 August, 2001) at 500m-depth between boreholes 315m-apart near a Mid-Atlantic Ridge transform fault in Iceland: (a) P-wave; (b) SV- and SH-waves; and (c) SV - SH delay times; coinciding with (d) number (12-hour) histogram of 106 small earthquakes (IM2.8) at 70km-distance (total energy equivalent to one M<4 event) ®]. The levels of the P- and shear-wave travel tines from previous observations in April 2001 are indicated in (a) and (b).. 9 1041 12.13 14 45 16 47 1849 2021 22 23 Dates in August 2001 stantial distances and directly confirms the compliant critical system of fluid-saturated stress-aligned cracks in most rocks in the crust, The unique observations in Figure 4 are re- corded in a quiet environment below near- surface noise, and used the exceptionally repeatable down-hole orbital vibrator (DOV) source of Geospace Engineering Research International, Houston. The DOV was pulsed three or four times each minute allowing 100- fold stacks with accuracies of £0.02ms (20ps) Properties of critical systems of cracks in the crust Critical systems are a New Physics of com- plicated interactive phenomena which be- have conventionally until they approach critical points. Near critical points, the be- haviour is no longer controlled by sub-criti- cal physics but becomes highly sensitive to small variations, and at critical points be- comes chaotic. Distributions of closely spaced fluid-saturated microcracks make the crust such a critical system, where the critical points are levels of fracture-criticality (Figures 2 and 3), and the chaotic behav- jour is fracturing and earthquakes", Ithas been shown that critical systems near criticality (such as microcracks in the crust in Figure 2) behave statistically more like other critical systems than the sub-critical physics. This is the reason why the nearly para-meteriess APE modelling matches be- haviour of complicated heterogeneous crustal rocks!" Practically, this means that the behaviour of the anomalies in Figure 4 may not be explicable or even understand-10th Annual Pacific Petroleum Insiders Upstream 6 December 2004, Orchard Hotel, Singapore Specialised & Intensive Upstream Briefing: Senior Management & Players in the Global & Asian Upstream, Oil-Gas &Energy Industry Presented By: Dr Duncan Clarke Chairman & CEO, Global Pacific & Partners London, The Hague, Johannesburg Global Pacific & Partners www.petro21.com Tel: + 44 207 487 3173 Fax: + 44 207 487 5611 Tel: + 31 70 324 6154 Fax: + 31 70 324 1741 info@glopac.comable in terms of conventional sub-critical geo- physics. Certainly, critical systems are known to have several remarkable properties". ‘Some of these properties have serious implica- tions for conventional cil-field geophysics and conventional oil-field operations. A1) The detailed behaviour of reservoirs is tem- porally and spatially unstable so that any given measurement may degrade in time, as in Fig- ure 4, where measurements vary with time (and place - not shown). 2) Reservoirs are temporally and spatially het- erogeneous at all scale lengths, so averaging properties may only be valid in particular circum- stances, A3) There is the possibility of (i) long-range in- teractions between-, and (ii) long-term interac- tions within-, hydrocarbon reservoirs. The effects have been observed in large mature oil fields". ‘A4) Detailed behaviour, such as the behaviour in Figure 4, may not correspond to or be expli- cable by conventional geophysics. Despite these complications, other properties of critical systems have enormous potential ben- efits for hydrocarbon recovery. B1) Current configurations of crack geometry within the deep interior of the rock mass or res- ervoir can be monitored with shear-wave split- ting and evaluated by APE", B2) Response of rock mass or reservoir to known changes can be calculated by APE®!. B3) Response of rock mass or reservoir can be controlled by feedback by repeating B1) and B2), above. If the response can be calculated and monitored by shear-wave splitting, in principle, the optimal response and optimal recovery can be achieved with feedback by adjusting input controls. Note that an important additional constraint is that modelling by APE, in Items B1, 82 and B3 will only apply to slowly driven systems, when, stress relaxation processes and fluid percola- tion are allowed to evolve naturally, Only when this occurs, can the response of a-complicated heterogeneous reservoir to specific changes be calculated, or predicted, by APE, as happened in the CO,-injections reported in !. The time such natural processes