flow, Volume 02

FEATURE FOCUS

THE STORY BEHIND PETRONAS’ JOURNEY TO LAUNCH THE WORLD’SFIRST FLOATING LNG PLANT

2015 PETROLIAM NASIONAL BERHAD (PETRONAS)

All rights reserved. No part of this document may be reproduced, stored in a retrieval

system or transmitted in any form or by any means (electronic, mechanical,

photocopying, recording or otherwise) without the permission of the copyright owner.

www.petronas.com.my

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Molecules to Market

The return of marine life to Sarawak shores

Drama!It’s more than Technology

Unconventional

A mid-life crisis for PETRONAS’ oil and gas business?

Thinking

Energy has spurred the growth of nations for decades and continues to fuel economies and human imagination. Rich

sources of energy can be found within layers of humble and seemingly ubiquitous shale rock, often in remote places

and in the toughest of terrains. People like Dr Chan Tuck Leong are traversing the globe to unlock this resource in

order to light up megacities, keep us cool on a sweltering afternoon and power the internet that keeps families and

friends connected. We’re going to need energy for the future. And we won’t stop looking. Empowering Lives.

Watch the full story at www.youtube.com/PETRONASofficial

www.petronas.com Petroliam Nasional Berhad PETRONASofficial

PETRONAS does not encourage the giving of gifts or the provision of gratuitous services by PETRONAS’ contractors or sub-contractors, suppliers, bankers, dealers, or customers to its employees.

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Energy rocks.

IR. DR CHAN TUCK LEONGPacific Northwest LNG

Integrated Gas ManagementPETRONAS' capabilities across the gas value chain underpin its strength as an LNG supplier

18

Editor’s NoteGoing the Distance – commitment to customers remain unwavered

3

4 NewsbriefsPETRONAS reports full-year earnings and other industry news and other exciting highlights

PETRONAS UPSTREAM MAGAZINE

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Cover StoryPETRONAS' groundbreaking floating LNG project, PFLNG 1, will alter the dynamics for gas when it sets sail soon

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Unconventional GasNew thinking for new resources

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COVERThis month's cover story goes

behind the scenes of

PETRONAS' first floating LNG

project, a technological and

engineering marvel that is set

to make waves in the global

gas industry.

On the World StageAn interview with a stalwart of the global gas industry on putting gas on the global energy agenda

32

Collector’s Item

COVER STORY

With two Floating Liquefied Natural Gas (FLNG) facilities under its wings, PETRONAS is boldly pursuing game-changing technology to mark its leadership position in the global LNG arena.

Production of the first drop of on-

specification LNG is expected to be in

Quarter 4, 2015.

The development of a 360 metre LNG

FPSO that will be able to process,

to the source of the hydrocarbons or

the gas field, allows natural gas located

hundreds of miles away from land to

be monetized without the need for

pipelines, heavy infrastructure and

other CAPEX investments.

Located at the Kanowit gas field, 180

the PFLNG 1 facility will be producing

1.2 million tonnes of LNG over a

period of 20 years of its design life.

Before the end of 2015, the vessel,

currently being constructed at Okpo,

South Korea, is expected to make

its way to Kanowit, Sarawak, for

commissioning.

“This isn’t only a breakthrough for

PETRONAS and Malaysia, but is

also a significant game-changer

for the oil & gas industry globally.

For PETRONAS specifically, an

operational FLNG facility is testimony

to PETRONAS’ capability in driving

excellence and engineering

solutions to meet energy demands.

Additionally, once PFLNG 1 achieves

First Drop of LNG and commercial

begins in early 2016, it strengthens

Malaysia’s position as the world’s

second-largest LNG exporter”, said

former President and Group CEO,

Tan Sri Dato’ Seri Shamsul Azhar

Abbas. Once on-stream, the facility

is expected to boost the country’s

LNG production capacity to about

27 million tonnes per annum.

For PETRONAS, the

conceptualisation of a floating

LNG facility was given serious

consideration beginning 2006.

At that juncture, with over 23 years’

experience in reliably delivering

LNG to customers, and over 15

years’ experience in shipbuilding,

PETRONAS was in a unique

position to push boundaries and

explore possibilities to expand its

monetisation opportunities by

turning the novelty of having an

LNG plant on a vessel into reality.

Changing the Landscape

for LNG

APR / MAY 20156 7

PFLNG:

COVER STORY: PFLNG

PETRONAS is not in any race to being the world’s first. The race is with ourselves; to let go of our own inhibitions, and stretch the limits of our abilities.

Tan Sri Dato’ Shamsul Azhar AbbasFormer President and Group CEO of PETRONAS

APR / MAY 2015

2726

By JANE LEE

THINKINGUnconventional

The mindset to be successful in the Unconventional resource business.

The company he worked for had an

innovative idea to use concentric

coiled tubing to inject steam and

produce heavy oil from a single

wellbore.

Today, two decades later and in

Kuala Lumpur, the 46-year-old, Vice

President of the Unconventional

Division in PETRONAS’ Upstream

business, says that even though

Steam Assisted Gravity Drainage

(SAGD) is now a common or

‘conventional’ extraction method it

took an ‘Unconventional’ mindset

to be innovative and successful.

“Unconventional means to not be

bound by or adhere to accepted

practices. It is just in the last 10

years that the term has been used

to describe the resource”. What he

wants to instill is the mindset to think

unconventionally so that the team is

always ahead of the competition.

“What we do is very straight forward

– we all drill and frac wells” said

the Canadian native. “Industry

competitors basically do the same

thing but the distinguishing factor is

the right mindset to achieve positive

results. This will be very important

to make PETRONAS a leader in

development of unconventional

resources.”

As a fresh-out-of-school petroleum engineer in Calgary in 1994, Neil Horbachewski was introduced to “unconventional” methods early in his career.

UNCONVENTIONAL GAS

FEATURE FOCUS

THE STORY BEHIND PETRONAS’ JOURNEY TO LAUNCH THE WORLD’SFIRST FLOATING LNG PLANT

2015 PETROLIAM NASIONAL BERHAD (PETRONAS)

All rights reserved. No part of this document may be reproduced, stored in a retrieval

system or transmitted in any form or by any means (electronic, mechanical,

photocopying, recording or otherwise) without the permission of the copyright owner.

www.petronas.com.my

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Molecules to Market

The return of marine life to Sarawak shores

Drama!It’s more than Technology

Unconventional

A mid-life crisis for PETRONAS’ oil and gas business?

Thinking

The afternoon flow sits down with Datuk Ir (Dr) Abdul Rahim Hashim, he has just returned from signing a Memorandum of Agreement with University of Cambridge Admissions Testing Service in his current role as Vice Chancellor of Universiti Teknologi PETRONAS.

The agreement is one more of the forward thinking and bold initiatives that embodies his approach in all things – to always consider what we can do that’s new,

push ourselves to a new level of excellence.

The same energy and drive underpinned

his tenure as President of the Malaysian

Triennium for the International Gas

Union (IGU), from 2009 to 2012. The

three years marked a number of

new programmes, initiatives and

collaborations that helped bring

the importance of natural gas as an

important element of the energy mix,

pushing it into greater prominence

within the industry.

“One of the things that changed

significantly during that time was the

positioning of gas. At the time it was

still considered very much a bridge

fuel. But with the ‘shale revolution’,

gas reserves are expected to extend

its sustainability for another 250

years, which is almost equivalent

to the supply for coal. Yes, there’s a

focus on renewable energy to reduce

carbon emissions, but hydrocarbons

will be around for a long time and

natural gas will play an important role

as source fuel to meet our energy

needs,” he says.

With programmes centered around

three core pillars of capability

development, youth involvement and

geopolitics, the Malaysian Triennium

set into motion initiatives that are

still being carried through today to

advocate natural gas.

“My motto, especially for the 2012

World Gas Conference, was ‘Failure

By CHRISTINE CHEAH

Putting gas on the global energy agenda took perseverance and clever persuasion.....

33

is not an option’. We decided that

if this is the only chance we had

better make it work and work well.

That’s it. I think everyone rose to the

occasion and all in all it was a great

triennium.”

In the conversation, Datuk Rahim

gave us some of his insights on…

THE SHIFT OF GAS FROM BEING

A BRIDGE FUEL TO WHAT IT IS

TODAY...

At the WGC 2009 in Buenos Aires,

I remembered (then IHS Chairman)

Daniel Yergin’s speech: gas is a ‘Fuel

Without a Voice’. They lumped it

together with coal and the rest of

the hydrocarbon family. Gas was

positioned as a bridge fuel, between

oil and renewables, and it would

disappear in later years.

But addressing energy requirements

against global population growth

and environmental concerns is

going to require a multi-pronged

strategy. Gas will continue to be

important because it is available,

things which are now part of the

IGU gas advocacy strategy.

MAKING EVERY CHANGECOUNT

ON THE WORLD STAGE

Gas has been a key resource for PETRONAS since its first solo field development: the Duyong field. Since then, an integrated approach to gas management has grown to become a cornerstone of the company’s operations.

Today, PETRONAS’ capabilities extend from the start to the end of

the gas value chain. A molecule of gas can stay under PETRONAS’

ownership from the moment it leaves the ground to the instant

value to our buyers globally.

Extensive gas reserves and the

potential for many more new

discoveries are just the beginning of

the story. From exploration in a wide

spread of field types and playtypes,

facilities, and transportation to markets,

PETRONAS is well entrenched at every

major point in the gas value chain.

With integrated end-to-end capabilities

and the continuous drive to maintain

its technical edge, PETRONAS is

maintaining its position as a key LNG

supplier; one that can ensure a stable,

secure and reliable supply of LNG to

buyers around the world.

INTEGRATED GAS MANAGEMENT

IntegratedGas

ManagementFrom Molecules to

Markets

With end-to-end capabilities and the continuous drive to maintain its technical edge in each aspect of the value chain, PETRONAS is maintaining its position as a key LNG supplier, one that can ensure a stable, secure and reliable supply to LNG to buyers around the world.

1918 APR / MAY 2015

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The LNG market has not been spared, with many projects now being held back in view of softening prices. However, even as the industry rides out this current period of volatility, our plans for gas at PETRONAS remains unchanged, while keeping an eye on cost efficiencies. PETRONAS has been involved in oil and gas for four decades, and in that time we have developed a track record of success across every aspect of the value chain - from exploration to trading and marketing. This allows us to take a long-term view of business, one that prioritises the needs of the customer over the short-term vagaries of the market. One fact captures our commitment to long-term customer relationships: PETRONAS has not missed delivering even one of the more than 8,500 cargoes it has pledged to its customers since shipping its first one in 1983.

