Operations in Indonesia
Glagah Kambuna TAC and East Seruway PSC
Glagah Kambuna TAC – Offshore North Sumatra
Serica 25%, Salamander 50% (operator), KrisEnergy 25%
The Glagah Kambuna Technical Assistance Contract (“TAC”) comprises an area of approximately 380 square kilometres and lies 40 kilometres offshore North Sumatra in about 40 metres of water. The TAC contains two hydrocarbon discoveries: the Glagah #1 oil discovery, drilled by Caltex in 1985, and the Kambuna #1 gas discovery, drilled by Bow Valley in 1986. In September 2005, Serica commenced drilling the company’s first operated well, the Kambuna #2 appraisal well. The well was drilled to a depth of 7,963 ft and tested gas from the Upper Belumai reservoir at 17.5 mmscfd and over 1,500 bpd of 55° API gravity condensate on a restricted choke.
A 3D seismic survey covering the Kambuna field was acquired in late 2006 and detailed processing and interpretation were carried out during 2007. In March 2009, consultants RPS Energy estimated the gross Proved plus Probable Reserves of the field at 133 billion cubic feet of sales gas and 11.6 millions barrels of condensate, a total of 39.3 millions barrels of oil equivalent (Kambuna gas is converted to oil equivalent at 4,800 cubic feet per barrel).
In early 2008 the Kambuna field production platform was installed and three development wells were then completed and tested. The total maximum stabilised gas rate from the three wells was 114 mmscfd, together with an estimated 8,000 bpd of condensate. This rate is considerably higher than was expected and would easily satisfy a greater production rate than the initial sales gas contracts of 40-44 mmscfd.
Gas demand is strong in North Sumatra but supply from existing gas sources is insufficient and the main power station near Medan is reported to be burning around 25,000 barrels of oil per day. Medan is the third largest city in Indonesia and the Kambuna production will alleviate the shortage of gas-fuelled power in the area.
Gas sales agreements have been executed for the sale of 28 million standard cubic feet of gas from the Kambuna field to the state electricity generator, PT Perusahaan Listrik Negara (‘PLN’) and 12 mmscfd to PT Pertiwi Nusantara Resources (‘Pertiwi’). The contract with PLN will realise an initial price of approximately US$5.40 per thousand standard cubic feet (‘mcf’) escalating at 3% per annum. The contract with Pertiwi will realise an initial price of approximately US$7 per mcf, again escalating at 3% per annum. In addition to these contracts, the sale of 4 mmscfd of gas to state oil company Pertamina has been agreed for the production of LPG.
Gas from the Kambuna field is delivered at Pangkalan Brandan at the site of a Pertamina gas plant and refinery about eight kilometres from the coast. In addition to the initial contract gas sales of 40 mmscfd, around 4,000 barrels per day of condensate will be processed and delivered by pipeline to Pangkalan Susu and sold to Pertamina at a price close to that of crude oil.
Serica completed the sale of a 15% working interest in the Glagah-Kambuna TAC to Salamander Energy in August 2008 and sold a further 25% working interest to KrisEnergy in January 2010. Serica presently retains a 25% interest in the TAC.
Gas sales from the Kambuna field commenced on 11 August 2009.
East Seruway PSC – Offshore North Sumatra
Serica 100%
In October 2008, Serica was awarded the East Seruway Production Sharing Contract (“PSC”) offshore north Sumatra. Serica is the operator of the PSC and holds a 100% interest. The PSC covers approximately 5,864 square kilometres of the offshore North Sumatra Basin. The eastern part of the PSC adjoins Serica’s Kambuna TAC and extends northwards to the Indonesia-Malaysia border in the Malacca Straits.
Serica has a detailed regional understanding of the offshore North Sumatra Basin, with over 5 years’ experience as a PSC operator in the region. In 2008, the Company carried out a study of all the available data on the East Seruway Block for the Indonesian government. Serica will acquire a new seismic survey and drill an exploration well in the Block during the initial three year term of the PSC.