takes is not known, and requires further study. However, evidence from: i) CO-injections ®; ii) Figure 4‘; and iil) changes before earthquakes '"*4, suggests that the response is comparatively fast, and that effects can be modelled by APE afier only a day 46 or two relaxation - this might be an acceptable delay in oil field procedures. The implication is, reservoirs forced by aggres- sive production strategies will create further heterogeneities and cannot be modelled and al- most certainly yield less oil. These disadvantages and potential benefits ‘open huge opportunities for exploitation, some of which shall be briefly discuss here. Main disadvantages for hydrocarbon production Unquestionably, the biggest operational disad- vantages are A1 and A2. Evidence for A1, tem- poral and spatial instability, is demonstrated directly by the variations in papers ''#5), and in Figure 4, where repeated measurements be- tween fixed source and fixed receiver vary with time because of small distant seismic distur- bances. Other evidence '"! suggests the varia tions could be weeks before small earthquakes within tens of km, and years before the largest earthquakes and eruptions and could be visible worldwide. Other sources of disturbance could be production operations in neighbouring not necessarily adjacent oilfields ©, and possibly other, to less tangible, phenomena. The Earth's crust is in a continual state of flux. This means that any detailed seismic measurement of a res- ervoir may vary with time due to what are likely to be intangible phenomena. These variations are likely to be small but could well contaminate time-lapse (4D) seismic monitoring in produc- tion reservoirs A2, temporal and spatial heterogeneity, is pos- sibly even more serious. The principal hetero- geneity is believed to be temporal and spatial variations in microcrack geometry, with varia- tions in crack aspect ratio one of the major ef- fects (Figure 3), leading to variations in (particularly directional) permeability. Since fluid percolation through porous rocks is one of the dominant mechanisms in hydrocarbon produc- tion, irregular variations in permeability could substantially modify flow rates. Such variations would be difficult to estimate, difficult to predict, or difficult to assign to a particular cause. The variation of permeability with direction shows that cracks have a large affect on hydrocarbon percolation, which means that variations of crack aspect-ratios (the most compliant crack parameter) could have major effects on pro- duction raies. Taken together, this means that::A Premier International Oil & Gas Event Millennium Asian Petroleum ey tome) Soe aie Convention ey Se ee) eae Le pee ee ee Asia Gas-LNG $I Singapore Exhibition Services Pte Ltd Global Pacific & Partners www.petro21.com Tel: + 44 207 487 3173 Fax: + 44 207 487 5611 Tel: + 3170 ee es oe Fax: +31 70 324 174148 1) Detailed seismic measurements are likely to vary with time; and 2) Because of temporal and spatial hetero- geneities, the longer the seismic ray path, the larger the possible temporal and spatial varia- tions in seismic measurements. 3) Comparatively minor variations in microcrack geometry could have major effects on porosity and permeability and hence have major effects on hydrocarbon production. ‘As a consequence conventional seismic obser- vations, where source andlor receivers are sur- face-based, may suffer possibly severe anomalies in time and space that will not be ex- plicable in terms of conventional geophysics. Meaningful measurements have to be taken at the time and place they are required and need to be recorded within the producing reservoir. These effects have been demonstrated in ab- servations of shear-wave splitting above small earthquakes '"l. The enormous (#80%) scatter in time-delays has been showed to be caused by minor variations in stress and pore-pressure after each earthquake causing variations in microcrack geometry that have substantial ef- fects on seismic ray paths, travel times, and time-delays “I. In detail, rocks in the crust are critical systems of highly-sensitive compliant fiuid-saturated cracks which can only be imaged by shear-wave splitting, Time-lapse Single-Well Imaging (SWI) The most direct way of recording seismics within a producing reservoir is by time-lapse (4D) Sin- gle-Well Imaging (SWI). SWI is where a borehole source (the DOV for example) is re- peatedly pulsed, and scattered reflections and diffractions are recorded by three-component geophones in the same borehole as the source. Recordings of a single pulse will almost certainly be uninterpretable. However, if pulse is repeated after there has been some change in the reser- voir, Figure 5 shows that differencing (time- lapse) recordings before and afier a change can, in principle, determine the direction and distance of the change in properties. Single-Well Imaging is a new technique that has several advantages. 