This issue of flow is thus dedicated to PETRONAS’ contribution to the global energy market through our capabilities

in integrated gas management. This is presented in our feature story Integrated Gas Management. This year will see another milestone in the development of our LNG capabilities as we prepare for the arrival of our first floating LNG plant, PETRONAS FLNG 1, which is expected to set sail towards the end of 2015. We delve into the challenges and technicalities of this groundbreaking project with the people who had the vision to bring this innovation to fruition in this issue’s cover story. flow also takes a look at PETRONAS’ successful Production Sharing Contract (PSC) concept, which has proven to be an important catalyst for the growth of Malaysia’s oil and gas sector. Since it was established to replace concession agreements in 1976, over 150 PSCs have been awarded. Amazingly, 100 are still active today. We speak to one of these contractors, Murphy Oil, about the benefits they have enjoyed working under this arrangement. We are also mindful of the diversified workforce at PETRONAS. In particular,

GOING THE DISTANCE

EDITOR’S NOTE

The dramatic plunge in crude oil prices since June last year has changed many assumptions about the energy markets, and is impacting everything from investments in new capacity to buying decisions.

our first female drilling supervisor, 25-year old Penny Chan who has to hold her own with the men on an oil rig. Equally captivating is the tale of Project BEAcON, an initiative jointly led by PETRONAS and Sarawak Forestry Corporation that seeks to save the corals and marine life from the damaging nets of fishing trawlers that ply the waters off the coast of Similajau National Park. Using innovative solutions like artificial reef balls, volunteers that include PETRONAS employees are helping to protect the rich biodiversity of the area. The oil and gas sector may be currently undergoing a period of relative turmoil, but our commitment to our customers, the communities we operate in and other stakeholders will remain, regardless of the challenges that weigh down the industry.

Dato’ Wee Yiaw HinExecutive Vice President & CEO PETRONAS Upstream

Dato Wee

InnovationA snapshot on Production Sharing Contracts and insights from an international company doing business in Malaysia

48

Personality SpotlightPenny Chan goes where no woman has gone before

38

DeepwaterPETRONAS has proven its deepsea credentials with its successful intervention campaigns in Mauritania

60

Market AnalysisIHS Energy make their bet: the sharp decline in oil prices is unlikely to impact Malaysia's deepwater projects in the near term

42

SustainabilityProject Beacon looks to save the corals and marine life off Similajau National Park

54

PETRONAS UPSTREAM MAGAZINE

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[email protected]

Petroliam Nasional Berhad (PETRONAS)

PETRONAS

STAY IN TOUCH WITH US

Get in with the flow

“Near-term Malaysian deepwater projects will not be deterred by low oil

prices” says Dylan Mair, Senior Director of Upstream Research and Consulting.

By IHS ENERGY

THOUGHT LEADERSHIP

MAL AYSIA’S DEEPWATER FIELDS

43 APR / MAY 201542

Seeing The UnseenAdvanced geoimaging technology is making the search for hydrocarbons less of a gamble

36

39

Name: Penny Chan

Joined PETRONAS: March 2011

O May 2011

Graduated All Rounded Drilling (ARD) programme: December 2013 (awarded top scorer)

Assistant night drilling supervisor for Sabah deepwater projects: December 2013 – May 2014

Night drilling supervisor in Myanmar land rig: June – October 2014

Night drilling supervisor in Sabah):

November 2014 – current

Hobbies: Jogging, reading (currently reading See Jane Lead: 99 Ways for Women to Take Charge at Work by Lois P. Frankel)

MAKING A NAME FOR HERSELFYou don’t need to behave like a man to survive in a male-dominated industry. As the first female night supervisor in PETRONAS, Penny Chan has sometimes found herself the only woman on an oil rig with more than 150 men. But she has taken it all in her stride. In fact, the experience has made her a better communicator and leader.

When flow interviewed her for this story, the 25-year-old was more than happy to share her unique story of life on an oil rig. Amusingly, she is

always mistaken for a trainee rather than a supervisor by many of the men who have not worked with her.

She admits that the conversation around her makes her a tad uncomfortable at times, but rather

makes her uneasiness known to her colleagues.

“That happens sometimes but I would talk to them privately and tell them that I am not comfortable with the conversation. I have done this before. It was okay because the guy was open about it and he understood. We were talking like friends,” she explains.

Chan was in the first batch of petroleum engineering graduates from Universiti Teknologi PETRONAS (UTP) in 2011. While some of her friends decided to play it safe by taking other courses which aren’t so specialised, Chan decided to opt for the newly launched course in petroleum engineering.

PERSONALIT Y SPOTLIGHT

“The only physically-challenging parts of the job are having to climb on piles of oil well casings, which can be quite scary as it gets higher and higher, and using the rope to swing onto the platform.”

Penny Chan, Drilling Supervisor

By BRIGETTE ROZARIO

As PETRONAS first female drilling supervisor, 25-year old Penny Chan is bravely blazing trails for

women in the industry.

38 APR / MAY 2015 APR / MAY 2015

4948

INNOVATION INNOVATION

Prior to 1974, the Government, under

a concession system collected, tax

from oil companies which were

granted rights to explore and develop

petroleum resources with leases of up

to 40 years or more.

In 1974, the Petroleum Development

Act (PDA) vested PETRONAS with

the ownership and control of all

hydrocarbon resources in Malaysia.

This led to the adoption of PSCs to

replace the Concession Agreement

in 1976 so that the nation could play

a more direct role in controlling

PSCs set out the arrangements

for co-operation between

PETRONAS, which assumes the

role of a regulator, with qualified

oil companies as contractors for

the exploration, development

and production of petroleum

in a contract area for a specific

duration.

It is used to engage capable oil

and gas companies to participate

in the development of Malaysia’s

petroleum blocks, covering the

entire upstream value chain.

Since its introduction almost 40 years ago, Malaysia’s production sharing contract (PSC) scheme has been a key platform for the growth of the country’s oil and gas sector.

PARTNERING FOR PROFITProduction Sharing Contracts have been key in the growth of Malaysia’s petroleum resources for the past two decades.

and managing its petroleum

resources. The first PSC was

awarded in 1976 to Esso for the

Duyong oil field in Terengganu.

Unlike the old concession

system, the key advantage

of the PSC is that it allows

PETRONAS to have input

in strategic and operational

decisions, ensuring that the

operations are aligned with the

group’s business objectives and

nation building agenda.

Malaysia has awarded over

150 PSCs since the inception

of the scheme in 1976, of

which more than 100 are

currently actively managed by the

Malaysia Petroleum Management

organisation in PETRONAS.

INNOVATION

What is a PSC? PSC or Production Sharing Contract serves as a vehicle for partnership for PETRONAS and multnational oil & gas companies in conducting hydrocarbon exploration & production activities in Malaysia.

100PSC’s

4,000+

20,000215 billion

20%GDP

22.2

132

14

1,587320

10

7000

22.2 330

100PSC’s

APR / MAY 201500

00

HOPEA BEACON

Walk along the coastline of Similajau National Park, the beauty of the blue skies and golden sand can lull one into a comforting sense of serenity. The waters

postcard, however, tell

story.

SUSTAINABILIT Y

“By installing the reef balls, we hope to improve the marine life and perhaps the local fishermen can get more fish.”

Azizah Mohd DeliChairman of the BEACON Project Taskforce

For the past 20 odd years, the corals in the waters here have been dying, the number of fish dwindling and scores of turtles found dead on the beach; and all because of the fishing by trawlers that takes place here. It didn’t use to be this way.

Marine biologist James Anak Bali,

Corporation (SFC), remembers the first time he dived at the age of 20. He was exposed to marine life of all shapes, sizes and colours; as well as corals that appeared in hues that only seemed to exist underwater. It was the allure of

this underwater paradise that led to him become a marine biologist.

“Watching the ocean’s rich marine life decline over the years really upset me. The trawlers and their dragnets – they’ve destroyed a lot of the corals here,” he says.

“When the corals die, the marine life goes with it. They’ve fished here undeterred for so long, even the turtles

dragnets, they don’t stand a chance. Fewer and fewer make it to shore to lay eggs,” explains James.

5554 APR / MAY 2015

Similajau National Park from trawlers’ nets is already showing impressive results.

By BRIGETTE ROZARIO

OF

APR / MAY 201500 00

DEEPWATER

61 APR / MAY 201560

PETRONAS’ successful intervention campaigns at the Chinguetti field in Mauritania have proven its ability to handle deepsea operations under challenging conditions.

PROVING ITS METTLE IN THE DEEP

When PETRONAS took over the running of the Chinguetti field in Mauritania in 2007, production had been falling rapidly and prospects for the West African country’s only producing field looked dire.

Chinguetti had achieved its first oil on 24 February 2006, but within a few months production rates had plunged from 75,000 barrels per day (bbl/d) to 30,000 bbl/d due to a lack of pressure support. By the time PETRONAS entered the picture through it’s through its wholly-owned subsidiary PC Mauritania 1 Pty. Ltd. (PCMPL), production had fallen further to just 11,000 bbl/d.

Given the rapid production decline, coupled with high operation expenditure and decommissioning costs, the field was expected to reach its economic limit in 2013

if nothing was done to reverse the situation.

Significantly, PETRONAS’ operations at Chinguetti were the first for the company involving Subsea Production systems (SPS). To boost production, PCML implemented an aggressive development and intervention program involving both drilling and intervention activities in 2008.

The field was developed in two main phases, using subsea wells located within manifold-templates that are tied back to a Floating Production Storage and

2 P E T R O N A S U p s t r e a m M a g a z i n eAPR / MAY 2015

APR / MAY 2015

DR ILLING

P E T R O N A S U p s t r e a m M a g a z i n e 54

NEWSBRIEFS

Newsbriefs

PETRONAS registered a 4 per cent growth in revenue to RM329.1 billion for the year ended 31 December 2014, up from RM317.3 billion a year ago. While net profit for the year fell RM18.0 billion to RM47.6 billion - largely as a result of significant assets impairment losses due to lower crude oil price forecasts - EBITDA managed to gain RM1.9 billion to RM 125.3 billion. The Upstream division performed well last year, achieving significant milestones across a variety of metrics. Production grew 5 per cent on the back of 19 greenfields starting up, while 21 exploration discoveries and the sanctioning of more enhancement and improved oil and gas projects added to the group’s resources. PETRONAS’ portfolio of production sharing contracts (PSC) continued to grow during the year, with 101 PSCs now active in Malaysia. (See PSC story on page 48). There were also new upstream ventures in Argentina and Azerbaijan, extending the group’s already sizeable overseas presence.