1) Time-lapse (4D) SWI can locate the direc- tion and distance of any change within the res- ervoir (the movement of fluid-fronts, for example). (Majer et al. "! recorded SWI changes in direct P-wave reflections, from a known frac- ture following air injection, recorded in a borehole a few metres from the fracture. The recordings were made with hydrophones and no shear- waves were recorded.) 2) The SWI location of changes (as in Figure 5) is largely independent of reservoir structure. This means that, in principle, SWI from a single well (ideally the production well) in a producing reservoir could: follow moving oil-water-contacts; anticipate water coning; locate by-passed oil (as volumes where there was no fluid movement); locate fractures by SWI location of small acous- tic events (and in optimum geometry by direct seismic reflections, as in ®); and otherwise pro- vide information for managing the reservoir. In principle, this would be without the need for ex- pensive structural surveys. 3) Analysis (in principle) is simple, automatic and largely independent of structure, thus al- most real-time analysis is possible. 4) There are significant advantages over al- tematives for monitoring production: 4.1) SWI would provide the basic parameters for initiating APE-modelling. 4.2) SWI operation and processing is auto- matic and fast (almost instantaneous). 4.3) SWI is much cheaper (x1/100) than 4D reflection surveys, particularly if geophones are located behind the casing when casing is first installed. As a result, SWI opens up whole new areas where time-lapse seismics could be used for real time monitoring of the producing reservoir with the possibility of making dynamic changes to optimise processes during production. Conclusions ‘We have shown the crust of the Earth is a crit cal system of closely spaced fluid-saturated microcracks with great sensitivity to small dis- turbances. Such extreme sensitivity verging on criticality is a feature that appears in many other phenomena, ranging from velocity glitches in pul- sars to quantum electrodynamics, from weather forecasting to the behaviour of traffic on roads and the economics of the New York Stock Ex- change. System criticality is a universally com- mon feature of complex interactive systems. Consequently, itis not surprising that the rocks in the Earth's crust, like many other Natural phe- nomena are also critical systems If observations of your reservoir are low-resolu- tion, then you can probably ignore the New Geo- physics, (except for analysing shear-waveSensors Borehole 2) Source sends signals that are scattered by nearby (eg coning fronts) orby distant production- scale OWCs, etc. and neoned by inline geophones. DOV Source (| | Oit-water [J | Substitution Volume 1b) Cut-away model rock show ing I(fmoise fluctuations in porosity and permeability as seen in almostall borebole logs. Line of geophones and source at centre of the cube. © Colours show values of variations in porosity, and permeability (embedded in a). 4) Time-lapsed (differenced) (,¥,Z) seismograms of reflected/scatinred motion mncorded on the borehole azay of geophones © Vector interpretation of (€) shows changed parameter averaging about the “**. Figure 5. Modelled time-lapse single-well imaging of a cube having the observation-based 1/-noise variations in porosity and permeability before and after 5% variations in one comer. splitting), but if you try to get more accurate measurements (and who does not), then your measurements are likely to be less and less un- derstandable as resolution increases. Thisis be- cause the behaviour near criticality is more like other critical systems than itis to the underlying sub-critical physics ". One cannot expect to un- derstand this behaviour in terms of conventional sub-critical physics. Ithas been claimed that itis one of the miracles of nature that the behaviour of these complicated interactive systems is so orderly, controlled and calculable. It is interesting that the practical en- gineers and managers to whom this paper is addressed should have to consider this state- of-the-art physical advance for better apprecia- tion of the behaviour of their reservoirs, and hopefully increase the oil production from their reservoirs. This paper has outlined a New Geophysics, sug- gesting that for detailed understanding of reser- Voirs and increasing production, reservoirs need to be monitored by time-lapse SWI. SWI is a new, largely untried, technology. Figure 5 indi- cates that in principle time-lapse SWI works. The most important requirement is to process real data. SWI today is in much the same position that reflection seismology was perhaps 70 years ago. There are many problems to resolve, known and. unknown, as there were with reflection seismol- ogy. With the massive advances projected in technology and processing, itis suggested that ‘SWI will be a key oilfield production tool for the 21 century. We need to begin to recover more oil as soon as possible. See References & Biography overleaf. 49An International Geoscience Conference organized by the Indonesian Petroleum Association (IPA) **** SUBMIT ABSTRACTS NOW II] ****‘The Meeting will focus on deepwater exploration and deepwater depositional systems. Frontier exploration of particular interest in the region will also be covered. Technical papers for oral or poster presentation are requested. The conference area encompasses the following countries: Australia, Bangladesh, Brunei, Cambodia, China, Indonesia, Japan, Malaysia, Myanmar, New Zealand, Pakistan, Papua New Guinea, the Philippines, Sri Lanka, Thailand, Vietnam, and the Western Pacific. The Technical Program will cover two full days and will consist of single oral sessions, An evening technical session will be organized as a geological forum. Around 30 oral presentations and 30-40 poster presentations are planned. A Field Trip to superb coastal outcrops of the Miocene Mt. Messenger deepwater depositional system on the North Island of New Zealand is planned for the week before the conference. Short Courses are planned to cover “Deepwater Depositional Systems” and “Deepwater Pore Pressures and Fracture Gradients” on Monday December 6. A Proceedings Volume will be published containing all oral and poster papers; authors must submit a manuscript in order to present a paper at the conference. Poster presenters will have the option of submitting a full manuscript or an extended abstract with figures from their poster presentation. CALL FOR PAPERS SUBMIT SHORT ABSTRACTS NOW DEADLINE FOR FINAL MANUSCRIPTS AUGUST 15, 2004 > Short Abstracts (200- 300 words, no figures) should be e-mailed or faxed A.S.A.P. > Selection of papers for the program will be made from abstracts. > Manuscripts for full papers or extended abstracts will be required by August 15, 2004 > Topics for presentation should be relevant to deepwater exploration and will include (a) deepwater depositional systems, (b) deepwater source rocks, maturation and charge systems, thermal histories of deepwater basins, (c| deepwater reservoirs: quality, distribution & connectivity, (d) formation pressures, fracture gradients and deepwater seals, (e) oil quality and biodegradation risks in cool deepwater environments, (i) mobile substrates, compressional tectonics, toe-thrusted areas and plays, (g) worldwide analogs and exploration statistics for deepwater exploration (h) seismic methods and case histories (i) basin studies, play concepts, deepwater petroleum systems. Frontier exploration topics should be focused on specific frontier areas and new play types of particular interest within the region. E-mail abstracts as attachments to ipaficbn.net.id or fax abstracts to IPA Jakarta 62-21-572-4259 Include authors names, company affiliations, postal address and contact telephone & fax numbers. Please indicate whether the paper has been presented before; if so give venue & date. Indicate clearly whether there is a preference for an ORAL or POSTER presentation.54 Scouting/Drilling Round-up Courtesy of IHS Energy AUSTRALIA The 2004 release of offshore petroleum acre- age has been announced by the Hon lan Macfarlane, Minister for industry, Tourism and Resources. It covers 31 areas in Commonwealth waters off Tasmania, Victoria, Westem Australia, the Northern Territory and the Territory of Ashmore and Cartier Islands. Companies have either 6 or 12 months from the date of the an- nouncement, depending on the area, to submit bids under the work programme bidding system Bids will be assessed on the basis of the work programmes proposed. The first round of bids will close on 30 September, the remainder of the areas remaining available for bidding until 31 March 2005. In addition to the Federal Bid