Looking ahead, with average prices in 2015 expected to be significantly lower than 2014, PETRONAS’ profitability

PETRONAS’ 2014 PRODUCTION BEATS TARGET

PETRONAS has joined hands with four partners to develop specific technologies for the development of fields with a high concentration of CO

2.

The partners, UOP, Twister BV, Generon and Technip, will develop with PETRONAS, technology related to CO

2 separation

systems and the conceptual engineering design for an offshore high CO

2 field.

These technologies will be applied at the K5 field, located 250 km offshore Bintulu, Sarawak. K5 is a greenfield containing approximately 217 cf of gas with 70 percent CO

2. Carbon dioxide separated at the K5

facility will be re-injected and stored in an aquifer located 2.2 km below the seabed. “The technology-centric program for high concentration CO

2 fields will delve

into both surface and subsurface designs,

and is comprehensive across the value chain for carbon separation, transportation and storage,” said Dr Nasir Darman, Head, Technology Division, Technical Global, Upstream Malaysia, PETRONAS.

GETTING A HANDLE ON CO2 FIELDS

Speaking at the LNG Supplies for

Asian Markets 2015 conference,

Ahmad Adly Alias, Vice President, LNG

Trading & Marketing, PETRONAS, said

that while Henry Hub-linked prices

for LNG was popular around a year

ago, the recent fall in crude prices

has changed market dynamics. As

such, buyers shouldn’t favour one or

the other, as both pricing methods

are complementary.

“The reality is that a significant portion

of contracts will remain indexed to

crude as the oil-linked pricing has not

lost its luster,” said Mr Adly.

He also noted that with oil being

half the level it was in July 2014,

some 100 million tonnes or so of

LNG capacity that analysts had

forecast to take a final investment

decision this year will be

unachievable, especially as the

LNG global market currently is over

supplied and costs for developing

challenging gas reserves remain

relatively higher than market prices.

In the current uncertainty, he believed

that PETRONAS’s value proposition in

the LNG market would continue to be

underpinned by its security of supply

and flexibility in meeting customer

demands.

Since shipping its first cargo in 1983,

PETRONAS has not missed delivering

a single one of the more than

8,500 cargoes it has pledged to its

customers, he added.

“In Malaysia, we continue to boost

our gas resources and we have

successfully grown it to more than 100

trillion cubic feet in 2014. This ensures

that we deliver 25.7 million tons per

annum of LNG from our complex in

Bintulu. The additional gas resources

discovered to date will ensure that we

can continuously sustain this level of

production for years to come.

NEW PRESSURES ON LNG PRICING AND SUPPLIES“With differing degree of project

maturity in our portfolio, we

can offer differentiated terms

and varying degrees of tenure,

be it long term, medium term or

short term,” Adly said.

The company is developing

unconventional gas assets in

the extents of Australia and

Canada – in addition to the

conventional resources from

Malaysia and Egypt.

Malaysia is currently amongst

the world’s top three LNG

suppliers.

PETRONAS LNG Sdn. Bhd. (PLSB)

has signed an agreement with MISC

Berhad for the charter of five newbuild

LNG ships for a firm period of 15

years with a charterer’s option for an

extension for the next five years.

The new LNG ships will provide

additional shipping capacity to service

cargo deliveries from PETRONAS

LNG Complex (PLC), Gladstone LNG,

PETRONAS Floating LNG 1, PETRONAS

Floating LNG2 and PETRONAS LNG

Train 9. The vessels are expected

to be delivered sometime from

September 2016 to December 2017.

En. Ahmad Adly Alias, VP LNG Trading

& Marketing, and CEO of PLSB, said

that this was the first Time Charter

NEW VESSELS TO SUPPORT LNG BUSINESS

Party (TCP) to be signed by PLSB and

the first moss designed vessels that

MISC Berhad will own and operate.

PETRONAS Head of CO2 Management Upstream Malaysia, Encik Hatarmizi Hassan; Twister BV

CEO, Mr John Young; Technip Consultant (M) Sdn Bhd Chairman, Encik Syed Feisal Mohammad; Generon Asia Sdn Bhd CEO, Mr John Jeffers; PETRONAS Senior Vice President Upstream Malaysia, Datuk Mohd Anuar Taib; PETRONAS Executive Vice President & CEO Upstream, Dato’ Wee Yiaw Hin; UOP Senior Vice President, Ms Rebecca Liebert; and PETRONAS Head of Technology Division, Upstream Malaysia, Dr Nasir Darman.

Cutting the aluminium plate at Hyundai Heavy Industries, which marks the start of construction for the LNG Carriers

will be impacted. To mitigate the impact, PETRONAS is taking steps to reduce planned CAPEX and OPEX spending for 2015.

Resource Addition (mmboe)

101 active PSC in Malaysia

New ventures - Argentina, Azerbaijan

4 partner in Integrated Canada LNG Project

th

GasLiquid

21 Exploration Discoveries

22 EOR/IOR/IGR Projects sanctioned

ORRR 3.1x 2C Resource Add 3.4 mmboe

RRR 1.6x 2P Reserve Add 2.1mmboe

Higher Gas Supply & Plant Performance

Record 423 cargoes

100% PLC OEE

Higher trading volume

7.56

7.77

2,213

2,359

2,127

2,226

Q42013

Q42014

Q42013

Q42014

2013

2014

2013

2014

3223

3382

2013

2014

5% production growth

Production Enhancement

19 Greenfields Production start up

Production (kboe/d)

Uncon MalaysiaIOR/IGR/EOR Exploration International

1165

2014

385

2014

21673

47% 53%

2014

LNG Sales Volume (MMT)

Traded Volume PLC

28.85

30.12

UPSTEAM OPERATIONAL HIGHLIGHTS 2014

More on the K5 Cryogenic Distillation Facility on page 22.“Most importantly,

it offers a commercially viable and environmentally sustainable approach for these challenging assets.”

Find out how PETRONAS works across the Integrated Gas Management chain on page 18.

COVER STORY

With two Floating Liquefied Natural Gas (FLNG) facilities under its wings, PETRONAS is boldly pursuing game-changing technology to mark its leadership position in the global LNG arena.

Production of the first drop of on-

specification LNG is expected to be in

Quarter 1, 2016.

The development of a 365 metre LNG

FPSO that will be able to process,

produce and offload LNG in-situ, close

to the source of the hydrocarbons or

the gas field, allows natural gas located

hundreds of miles away from land to

be monetized without the need for

pipelines, heavy infrastructure and

other CAPEX investments.

Located at the Kanowit gas field, 180

kilometers offshore Bintulu, Sarawak,

the PFLNG 1 facility will be producing

1.2 million tonnes of LNG over a

period of 20 years of its design life.

Before the end of 2015, the vessel,

currently being constructed at Okpo,

South Korea, is expected to make

its way to Kanowit, Sarawak, for

commissioning.

“This isn’t only a breakthrough for

PETRONAS and Malaysia, but is

also a significant game-changer

for the oil & gas industry globally.

For PETRONAS specifically, an

operational FLNG facility is testimony

to PETRONAS’ capability in driving

excellence and engineering

solutions to meet energy demands.

Additionally, once PFLNG 1 achieves

First Drop of LNG and commercial

begins in early 2016, it strengthens

Malaysia’s position as the world’s

second-largest LNG exporter”, said

former President and Group CEO,

Tan Sri Dato’ Seri Shamsul Azhar

Abbas. Once on-stream, the facility

is expected to boost the country’s

LNG production capacity to about

27 million tonnes per annum.

For PETRONAS, the

conceptualisation of a floating

LNG facility was given serious

consideration beginning 2006.

At that juncture, with over 23 years’

experience in reliably delivering

LNG to customers, and over 15

years’ experience in shipbuilding,

PETRONAS was in a unique

position to push boundaries and

explore possibilities to expand its

monetisation opportunities by

turning the novelty of having an

LNG plant on a vessel into reality.

Changing theLandscape

for LNG

P E T R O N A S U p s t r e a m M a g a z i n eAPR / MAY 20156 7

PFLNG:

COVER STORY: PFLNG

PETRONAS is not in any race to being the world’s first. The race is with ourselves; to let go of our own inhibitions, and stretch the limits of our abilities.

Tan Sri Dato’ Shamsul Azhar AbbasFormer President and Group CEO of PETRONAS


COVER STORY: PFLNGCOVER STORY: PFLNG

our operators for PFLNG 1 will be

from Sarawak. This goes to show

PETRONAS’ commitment in nation

and capability building, whilst

embarking on a strategic project

of this scale for the interest of the

nation,” added Tan Sri Shamsul Azhar.

When asked about the competition,

he commented that PETRONAS is

not in any race to be the world’s

first. “The race is with ourselves; to

let go of our own inhibitions, and

stretch the limits of our abilities.

This is reimagining energy at work,

he said. The project now stands at

70% of overall progress. This is an

impressive achievement, given that

the keel laying for the hull was done

in January and the hull launching took

place in April 2014, both being key

milestones for the 45 month fast track

EPCIC project.

The PFLNG 1 EPCIC contract was

awarded to Technip & Daewoo

Shipbuilding & Marine Engineering

(DSME) (read more – our partners’

views, page 17) in March 2012.

PETRONAS is currently working

closely with its partners, Technip

and DSME, to ensure that the

project is delivered safely, in

accordance to project specification

and quality, within cost and on

schedule.

Almost all engineering and

procurement activities during the

12 month period for the PFLNG

1 Project were done in Malaysia.

PETRONAS played a leading role

in both phases given the nature

of alliance contracting with its

partners, with almost 5.5 million

manhours committed to these

phases of the project.

“There were many drivers for us to

pursue this endeavour. We have been

aggressive in our efforts to reverse the

natural decline in domestic production,

and while this has led to several new

and significant gas discoveries, FLNG

opens the opportunity to monetise

resources from remote marginal and

stranded gas fields, which would

otherwise be uneconomical to develop

via conventional means. With PFLNG 1

in particular, PETRONAS has positioned

itself as a forerunner in FLNG,

opening further prospects of FLNG

developments,” he added.