Round, three regional governments have also launched tender calls. Wester Australia has opened the bidding on seven blacks setting a bid deadline of 23 September. Victoria has opened four blocks setting a bid deadline of 30 September. Finally, South Australia has opened two blocks setting a bid deadline of 30 Septem- ber. CHINA Shell has received governmental approval for the extension of Phase | exploration of PSCA 11/28, Bohai Gulf until 31 January 2005. The company will drill two exploratory wells in late 2004. Kerr-MoGee has plugged and abandoned Caofeidian 23-3 1, located in PSCA 09/18 in the Bohai Gulf, as a dry hole without tests. In May, Roc Oil plugged and abandoned ap- praisal well Weizhou 12-3 4, situated in PSCA 22/12 in the Beibu Gulf, as a dry hole. Wireline logs indicate an absence of significant hydro- carbons. Weizhou 12-3 4 is a down-dip appraisal of the 1982 Weizhou 12-3 1 oil discovery which flowed 36° API oil at 1,380 bo/d from the Oligocene Weizhou Formation. With the aban- donment of the well, Roc Oil completed its dri ing programme in the block for 2004. INDONESIA In May itwas announced that the BG Group had completed the sale of its 50% operating stake in the Muturi PSC in Papua for US$ 236 milion in cash, this stake also representing a 10.73% stake in the Tangguh LNG Project. The buyers were Muturi PSC partners Indonesia Natural Gas Resources Muturi Inc (INGRMI) and CNOOC Muturi Ltd. INGRMI paid USS 130.9 million for an additional 29,233% in the PSC, increasing its stake to 34.233%, while CNOOC paid US$ 105.1 million for an additional 20.767%, increasing its stake to 64.767% and assuming operatorship. The effective date of the transaction is 1 January 2003. The shares in Tangguh derived from the partnership splits of the three PSCs involved are currently: BP 37.2%, Ml Berau BV (Inpex/Mitsubishi) 16.3%, CNOOC 16.96%, Nippon 12.2%, KG 10% and LNG Japan 7.34%. Santos wildcat Jeruk 1ST in the Madura Strait Sampang PSC has been plugged and aban- doned as an oil and gas discovery after plans to sidetrack for a second time due to stuck drill pipe and then deepen the well to its PTD of 5,172m were cancelled. The well was previously drilled to 5,027m in sidetracked hole, at which depth an open hole test in the Kujung Forma- tion was undertaken and flowed 4,700 b/d oil and water emulsion (up to 80% water), 0.3 MMcf! d plus 470 bw/d. Spudded on 21 November us- ing the "Ocean Sovereign” J/U in 39m of water, the well was targeting a potential 227-584 MMboe recoverable in a Kujung Formation car- bonate reservoir. The prospect lies in the south- west of the block, 6km south of Anggur and 3km west south-west of yong. Amerada Hess deviated gas appraisal well Ujung Pangkah North 1 in its East Java Sea Pangkah PSC was being tested in early June after having been drilled to a revised TD of 1,829m MD (1,642m TVD). The well is located at the mouth of the Bengawan Solo river and is targeting Kujung Formation Unit | carbonates with an original PTD of 1,844m MD (1,631m TVD). The well lies about 7km west north-west of the 1998 Ujung Pangkah 1 discovery well INDIA Caim Energy India Ltd (CEIL) has announced that the second and third appraisal wells to its significant N-B-1 (Mangala field) oil discovery in the northern third of the RJ-ON-90/1 (Rajasthan) block were successful. Located 3kmMANGALA 2 & 3 LOCATION MAP as and nonferrous metals for Ja- pan. Headed by President Hidejiro Ohsawa, JOGMEC took ow Barmer Basin Imis21 WELL 10: 190000803812 & 100000803813, over previous functions of NOC and Metal Mining Agency. JOGMEC has the following re- sponsibilities: (1) to provide vari- ous assistance to Japanese companies engaged in oil and gas exploration and production in accordance with their needs at various stages from acauisi- tion of exploration and produc- tion rights, (2) to provide various assistance to Japanese compa- nies engaged in exploration and development of nonferrous min- eral resources, ranging from planning of exploration projects to finance for exploration and de- velopment projects, (3) to ensure safe and adequate stockpile management for the national stockpiling programmes of oil and LPG, and to ensure timely and flexible stockpile release, (4) to provide support to municipal governments and Japanese companies for mine pollution to the north-east and 2.5km to the south south- west of the discovery well respectively, Mangala 2 and Mangala 3 were both designed as down- dip appraisal wells and are reported to have encountered excellent quality Palaeocene Fatehgarh Formation sands