Benefits for the nation

Apart from augmenting PETRONAS’

LNG portfolio, the PFLNG 1 facility

will be able to generate hundreds

of jobs and support services during

its operations. “Almost a majority of

Key Design Parameters

PETRONAS Floating LNGA

B C

D

A

B

C

D

E

E

Location : Kanowit Gas Field, 180km offshore Bintulu

Hull Size : 365m (L) x 60m (W) x 33m (D)

Capacity : 1.2 MTPA

LNG Storage Capacity : 177,000 m3

LNG Offloading : Cryogenic marinised loading arm

FLNG Mooring : External turret mooring

Loading : Side by side

Water Depth : 70m - 200m

Design Life : 20 years

Inlet Design Pressure : 65 Bars atmospheric

Accommodation : 100 – 150 personnel

Rotan Gas Field, 240km offshore Kota Kinabalu

381m (L) x 64m (W) x 31m (D)

1.5 MTPA

177,000 m3

Cryogenic marinised loading arm

External turret mooring

Side by side

500m - 1500m

20 years

65 Bars atmospheric

100 – 150 personnel

36

5m

38

1m

60m

Level 75

Level 80

PETRONAS Twin Towers

PFLN

G 1

PFLN

G 2

64m

PFLNG 1 PFLNG 2

PFLNG 1

PFLNG 2

PETRONAS FLOATING LNG AT A GLANCE

Pre-Treatment Liquefaction Storage OffloadingResource

PETRONAS Floating LNG 1 (PFLNG 1) has a capacity of 1.2 million tonnes per annum (mtpa) and is targeted for commissioning in the Kanowit Field offshore Sarawak in 2015. PETRONAS FLNG 2 (PFLNG 2), with a larger capacity of 1.5 mtpa, is scheduled for commissioning in 2018 in the Rotan Field offshore Sabah.

Once operational, the facilities are expected to change the landscape of the LNG business where the liquefaction, production and offloading processing of LNG, previously only possible at onshore plants, will be carried out hundreds of kilometres away from land and closer to offshore gas sources.

ABOUT PFLNG 1 & 2

COVER STORY: PFLNG

P E T R O N A S U p s t r e a m M a g a z i n e 11APR / MAY 201510

PFLNG iN BRiEF

The PFLNG 1 facility consists of

22 modular systems, from gas

treating, liquefaction, storage and

offloading systems. All of these

systems will be placed within and

on top of the vessel which, in

comparison, is as long as the Eiffel

Tower in length.

The heart of the FLNG is essentially

the liquefaction system which

liquefies the natural gas to minus

162 degrees Celsius, a process

which shrinks its volume by 600

times. The LNG will be stored in

a dual row membrane type cargo

containment system (CCS) before

being offloaded to the LNG carrier.

The PFLNG 1 facility is able to

accommodate LNG carrier sizes

of between 150,000 m3 and

157,000 m3.

The facility will be powered by 100

megawatts of electricity through

the use of natural gas, enough

to power up a small town with

100,000 people. Its combined

weight of both topsides and hull is

132,000 tonnes, which is six times

the weight of an LNG carrier. The

facility has a total 1,600 kilometers

in length of electricity supply

and instrument control cables,

equivalent to the distance from

Kuala Lumpur to Kota Kinabalu.

COVER STORY: PFLNG


Adnan oversees the multi-billion dollar project, which will see a unique tanker – more than 365 meters in length and 60 meters wide - set sail soon. PFLNG 1, as the massive facility is known, is expected to be fully operational by the first quarter of 2016.

With the end of an almost decade-long journey in sight, Adnan is in no mood for chest thumping. Rather, his team is fully focused on getting this groundbreaking project past the finish line.

“We are not out of the docks just yet, and my current focus is to make this happen and for us to be successful,” says Adnan, who is Vice President of Global LNG Projects, Upstream at PETRONAS.

He adds: “I think you need to prove what you have first and once you have done that and shown your experience and track record, then you will be in a position to blow your own trumpet.”

UNLOCkiNG POTENTiAL

If Adnan were to allow himself to take a step back to reflect, he would likely wonder at the game-changing nature of this complex project on the global LNG industry.

But he believes that success will ultimately be measured against the company’s original goal: to

monetize small stranded gas fields in Malaysia. The world’s second-largest LNG exporter after Qatar, PETRONAS currently operates eight LNG trains onshore with a total combined capacity of around 25.7 million tonnes per annum (mtpa).

The main reason PETRONAS is launching this project is to unlock fields that we previously were not able to tap, fields that were stranded or small in nature,” he explains.

With PFLNG, we are basically able to open up a new play for us in monetizing fields which previously had zero value. Besides, the days of big fields are probably coming to an end, or we are making fewer big discoveries globally.”

He adds that the timing of this project is fortuitous as the industry is moving towards maximising the potential of

Adnan Zainal Abidin Vice President of Global LNG Projects, Upstream at PETRONAS

The development of PETRONAS’ first commercial floating liquefied natural gas facility (FLNG) has been a labour of love for Adnan Zainal Abidin.

PETRONAS is ready to deliver a game-changer to the LNG industry with one of the world’s first floating liquefaction plants.

By LUkE ROShAN

Setting Sail For A Brave New World

Material MattersSpecific materials are used to ensure minimal downtime. Equipment is designed to be hardy and materials, saline-resistant.

Safety FirstPETRONAS Technical Standards were used to design the Floating LNG. This Gold Class standard also incorporates stringent HSE policies in the design, as well as when the vessel is operational.

Reverse EngineeringVessel fabrication and construction of the topside modules components are done UPSIDE DOWN.

Environmentally E�cientThe environmental footprint of the Floating LNG facility is far smaller than a regular plant.

MobilityFLNG vessels can be redeployed to multiple upstream areas as the reserves in the fields they are originally operating at deplete.

Size MattersOut in the open sea, PFLNG is BIGGER than a Nimitz-class aircraft carrier, TALLER than the Eifel Tower, HEAVIER than the Titanic – and yet, SMALLER than a regular LNG processing facility.

Writing New RulesThe marinisation of equipment required new rules to be written, as an FLNG is more complex than an FPSO.

MAKING IT WORKConstructing one of the world’s first floating LNG vessels required the skills of many parties:

PETRONAS Floating LNG 1

Resource owner, Operator, Marketing & Trading

PFLNG1 Contractor and Consortium Leader

PFLNG1 Contractor

Acid GasRemoval Unit (AGRU) Supplier

Liquefaction Modules Supplier

Turbine Supplier

2-row LNG Membrane Tank Supplier

COVER STORY: PFLNGCOVER STORY: PFLNG

medium and small sized fields that may not be near to shore. The FLNG technology PETRONAS is developing will help them tap into this potential.

Unlike a conventional onshore gas plant which requires the transfer to take place via hundreds of kilometers of pipelines connected to the offshore site, an FLNG facility will now have an LNG plant onboard the vessel with the capacity to process, produce and offload the product from the primary supply source.

PROViNG iTS WORTh

Although PETRONAS floating liquefaction plants have yet to start

operations, Adnan reveals that he has already started fielding inquiries from the multinational companies about the possibility of chartering these vessels.

Yet, he makes it very clear that the primary focus is to first prove the success of the technology PETRONAS has developed by successfully monetizing the fields in Kanowit and then Rotan before embarking on other commercial ventures with external partners.

“Our priority, and I can’t stress this enough, is to prove our worth and hopefully this will open doors for us. We have already been approached by

MNCs to use our floaters for one of their fields, but for us the focus is to get this out of the shipyard and have it commissioned and run successfully,” he says. “Once we’ve done this we can show the world this thing is happening and I have no doubt in my mind this will lead to other commercial opportunities beyond Malaysia.”

UNiqUE ChALLENGES: MOTiON, SPACE AND SAFETY

As a typical first-of-its-kind development, surprises along the project development are not

Kota Kinabalu

“With PFLNG, we are basically able to open up a new play for us in monetizing fields which previously had zero value.“

Adnan Zainal AbidinVice President of Global LNG Projects, Upstream at PETRONAS


FEATURE FOCUSCOVER STORY: PFLNGCOVER STORY: PFLNG


uncommon. PETRONAS is confident that the PFLNG 1 will be successfully executed and operational as scheduled.

The challenges of getting a project like FLNG 1 off the ground has tested the limits of the engineering prowess of PETRONAS and their partners.

For instance, there is the issue of motion caused by being in the ocean that is not present for a land-based plant. This required the project managers to use equipment that would be minimally impacted by this movement.

Then there is the problem of space, which would be limited on a ship compared to an onshore facility. “Previously we were building plants on shore, so in that respect the real estate was never a major issue to us as we could build the facility based on safety distances and a layout we were used to,” explains Adnan.

“However when building a plant on a ship, the real estate now is of prime consideration as we have to think about squeezing everything we would normally do at an onshore plant into a very tight space floating on water.

His team was also careful to put in place a more robust than usual operational system that would require less frequent maintenance.

“Unlike onshore plants if you have maintenance issues you can’t just pick up the phone and have your contractor appear in a pick-up truck. So we have to make all operating systems as robust and reliable as it can be so that the folks on the floater can deal with this as much as possible.”

Safety was another key consideration. Once fully operational, Adnan says

that at any given point in time there should be about 150 personnel on board the PFLNG 1. As such, certain safety features needed to be built into the floating platform itself.

“In an onshore plant, the equipment is well spread out and you have a bit more leeway, but with the close proximity of the equipment on a small real estate, it was critical that we had to pay special attention in the installation of blast walls to ensure necessary safety coverage.”

The team has employed a combination of innovative flair and technical excellence to overcome the challenges, ensuring that the dream of a floating LNG plant remains on track to becoming a reality. If all goes well and PFLNG 1 is a success, you can be sure that Adnan and PETRONAS will be celebrating this engineering Marvel.

Tuan Syed Feizal Syed Mohammad: Technip in Malaysia is the leader of a consortium with DSME, responsible for engineering, procurement, construction, installation and commissioning of the PETRONAS Floating LNG 1. Tuan Syed: FLNGs are challenging projects, placing gas liquefaction facilities on a vessel directly over offshore gas fields is clearly very demanding but at the same time it is very exciting! To overcome the complexity, Technip brings together its expertise, not only in offshore but also in subsea and onshore.

On a scale of 1 to 10, I would rate it a 9. As a comparative reference, a major FPSO would rate a 7 or 8.

Tuan Syed: With the primary aim to achieve safe operations and ease of operability, we have to push the limits and in some areas with novelties. A good example would be the use of nitrogen as a refrigerant, giving ease of operability which is a world’s first for this capacity.

Tuan Syed: Because of the complexity of this project, we have a contract structure that gives us the flexibility to accommodate changes along the way. We also adopted an integrated team approach where we resolve issues collectively, and we can share best practices on a collaborative basis.

A PiONEERiNG

Mr Duck Yull Lee, EVP, PFLNG Project Sponsor

for Daewoo Shipbuilding &

Marine Engineering Co. Ltd

(DSME)

Members of the consortium responsible for the engineering and construction of PFLNG 1 share their views on the challenges of taking on this groundbreaking project.

Tuan Syed Feizal Syed Mohammad, Chairman & SVP,

Malaysia, Technip

EFFORT

Mr. Duck Yull Lee: My role in the project at DSME is to lead, coordinate and mobilise the necessary resources for smooth execution of the project, and co-operating with consortium partner, Technip. I am also representing DSME as the project sponsor.

Mr Lee: Considering the new technologies being applied for this floating LNG such as the liquefaction process, LNG offloading system and LNG cargo containment system (CCS), among other things, I would say this project should be ranked very high in terms of complexity. The physical size of this project is very similar to several FPSOs already fabricated or being fabricated by DSME.

Mr Lee: One of the technical challenges we faced was how we could secure the necessary time for CCS installation in cargo tanks. At the engineering stage of the project, it was understood that the CCS work needed to commence only after the completion of the topsides module lifting.

However, thanks to our in-depth research with support from PETRONAS, we verified that CCS works could start even before completion of topsides module lifting. This allowed the CCS works to be completed much earlier.

Mr Lee: DSME’s policy regarding topsides module fabrication is to fabricate as many blocks as possible at the DSME yard. Due to the large work volume of the project as well as several other offshore projects being executed simultaneously, DSME had to fabricate more topsides blocks using subcontractors, including DSME’s subsidiary yards.

YOUR ROLE iN ThE PFLNG 1

PROjECT?

hOW DOES ThiS PROjECT RANk

iN TERMS OF COMPLExiTY?

ThE UNiqUE TEChNiCAL AND

OPERATiONAL ChALLENGES

AND hOW DiD YOU OVERCOME

ThEM?

DiD YOU hAVE TO ChANGE ThE WAY

YOU OPERATE

DR ILLING

Gas has been a key resource for PETRONAS since its first solo field development: the Duyong field. Since then, an integrated approach to gas management has grown to become a cornerstone of the company’s operations.

Today, PETRONAS’ capabilities extend from the start to the

end of the gas value chain. A molecule of gas can stay under

PETRONAS’ ownership from the moment it leaves the ground to

the instant that it is transformed into liquefied natural gas. The cost

efficiencies harnessed from this unique position enable us to offer

the best value to our buyers globally.

Extensive gas reserves and the

potential for many more new

discoveries are just the beginning of

the story. From exploration in a wide

spread of field types and playtypes,

facilities, and transportation to markets,

PETRONAS is well entrenched at every

major point in the gas value chain.

With integrated end-to-end capabilities

and the continuous drive to maintain

its technical edge, PETRONAS is

maintaining its position as a key LNG

supplier; one that can ensure a stable,

secure and reliable supply of LNG to

buyers around the world.

INTEGRATED GAS MANAGEMENT

IntegratedGas

ManagementFrom Molecules to

Markets

With end-to-end capabilities and the continuous drive to maintain its technical edge in each aspect of the value chain, PETRONAS is maintaining its position as a key LNG supplier, one that can ensure a stable, secure and reliable supply to LNG to buyers around the world.


EX

PLO

RA

TIO

N &

PR

OD

UC

TIO

N

RE

GA

SIFI

CA

TIO

N

MA

RK

ET

ING

MISC Fleet of 27 LNG Carriers-World’s leading owner-operator ofLNG carriers

Peninsular Gas Utilisation Project – 2,500 km of gas pipeline

Sabah - Sarawak Gas Pipeline - 512 km of gas pipeline

Pacific NorthWest LNG, British Columbia, CanadaTarget FID - 20152 trains of 6 mtpa each

PETRONAS Floating LNG 1 MalaysiaTarget 2015 for PFLNG 1 of 1.2 mtpa

Gladstone Australia LNG 7.8 mtpa

PETRONAS LNG Train 9 Project Additional 3.6 mtpa LNG production - Q1 2016

PETRONAS LNG Complex (PLC) Bintulu 25.7 mtpa LNG production

Egyptian LNG, Idku 7.2 mtpa LNG production

Dragon LNG, Wales5.4 mtpa regas terminal

Regas Terminal, MalaysiaMelaka - 3.8 mtpaPengerang 3.8 mtpa

Japan, South Korea,Taiwan, China30 Years of 100% on-time & on-schedule deliveries for8,500 + cargoes

TR

AN

SPO

RT

AT

ION

DR ILLING


EXPLORATION & PRODUCTION

PORTFOLIO : PLAYTYPES

PETRONAS’ current global portfolio of major gas fields span a variety of playtypes: onshore and offshore fields, conventional and unconventional gas, shallow and deepwater plays.

It also has gas assets from technically challenging fields, including high pressure high temperature (HPHT) drilling, small and marginal fields, highly contaminated gas and more.

New and innovative contracting strategies in Malaysia have opened up a range of small and marginal fields for development as well.

PETRONAS has also built a track record of working in fields with increasingly high concentrations of CO

2 content.

Meanwhile, our unconventional resource base (2P + 2C) has grown from 0.38 billion boe

in January 2012 to 5.2 billion boe in 2013 with the acquisition of Progress Energy Canada Limited (PECL).

As we broaden our experience in each of these playtypes, we continue to tap the potential of a range of hydrocarbon opportunities across the globe including unconventional assets in Canada (Shale) and Australia (coal-bed methane).

INTEGRATED GAS MANAGEMENT INTEGRATED GAS MANAGEMENT

Across geographies and geologies, our

exploration efforts over the past forty

years have yielded discoveries of huge

gas fields.

These major gas finds have contributed

to significant growth in our gas resources

in Malaysia, which now amount to 100

trillion scf, PETRONAS is well placed to

continue supplying natural gas to feed

growing global energy demand.

DISCOVERIES

Total gas resources 100 trillion scf (2014)


New Playtypes

• Basement OilVietnam, Malaysia

• Carbonates and Pre-CarbonatesMalaysia, Indonesia

• High Pressure - HighTemperatureEgypt, Malaysia, Turkmenistan

• Pre-SaltAngola, Gabon

Unconventionals

• Shale Gas North Montney , Canada

• Coal Bed Methane Bowen and Surat Basin, Australia

• Shale Oil Vaca Muerta , Argentina

PETRONAS PORTFOLIO: New Playtypes and UnconventionalsMaximising resources and developing new innovative solutions

PETRONAS Upstream Presence

Angola

Algeria

Chad

Cameroon

Gabon

Sudan

South Sudan

Mozambique

Egypt

Iraq

Turkmenistan

China

Watch our Upstream

video on the PETRONAS

YouTube Channel

APR / MAY 2015

DR ILLING


PRODUCTION

FACILITIES

PETRONAS has a potential liquefaction capacity of more than 40 mtpa from facilities strategically located across the globe.

The Malaysia (MLNG) Plant in Bintulu

is one of the largest plants in a single

location in the world. With almost 26

largest in the region. The reserves of

unconventional gas in the area are

expected to be able to sustain an

estimated 220 cargoes that will be

delivered in a year.

PETRONAS is building one of the first

floating LNG vessels in the world.

Located offshore Sarawak and Sabah,

PFLNG 1 & 2 will add a combined

2.7 mtpa of liquefaction capacity while

enabling PETRONAS to monetize

stranded gas with no value otherwise.

(cover story, page 6)

Regasification terminals in Wales and

Malaysia provide further monetisation

opportunities.

mtpa of liquefaction capacity, the

plant boasts a 100% success rate in

delivering all its contracted value on

time to its clientele worldwide. The

Train 9 LNG project will add another

3.6 mtpa of capacity to the location.

The Gladstone LNG (GLNG) project

in Australia will process Coal Bed

Methane (CBM) gas into LNG for

export to the global markets. The

plant has a liquefaction capacity of

7.8 mtpa.

When built, the Pacific NorthWest

LNG Plant will evacuate shale

gas from British Columbia. The

facility is expected to be one of the

Expanding LNG CapacityEmbarking on world-scale projects to supply energy across the world

PFLNG 1Kanowit Gas Field 180km offshore Bintulu

1.2 million tpa

PFLNG 2

Production of LNG

Rotan Gas Field, 240km o�shore Kota Kinabalu

million tpa

billion

Production of LNG

1.5

Amongst the World’s First

floating LNG structures

PETRONAS Floating LNG 1 & 2

Pacific NorthWest

LNG,British Columbia

USD35CAPEX

12 million tpaProduction of LNG

7.8 million tpaProduction of LNG

cargoes

PETRONAS LNG

COMPLEXBintulu

423of LNG in 2014

26 million tpaProduction of LNG

Gladstone LNG,

Queensland

billionUSD18.5

CAPEX

Cryogenic Distillation is a bulk CO2

separation method that has been

applied onshore. Through innovation

in process engineering and design,

we are overcoming the challenges

of space, weight and environment to

bring this technology offshore.

Onshore

110 Tennis Courts

O�shore

K5

Aquifer

Caprock

CO₂

H₂S CO₂ Hc Hg N₂

CO₂

World’s Highest CO₂ Concentration Gas Development Offshore

World’s First Offshore Cryo-D Facility

The K5 High CO2 cryogenic

distillation facility extends PETRONAS’ forays into the world of highly contaminated gas.

The offshore facility serves as a testing

ground for a suite of CO2 separation

technologies and will boast the world’s

first offshore cryogenic distillation facility.

The project will also be one of

PETRONAS’ first involving carbon capture

and storage, with all of the produced CO2

permanently stored in the reservoir.

K5 Cryo-D Facility

INTEGRATED GAS MANAGEMENT INTEGRATED GAS MANAGEMENT

PROCESSING

NMJV PROJECTS

Maintenance Phase 2019-2038

To maintain 2.0 bcf/d of production for 20 to 40 years of LNG operations by drilling 250 wells per year to offset the well production declines.

Appraisal Phase 2013-2014

Step-out drilling to have 15 TCF of 2P reserves by the end of 2014. At the end of 2013, 2P reserves stood at 7.9 TCF with an additional 20.4TCF of 2C resource. Consists of drilling approxi-mately 320 horizontal wells with 3 miles between pads.