similar to those found in previous wells and established that the gross sand packages can be correlated across the field. Furthermore, log, core and pressure information from all four wells drilled on the Mangala field to date confirm a single oil-water contact throughout the field. JAPAN Japan Oil, Gas and Metals National Corpora- tion (JOGMEC) has been established with the mission to ensure the stable supply of oil, gas control. MALAYSIA. US-independent Newfield has been awarded the 4,400 sq km deepwater Sarawak Block 2C. The new block, carved from the previously delineated blocks A, B, C and D, contains one well but is largely unexplored. Newfield will hold 60% equity and operatorship of Block 20, with state firm Petronas Carigali holding the remaining 40% Petronas completed a 4,172 sq km 3D seismic survey over Sarawak Deepwater blocks A, B, C and D on 17 August 2003, using the WestemGeco “Eagle” S/V. As part of the agree- ment for Block 2C, Newfield will have to pay a portion of the back costs of the seismic (USS 7.5 million), as well as commit to drilling two new wells to 3,000m each. Minimum financial com- mitment for Block 2C is USS 28 million. The tract, lies in water depths of up to 1,000m. Understood to be part of the deal to acquire Block 2C, Newfield announced a separate agreement that will see it take a 50% non-operated stake in the newly designated PM-318, covering 1,600 sq 5556 km offshore Peninsular Malaysia, Petronas Carigali will hold the remaining 50% and oper- ate the tract. The block covers the North Lukut, Penara, Rabung, Abu, Abu Kecil, Bubu, Korbu and Diwangsa oil discoveries, made by EPMI in the early 1990s. Commitments associated with the new contract are for acquisition of 400 sq km of 3D seismic data, plus four wells to a mini- mum depth of 1,750m each. Minimum financial ‘commitment on the block is US$ 12 million. MONGOLIA PAM has signed a PSC for coalbed methane exploration and development in block Nomgon- IX, southern Mongolia with Mongolian Gas and Exploration Inc (MOGE). The agreement had been approved by the Government of Mongolia effective 10 December 2003. PAMis a Canada- based company. MYANMAR Petronas Carigali has commenced acquisition ofa planned 8,800km of 2D seismic over its ex- ploration blocks in the Mergui Terrace, Andaman Sea, using the “Veritas Searcher’ SIV. Effective 19 November 2003, Petronas entered into the exploration phase in M-16, M-17 and M-18 blocks by paying signature bonuses of USS 2 million per block, as specified in the PSC agree- ments signed on 19 August 2002. Petronas has 100% equity in the three blocks, with a back-in option for MOGE in the event of a commercial discovery. Petronas also requested an exien- sion for the study period of the M-15 block and it seems that Petronas will be allowed to shoot seismic over the block during any future seis- mic campaign in the adjacent blocks. PAKISTAN Total E&P Pakistan spudded the Pak G2-1 deep water exploration well in the Offshore Indus-G EL (Indus Delta) block in May using the Tran- socean Sedco Forex “Deepwater Discovery” D/ S. The well is believed to have a prognosed TD of 4,725m, PHILIPPINES South China Resources has applied for a Serv- ice Contract covering 10,000 sq km in the Cuyo Platform area of offshore Palawan. The com- pany had previously held the area under a six month Non-Exclusive Geophysical Permit (NGP) covering 13,400 sq km, which expired in July 2003. South China stated that work conducted under the previous contract ‘has allowed it to formulate a “viable exploration programme” for its new contract application. The Cuyo Platform lies to the north-east of Palawan Island in the northern Sulu Sea and covers part of an area previously held by Murphy and South China as GSEC 96. It lies in water depths generally not exceeding 200m. VIETNAM Israeli firm Delek Energy, which was left hold- ing 100% equity and operatorship of blocks 12W_ and 12E following the withdrawal of former op- erator Noble Energy (Samedan) in late 2003/ early 2004, has now secured UK firm Premier as a farminee to the Nam Con Son Basin tracts. Premier will take a 75% rightholding and operatorship of the two blocks, with Delek re- taining a 25% non-operated share. Premier is understood to be planning 2D seismic acquisi- tion in the block. Previously work has centred around the Dua oil and gas discovery in the east of Block 12E, as well as the Condor Prospect in Block 12W. In the event of a declaration of com- merciality, PetroVietnam has the option to back- in for a 15% working interest. Premier is also