Development Phase 2015-2019

Concentrate pad drilling of approxi-mately 1700 wells to increase sales gas production from 0.4 bcf/d to 2.0 bcf/d for the PNWLNG facility start up by 2019. Key focus on costs and efficiency.

Progress Alberta Deep Basin

Development of light tight oil in the Dunvegan play. Progress is well positioned with 380,000 net acres of land for future production growth.

PETRONAS UNCONVENTIONAL PROJECTS WORLDWIDE

Progress Sasol Montney Partnership

Development of Montney unconven-tional shale gas in partnership with Sasol. Target domestic gas markets and potential supply to PNWLNG Train 3 expansion.

Gladstone LNG

The GLNG project is a pioneering venture to convert coal bed methane (CBM) into liquefied natural gas (LNG) for export to global markets.

The North Montney Joint Venture (NMJV), operated by Progress Energy, will provide natural gas feedstock to its sistercompany Pacific Northwest LNG (PNWLNG) for its proposed 12MTPA LNG export facility on the West Coast of British Columbia.


APR / MAY 2015

DR ILLING


Integrated into the upstream value chain, PETRONAS’ LNG trading and marketing arm offers a portfolio of distinctive solutions to ensure the best value for its customers. With security of supply from a variety of sources, a spread of pricing options, and flexibility in contract duration, shipping and delivery, PETRONAS ensures our customers get the best value.

WhAT hAS ThE EXPERIENCE OF WORKING WITh PETRONAS bEEN LIKE SO FAR?

It is a good relationship. Sometimes we have heated discussions over the price negotiations but because of our strong relationship we are always able to find some middle ground that can satisfy both parties. In fact, Tokyo Gas is the only company that has signed LNG contracts with MLNG’s Satu, Dua and Tiga projects.

WhAT ARE PETRONAS’ STRENGThS AS AN LNG SUPPLIER?

First, PETRONAS has a huge natural resource reserve as well as one of the biggest LNG shipping terminals in the world, in Bintulu, and a long history of safe operations. Malaysia is in a good location, not too far away like the Middle East. It is also politically very stable.

This allows us to have assurance that the likelihood of our supplies being disrupted is low. PETRONAS is a reliable and stable supplier for over 30 years. The gas composition is also of good quality and suits our requirements.

PETRONAS is also quick to make good decisions for investments.

WhAT ARE SOME OF ThE NEW NEEDS AND ChALLENGES ThAT yOU SEE ARISING FOR LNG bUyERS AND SUPPLIERS IN ThE FUTURE?

The market is changing. Shale gas in the US is coming onstream, and other suppliers from Africa are emerging. PETRONAS is facing the challenge of meeting the needs of more demanding customers, but they have a long history of energy supply, capable employees long relations with players like Tokyo Gas. If PETRONAS continues to discuss openly with the buyers it will be win-win for all.

DO yOU SEE POTENTIAL FOR FURThER COLLAbORATION bETWEEN yOURSELF AND PETRONAS?

Definitely. Tokyo Gas and PETRONAS have a long relationship and there are certainly opportunities for collaboration. Not just for the existing LNG contracts but joint marketing on some new projects further downstream like power plants.

A BUYER’S PERSPECTIVETokyo Gas’ representative in Kuala Lumpur, Yasushi Sakakibara, shares why his company has been buying gas from PETRONAS for the past 30 years.

Yasushi Sakakibara

The only company that has

signed LNG contracts with MLNG’s

Satu, Dua and Tigaprojects

PETRONAS is a reliable and stable supplier for over

years30

PETRONAS have a long history of energy supply,

capable employees and long relations with players like

Tokyo Gas

by LUKE ROShAN

MARKETING & TRADING

INTEGRATED GAS MANAGEMENTINTEGRATED GAS MANAGEMENT

In the Peninsular, gas from fields

offshore Terengannu is processed and

transported through 2,500 km of main

and lateral pipeline in the Peninsular

Gas Utilisation (PGU) project. The

gas is sent to end users in the power,

industrial and commercial sectors in

Peninsular Malaysia and power plants

in Singapore.

Spanning 512 km and two of the

largest states in Malaysia, the Sabah-

Sarawak Gas Pipeline feeds gas from

the Sabah Oil and Gas Terminal to

several essential integrated projects

including the Kimanis Power Plant and

the Samur Urea Plant in Sabah, ending

at the MLNG plant in Bintulu.

PETRONAS’ gas transportation

business is also supported by MISC

Berhad, which owns a fleet of 27 LNG

carriers. The partnership provides a

stable channel for the transportation of

gas molecules.

This, along with the spread of gas

sources across the globe, allows

PETRONAS to ensure reliable supply

to our customers worldwide.

GAS TRANSPORT

Labuan

KEDAH

PERLIS

PERAK

TERENGGANU

PAHANG

JOHOR

SELANGOR

Kertih

Gebeng

MELAKA

NEGERISEMBILAN

PULAUPINANG

PETRONAS LNGCOMPLEX (PLC)

REGASIFICATIONTERMINAL 1(RGT-1)

PENGERANGINTEGRATEDCOMPLEX*(PIC)

Kimanis

S A R A W A K

S A B A H

Miri

Pasir Gudang

Gurun

Oil Fields

Gas Fields

* Under construction

Power Plant

LNG Regasification Terminal

Petrochemical Plant

Refinery

LNG Processing Plant

Nation Building Our role is to promote a sustainable and an orderly development of petroleum industry for the nation

SOGT

Reliability of Gas Supply

TRANSPORT

2,500kmPGU

27 LNGVessles

512kmSSGP

MARKETING & TRADING

MARKETING & TRADING

APR / MAY 2015

DR ILLING


By JANE LEE

THINKINGUnconventional

The mindset to be successful in the Unconventional resource business.

The company he worked for had an

innovative idea to use concentric

coiled tubing to inject steam and

produce heavy oil from a single

wellbore.

Today, two decades later and in

Kuala Lumpur, the 46-year-old, Vice

President of the Unconventional

Division in PETRONAS’ Upstream

business, says that even though

Steam Assisted Gravity Drainage

(SAGD) is now a common or

‘conventional’ extraction method it

took an ‘Unconventional’ mindset

to be innovative and successful.

“Unconventional means to not be

bound by or adhere to accepted

practices. It is just in the last 10

years that the term has been used

to describe the resource”. What he

wants to instill is the mindset to think

unconventionally so that the team is

always ahead of the competition.

“What we do is very straight forward

– we all drill and frac wells” said

the Canadian native. “Industry

competitors basically do the same

thing but the distinguishing factor is

how to execute efficiently and have

the right mindset to achieve positive

results. This will be very important

to make PETRONAS a leader in

development of unconventional

resources.”

As a fresh-out-of-school petroleum engineer in Calgary in 1994, Neil Horbachewski was introduced to “unconventional” methods early in his career.

UNCONVENTIONAL GAS

APR / MAY 2015

DR ILLING


PETRONAS ventured into

unconventional oil and gas development

via its coal-bed methane venture in

GLNG in Australia in 2008 and shale

gas through the acquisition of Progress

Energy Resources in Canada in 2012

(now known as Progress Energy Canada

Ltd). The company is seeking to expand

its reserves beyond the conventional oil

and gas at home in Malaysia and in

3 other countries.

Horbachewski, who’s relocating his

wife and two daughters to Kuala

Lumpur from Calgary by mid-2015, is

determined to see through a change in

PETRONAS’ thinking that began in 2008,

in paving the foundations to achieve

a thriving unconventional resource

business.

“It doesn’t all just hinge on

technology. It’s everything from

the processes and policies to a way

of operating. We have to have a

manufacturing mindset.”

RidiNg thE ShALE Boom

Shale production of oil and gas

has taken off in a big way in North

America and the result is a large

supply of oil that puts the United

States almost on par with Saudi

Arabia in terms of daily production.

While some analysts credit the U.S.

for having the technology to develop

its unconventional resources, the

nation has more than a few other

factors that led to the shale boom.

“Technology application is just

but one part of it,” Horbachewski

said. “Exploration of shale is not

about finding the reservoir. It’s

about vastness of the resource and

leveraging efficiencies to drive down

costs.”

The growth in North American shale

oil and gas production came about as

large new conventional discoveries

became hard to find. At the same

time, a very competitive oil and gas

industry that pushed innovation,

extensive infrastructure including

a large network of pipelines and

an easily accessible market helped

create the right atmosphere for an

expansion in the unconventional

resource output.

“Industry competitors

basically do the

same thing but the

distinguishing factor is

how to execute efficiently

and have the right mindset

to achieve positive results.

This will be very important

to make PETRONAS a

leader in development

of unconventional

resources.”

In the background, certainty for

investors came in the form of firm

regulatory frameworks that were

provided by federal, state and

provincial governments.

WiNNiNg thE PuBLic ovER

“Not to be underestimated is the role

of the public, one with a sophisticated

enough understanding of the oil and

gas sector,” Horbachewski said.

Keeping the public informed is

crucial, especially with the U.S. and

Canada’s developed and thriving oil

and gas industry. Shale oil and gas

production may need more wells

drilled compared with conventional

resources but its surface foot print

should be smaller with the use of

horizontal drilling. PETRONAS through

its affiliate Progress Energy Canada

works very closely with stakeholders

and aboriginal or First Nation groups

in building a strong relationship and an

understanding of the benefits of this

development.

PETRONAS is currently producing the

equivalent of more than 500 million

cubic feet of gas a day from its North

Montney Joint Venture alone.

As a result of the large number of wells

needed, shale reservoir development

is very capital intensive. The risk is no

longer about inability to find the gas in

NMJV PROJECTS












Gladstone LNG



NMJV PROJECTS












Gladstone LNG



“It doesn’t all just hinge on technology. It’s everything from the processes and policies to a way of operating. We have to have a manufacturing mindset.”

Neil horbachewskiHead, Unconventional Division at PETRONAS Upstream

UNCONVENTIONAL GASUNCONVENTIONAL GAS

APR / MAY 2015

DR ILLING


the reservoir. “The risk is whether

it can be extracted at a cost that

provides an economic rate of

return to continue re-investing,”

Horbachewski said.

thiNkiNg LikE A utiLity

As PETRONAS marches towards

a final investment decision on the

Pacific Northwest LNG (PNWLNG)

facility to be located at Prince Rupert

on the west coast of Canada, the

project has entered the development

phase for its Upstream business.

In this next stage, the North

Montney Joint Venture will be

aiming for a production target of

2 billion cubic feet a day. “100%

reliable delivery of natural gas to

PNWLNG at the lowest supply cost”

is the target that the team is striving

to achieve.

“Now the mindset has to shift to

thinking like a utility service provider,’’

Horbachewski said. “Like utilities, we

have a customer in PNWLNG that

requires proven reliability with cost

efficiency.”

Focusing on unconventional

resource development means

that PETRONAS can’t be bound

by or required to conform to

conventional methods. Stepping

beyond conventional thinking is key

to ensuring unconventional resource

development takes off.

SHALE GAS / OIL TIGHT GAS/ OIL A B C D

Source Shale Shale

Reservoir Shale

Fluid Natural Gas / Oil/

Condensate

Natural Gas / Oil

Extraction Methods

Special Requirements

As rock quality is poor, horizontal drilling is used to contact as much reservoir as possible

Hydraulic fracturing , uses a fluid slurry, pumped at extreme pressure, to fracture the reservoir

Low Quality sandstone or Dolomite

High well densities – pad drilling

Horizontal or multi-stage vertical wells.

Hydraulic fracturing and acidizing using leading edge fluid system

Horizontal wellsHydraulic fracturing technologies

Central site -wells and facilities

Wellbones

Gas filled rock

DIRECTIONAL DRILLING

Water filled rock

Submersible pump

Processed water

Gas to pipeline

Coalbed

TubingGas

PRODUCTION OF

COALBED METHANE

450 - 550 m

800 - 900 m

5 m

COAL BED METHANE OIL SANDS

Coal Shale

Shallow Coal High quality shallow

sandstone

Natural Gas Bitumen (Very Heavy Oil)

Stimulation techniques:

•Cavitation

•Hydraulic fracturing

Vertical wells for shallow coal seams

Steam assisted gravity drainage (SAGD)

Consists of 2 horizontal wells

Steam is injected in the upper well to lower the bitumen viscosity The lower well is used to pump the oil to surface

Fractured horizontal wells to access deep coal seams Dewatering reservoir usually required to desorb gas from coal.

EXTRACTION METHODS & PROCESSESTechnological breakthroughs in horizontal drilling steam assisted gravity drainage and fracturing

have made shale and other unconventional hydrocarbon supplies commercially viable

Excellence in water handling and lean

operations to optimize costs

Deep understanding ofpetrophysical parametersand geology to optimize

recovery

Lean operations, handling of large volumes of water at surface for disposal

Complex surface facilities to generate steam at low cost. Addition of diluent required for

transport of oil at surface

the North montney Joint venture will

be aiming for a production target of

2 billion cubic feet a day.

UNCONVENTIONAL GAS

“It’s about an attention to detail and

doing what is right versus what is easy,”

Horbachewski said.

UNCONVENTIONAL GAS

To deliver essential energy to a growing population, PETRONAS constantly examines new ways

to unleash gas resources. From the furthest corners of the globe, deep into shale and coal-bed

formations and out in remote and difficult fields, we are applying new and innovative technologies

to monetize hydrocarbon molecules. Building on 40 years of oil and gas experience, PETRONAS is

developing one of the world’s first floating LNG and other large scale liquefaction facilities to reliably

and safely supply the energy needed to light up megacities like Tokyo, Seoul and Shanghai.

www.petronas.com

The afternoon flow sits down with Datuk Ir (Dr) Abdul Rahim Hashim, he has just returned from signing a Memorandum of Agreement with University of Cambridge Admissions Testing Service in his current role as Vice Chancellor of Universiti Teknologi PETRONAS.

The agreement is one more of the forward thinking and bold initiatives that embodies his approach in all things – to always consider what we can do that’s new, different and distinctive to push ourselves to a new level of excellence.

The same energy and drive underpinned

his tenure as President of the Malaysian

Triennium for the International Gas

Union (IGU), from 2009 to 2012. The

three years marked a number of

new programmes, initiatives and

collaborations that helped bring

the importance of natural gas as an

important element of the energy mix,

pushing it into greater prominence

within the industry.

“One of the things that changed

significantly during that time was the

positioning of gas. At the time it was

still considered very much a bridge

fuel. But with the ‘shale revolution’,

gas reserves are expected to extend

its sustainability for another 250

years, which is almost equivalent

to the supply for coal. Yes, there’s a

focus on renewable energy to reduce

carbon emissions, but hydrocarbons

will be around for a long time and

natural gas will play an important role

as source fuel to meet our energy

needs,” he says.

With programmes centered around

three core pillars of capability

development, youth involvement and

geopolitics, the Malaysian Triennium

set into motion initiatives that are

still being carried through today to

advocate natural gas.

“My motto, especially for the 2012

World Gas Conference, was ‘Failure

By CHRISTINE CHEAH

Putting gas on the global energy agenda took perseverance and clever persuasion.....


is not an option’. We decided that

if this is the only chance we had

to make a difference, then we had

better make it work and work well.

That’s it. I think everyone rose to the

occasion and all in all it was a great

triennium.”

In the conversation, Datuk Rahim

gave us some of his insights on…

THE SHIfT of gAS fRom bEINg

A bRIdgE fuEl To wHAT IT IS

TodAy...

At the WGC 2009 in Buenos Aires,

I remembered (then IHS Chairman)

Daniel Yergin’s speech: gas is a ‘Fuel

Without a Voice’. They lumped it

together with coal and the rest of

the hydrocarbon family. Gas was

positioned as a bridge fuel, between

oil and renewables, and it would

disappear in later years.

But addressing energy requirements

against global population growth

and environmental concerns is

going to require a multi-pronged

strategy. Gas will continue to be

important because it is available,

accessible, affordable and all those

things which are now part of the

IGU gas advocacy strategy.

mAKINg EVERy CHANgECouNT

ON THE WORLD STAGE

APR / MAY 2015


When we took over the triennium,

we knew that we wanted to make a

difference, not just maintain the status

quo and go about business as usual.

The greatest change through those

years was the positioning of gas. In

2013 when Obama released the US

Blueprint for a Clean and Secure Energy

Future, gas was a significant part of the

strategies involved in providing a source

of clean energy for the U.S. It’s come

quite a long way from being a bridge

fuel.

How No mAN, oR oRgANIzATIoN,

IS AN ISlANd...

The IGU was more of a fraternity

within the industry, but to properly

brand something we need buy in from

key global organisations like the World

Bank, the United Nations, Regulatory

Bodies and the International Energy

Agency. We also focused on attracting

the big multinationals and getting

them involved in the Union.

We established regional coordinators

who would attend Executive

Committee or Council meetings. There

was a lot more knowledge sharing and

a lot more workshops throughout the

three years, which also continued well

after the Malaysian Triennium.

Shale gas was also in play and there

were some controversies. We tried

to coordinate with the various

organisations in the United States such

as the American Natural Gas Alliance

that were doing advocacy for that.

Gradually, people grew more and

more excited to get involved because

they realized that something new was

happening.

THE NExT TECHNologICAl

fRoNTIER foR NATuRAl gAS...

One thing to watch is FLNG, which

monetises marginal fields and stranded

gas. It needs someone to start it off

and I think PETRONAS has the right

strategy to kick start development in

this area.

If it works well then it will be the next

area of gas development. It is just like

the Floating Processing Storage

Offloading (FPSO) units, where

once it’s been proven, a new service

industry emerges.

Another area is shale gas. The U.S.

has a lot of factors contributing to

their success in that area, including

the market, infrastructure, service

providers and so on. The question

is whether it can be replicated

elsewhere. If that happens, a lot

more countries will have gas

available to them.

LNG from coal-bed methane (CBM)

is also under close observation. There

are three huge projects on CBM to

LNG currently ongoing in Australia

and it will be equally interesting

to see how the upstream industry

overcomes the challenges and

monetise the resource.

LNG for transportation is coming up

in a big way for sure. If you have the

option of cleaner burning natural

gas for transport, countries are going

to say, “Look, you are not going

to come into my port while you’re

still burning fuel oil and sputtering

smoke around.”

Slightly further on, another

interesting area of innovation will

be methane hydrates. There are

some pilot, experimental work

going on at the moment trying to

commercialise it. If that happens,

and is competitive, then the whole

world’s energy dynamics will change

drastically.

gETTINg THE NExT gENERATIoN

AwARE ANd INVolVEd...

You have to start early with the

teaching of science, technology,

engineering and mathematics, then

gradually let the children become

more aware of what gas is all about

and why it’s so important.

Secondly, I think the industry needs

to come out more collectively

to reach out to school children.

There also needs to be consistent

messages, so that it doesn’t matter

which company does it, the

message is always the same.

LNG for transportation is coming up in a big way for sure. If you have the option of cleaner burning natural gas for transport, countries are going to say, “Look, you are not going to come into my port while you’re still burning fuel oil and sputtering smoke around.”

datuk Ir (dr) Abdul Rahim Hashim Past IGU President, Malaysian Triennium (2009-2012)

• Moving the organization to be

more strategic in its outlook

while keeping the legacy work

intact

v Established Regional

Coordinators in four

regions worldwide

v Increased participation

of members in technical

committees up to more

than 900 people

v Introduced a Youth

Programme in World Gas

Coference (WGC) 2012

v Getting the organization

to be more active during

the triennium with

forums, roundtables,

seminars, workshops and

publications

v Publish more publications

to reflect IGU’s mission –

including 17 reports and 32

studies, in the three years

v Increased IGU memberships

with the addition of nine

new Charter members and

14 Associate members

INITIATIVES ANd ACHIEVEmENTS duRINg THE 2009 – 2012 mAlAySIAN TRIENNIum of THE

INTERNATIoNAl gAS uNIoN

ON THE WORLD STAGEON THE WORLD STAGE

• Making a case for gas through

advocacy

v Linking up with other

multilateral agencies

including the World

Bank, United Nations,

International Energy

Agency, Regulatory

Bodies, Eurogas and

American Natural Gas

Alliance to increase

visibility of natural gas

v Enhanced the

transformation journey

for the organization with

a new vision, a new logo

and the publication of the

Global Gas Vision

APR / MAY 2015

DR ILLING


Simplifying Technology

Going into the ‘underworld’ in search of hydrocarbons is now much less of a guessing game thanks to the latest advancements in geophysical technology.