understood to be close to finalising a farm-in agreement with Vamex to its Block 07 & 08/97, located to the south-east of blocks 12W and 12E. This represents Premier's first entry into Viet- nam although in the early 1990s they were close to finalising a deal for the then larger Block 15 that subsequently has become the venue of a number of impressive oil and gas discoveries. Singapore Petroleum Company (SPC) has farmed-in for a 10% stake in the Petronas Carigali-operated blocks 102 and 106 in the Gult of Tonkin. Revised interest holdings are now Petronas Carigali 50% (operator), American Technologies Inc (ATI) 20%, PIDC 20% and SPC. 10%. The cost of the transaction has been re- ported as USS 3.5 million, presumably taking the form of SPC's contribution to the upcoming drilling programme, which is expected to com- mence in August. Con Son Joint Operating Company (CSJOC) has abandoned (with minor shows) its second wildcat in Block 10 in the Nam Con Son Basin. The well was targeting Lower and Middle Miocene sandstones, with a deviated section (maximum 24 degrees) from 1,250m TVD. On 8 January 2002 the state oil companies of Viet- nam, Malaysia and Indonesia, namely PetroVietnam, Petronas and Pertamina respec- tively, were awarded Vietnamese blocks 10 and 11-1. Anewly formed company, CSJOG, in which equity is split 40/30/30 in favour of PetroVietnam, Petronas and Pertamina, operates the blocks. Meanwhile, PetroVietnam has announced plans to offer nine deepwater blocks, located mainly in the Phu Kanh Basin, as part of a licensing round set to commence on 1 September.SOUTHEAST ASIA PETROLEUM EXPLORATION SOCIETY Tanglin P. O. Box 423, Singapore 912415 emall: seapex@seapex.ory Web: www.seapex.org Membership ici perc | Membership fees 1 year $50 uss 35, 2 years $$ 100 Uss70 Life Membership $600 uss 420 Name: Family Name Given Names Company Name and Address: Home Address: [_ ] Preferred Mall (please tick): Telephone No: Telephone No.: FaxNo.: FaxNo.: ee E-mail: ial Profession: Membership No: Education: University: \DagreeMajor/Vear: Professional Experience: Qualification requirements are a degree in Geology, Geophysics or related Earth Science or a minimum of five years practical experience in Petroleum Exploration. Date Signature Please make payment with this application (AMEX, Visa or Mastercard* )* Circle name Card number Ti. I please write clearly ExpiryDate: [|_| Invalid without signature (US Dollars cheques must be drawn on a US-based bank account or sent as a bank draft.) Cheques made out to SEAPEX, along with this Application Form should be sent to: ‘SEAPEX Membership Committee, Tanglin P O Box 423, Singapore 912415. Yearly dues run from October to September.Geren ieienre Frege BULAN THE BENEFITS Ore RCE es ee Serre eee ey cay Oc RU Cen) + Tightest streamer separation in industry Set EC Aen es * Leading trace densities with single source, nes pte es + Enhanced sub-surface illumination * Ramform towing stability and control eee ST eee | + Proven Ramform performance with highest Or eee oteatcsy eT ts Prac OUT ER acl PGS MARINE GEOPHYSICAL Oslo London Houston Singapore Tak nM Te COTATI Teese Och aeRO ES www.pgs.com‘The Widuri field, offshore southeast Sumatra, has been very successfully developed over the past 13 years despite its complex lithology. In 2000, a monitor 3D seismic data set was acquired in order to observe pressure depletion around a water-flooding project, improve the characterization of the reservoir and develop a better understanding of fluid movement over time CNOOG SES Ltd. contracted Fugro-Jason to demonstrate the pawer af 3DiQ Simultaneous AVO Inyersion™ in developing superior subsurface information. From well log information, it was demonstrated that in a P-lmpedance varsus S-Impedance cross plot, sands could be distinguished from coals and cil sands fram watar-wet sands. Muliiple seismic angle stacks were inverted simultaneously to produce a 3D cube of P- and S- impedance. 4D fluid effects were investigated and characterized using a Time-Lapse worklow utlizing the unique features of Jason's 3DiQ Simultaneous AVO Inversion, ‘The study showed that a clear delineation of reservoir lithology is possible with 3DiQ Simultaneous AVO Inversion technology. The Time-Lapse information was instrumental in understanding the flow within the water-drive reservoir and highlighting the bypassed oil Both the wells crilled after the study came in with the reservoir lithology and hydrocarbon Content predicted by the Jason 3DiQ subsurface information. JASON ize a= ir characterization = in rese