Uncertainties relating to geological

structure, the presence or otherwise

of hydrocarbons, as well as the

movement of fluids during production,

are the bane of oil and gas companies.

Geophysics plays a vital role in reducing

these uncertainties, but also faces its

own challenges in terms of different

geological settings and their impact

on geophysical data. This means

exploration and development often

take place without properly “seeing”

and understanding the subsurface, and

puts projects at high risk – especially

when determining the optimum

placement for wells.

The use of proprietary in-house

technologies developed by

PETRONAS’ GeoImaging group has

enabled us to tackle some of the

more difficult problems and provide

significant improvements in the

quality of our geophysical data. Recent

achievements include the following:

Gas Clouds

Problem: Shallow gas obscures deeper

targets, often making them invisible in

seismic images.

solution: New workflows,

methodologies and tools based on

advanced theoretical concepts which

either compensate for the effect of the

gas on seismic data, or use special data

acquisition arrangements to avoid the

problem.

Result: Dramatic improvement of

images in areas affected by gas clouds,

eg. Bujang field.

Unseen

Horizon slice of seismic data from the Bujang field showing the effects of shallow gas clouds (left). The display on the right shows the waveform classification result for the same horizon after implementation of a GeoImaging workflow. The new result reveals important details under the gas cloud which were not evident in the original data.

By PRofessoR Helmut JakubowiCz

Standard variance image of the Enau-Arenga-Palma I-35 (top) compared to the new GeoImaging Laplacian filter (bottom). The new filter extracts significantly more detail on subtle features than the standard approach.

Facies reservoir characterization provides more accurate information on producer-injector performance and infill well locations. Correlation and integration between 4D time-lapse seismic data with dynamic reservoir model enhances prediction and imaging of fluid fronts from the injector wells.

Conventional seismic attribute display of the Angsi I-35 field (left) compared to a new enhanced RGB attribute developed by GeoImaging (right). The new attribute provides much more information on important channel features than the standard version.

Problem: Technologies for time-lapse surveillance and monitoring EOR programs are not readily available, resulting in inaccurate predictions of fluidfront movement and bypassed oil

PRe-salt/PRe-CaRbonate

taRGets

Problem: Carbonates and salt bodies

act as lenses for sound energy,

resulting in poorly-focused seismic

images of deep targets.

solution: First use full waveform

inversion to determine the structure

and properties of the lenses

from the seismic data, then use

this information to remove the

distortions using advanced imaging

methods such as full waveform

redatuming.

Result: Clearer images of deep

geological formations and features,

eg. Sepat.

solution: Geophysical reservoir characterisation/imaging and fluid prediction/monitoring using 4D time-lapse seismic and/or non-seismic technologies.

Result: The ability to delineate facies distributions not normally seen in conventional legacy seismic data, as well as the determine fluidfront movement and locate bypassed/undrained oil.

the incremental water saturation in the reservoir

at mid 2006 in the dynamic model showed quite a

good agreement with the 4d seismic

result.

SEEING THEProprietary in-house technologies have enabled us to tackle some of the more difficult problems and provide significant improvements in the quality of our geophysical data.

Problem: Seismic data contain important information and details that cannot be seen directly using standard interpretation techniques.

solution: Advanced seismic

characterisation technologies that highlight and enhance subtle features related to facies and fluid changes.

Result: Application of a proprietary Laplacian filter for enhanced

subsurface imaging of the Angsi field and Enau-Arenga-Palma prospects, as well as use of a new waveform classifier to delineate compartmentalisation in the Bujang and Angsi fields.

seismiC ReseRvoiR CHaRaCteRisation

ReseRvoiR monitoRinG

DR ILLING

39

Name: Penny Chan

Joined PETRONAS: March 2011

Offshore trainee: May 2011

Graduated All Rounded Drilling (ARD) programme: December 2013 (awarded top scorer)

Assistant night drilling supervisor for Sabah deepwater projects: December 2013 – May 2014

Night drilling supervisor in Myanmar land rig: June – October 2014

Night drilling supervisor in Wakid-3 project (offshore Sabah): November 2014 – current

Hobbies: Jogging, reading (currently reading See Jane Lead: 99 Ways for Women to Take Charge at Work by Lois P. Frankel)

MAKING A NAME FOR HERSELFYou don’t need to behave like a man to survive in a male-dominated industry. As the first female night supervisor in PetronAs, Penny Chan has sometimes found herself the only woman on an oil rig with more than 150 men. But she has taken it all in her stride. In fact, the experience has made her a better communicator and leader.

When flow interviewed her for this story, the 25-year-old was more than happy to share her unique story of life on an oil rig. Amusingly, she is

always mistaken for a trainee rather than a supervisor by many of the men who have not worked with her.

She admits that the conversation around her makes her a tad uncomfortable at times, but rather than just suffer in silence, she makes her uneasiness known to her colleagues.

“That happens sometimes but I would talk to them privately and tell them that I am not comfortable with the conversation. I have done this before. It was okay because the guy was open about it and he understood. We were talking like friends,” she explains.

Chan was in the first batch of petroleum engineering graduates from Universiti Teknologi PETRONAS (UTP) in 2011. While some of her friends decided to play it safe by taking other courses which aren’t so specialised, Chan decided to opt for the newly launched course in petroleum engineering.

PERSONALIT Y SPOTLIGHT

“the only physically-challenging parts of the job are having to climb on piles of oil well casings, which can be quite scary as it gets higher and higher, and using the rope to swing onto the platform.”

Penny Chan Drilling Supervisor

By BRIGETTE ROZARIO

As PetronAs’ first female drilling supervisor, 25-year old Penny Chan is bravely blazing trails for

women in the industry.

38 P E T R O N A S U p s t r e a m M a g a z i n eAPr / MAY 2015

APr / MAY 2015

DR ILLING


OIL IN hER BLOOD

Her career choice becomes less surprising when you find out that her father has been working with PETRONAS for more than 25 years at one of its subsidiaries – Asean Bintulu Fertilizer - and Chan had her sights set on the national oil company from a young age. She received PETRONAS scholarships after both her PMR (Penilaian Menengah Rendah) and SPM (Sijil Pelajaran Malaysia) exams.

Beyond legacy, Chan’s desire to take on new challenges was also behind her decision to become a driller.

“When I was studying in UTP, I had not decided to go into petroleum engineering or drilling. At that point I just wanted to be in the oil and gas industry. I love challenging myself so hearing that it was a male-dominated industry made me wonder why it was a career for men,” she says.

On graduating from UTP, Chan was offered a job at PETRONAS in

the drilling department as a well engineer. She admits to being disappointed initially as she had hoped to become a petro-physicist and have an office job.

She pondered asking for a change, but after speaking with then general manager, Rahimi Abdul Wahab, she got a clearer picture of the job scope, challenges and opportunities, as well as potential career path.

Chan hasn’t regretted her decision. The eldest of three siblings has been working with PETRONAS for almost four years now.

“I know that I made the right choice because I really like it. PETRONAS operates globally, so we have the opportunity to travel. I was in Myanmar last year for six months on and off for two hitches,” she says.

MISSING hER FAMILy

Being one of the few women onboard a rig, usually alongside female trainees, is not as tough as

it seems. She explains that there is now a separate bedroom with attached bathroom just for women, and all the new rigs now come with a separate changing room for the ladies.

In addition, the job is no longer as physically-demanding as it was in the past, as many of the processes are automated.

“The only physically-challenging parts of the job are having to climb on piles of oil well casings, which can be quite scary as it gets higher and higher, and using the rope to swing onto the platform. If the seas are rough and you miscalculate the swing, you may very well end up in the sea instead!”

That’s basically what happened while Chan was undergoing BOSIET (basic offshore safety induction and emergency training) in order to get her licence to go offshore.

“I fell into the water three or four times! Luckily, it was held indoors

and it was just a swimming pool, and not the sea!” recalls Chan, laughing.

The bigger challenge is being away from family and friends and missing important occasions. She had a bitter taste of this sacrifice when her grandmother died in September.

“I didn’t manage to go home in time because it was tourist season in Myanmar and it was hard to get an air ticket. I ended up missing her funeral. These are some of the sacrifices that we need to make sometimes. We will face hardship; it’s up to us in how we cope with it. Family support is very important,” says Chan, who managed to find the time to get married to her university coursemate last year.

Her husband, who is with another oil and gas company naturally understands the nature of her work and her passion for it.

“We haven’t had the conversation about what to do when we have kids,” she adds, giggling.

WINNING RESPECT

For now, she is focused on her job and, in particular, winning the respect of her peers. Chan believes it’s just a matter of using her talent and skills to prove her worth.

“I am looking forward to

leading in the complex

and challenging well

drilling situations,

and at the same

time developing and

mentoring the new batch

of young engineers.

of course, there is still a

lot for me to learn before

I can go down that path.

I will have to work harder

for that.”

“From being on the rig you will learn about rig psychology. From there you will learn how to get along with everyone else and talk with them. Slowly, they will show you respect and you will know each other’s strengths and weaknesses,” she says.

Chan is determined to be PETRONAS first female drilling superintendent and help the company become more efficient.

She adds: “There is always new technology coming in so we are constantly thinking of how we can drill a well safer, cheaper and faster. I wouldn’t mind being in the role of superintendent for a long time as it would be challenging.”

“I am looking forward to leading in the complex and challenging well drilling situations, and at the same time developing and mentoring the new batch of young engineers. Of course, there is still a lot for me to learn before I can go down that path. I will have to work harder for that.”

PERSONALIT Y SPOTLIGHT PERSONALIT Y SPOTLIGHT PERSONALIT Y SPOTLIGHT

“Near-term Malaysian deepwater projects will not be deterred by low oil

prices” says Dylan Mair, Senior Director of Upstream Research and Consulting.

By IHS EnErgy

MArKET AnALySIS

MARKET ANALYSIS



Rising oil prices over the past decade have incentivised Exploration & Production (E&P) companies to target frontier plays such as deepwater, the arctic, East Africa, and unconventional resource plays as conventional onshore and shallow water plays mature.

This resulted in relatively unchanged

margins for the operators during

the high oil price environment. As

improvement in technology led

to significant volumes of shale oil

production from North America which

drove oil prices down, E&P producers

are now reacting by reassessing their

global portfolio and reducing capital

spending. We look at the impact this

has on deepwater developments in the

Asia-Pacific (APAC) region and more

specifically its impact on Malaysia.

SHOrT AnD LOng

Short-term regional production is

likely to remain unchanged. Projects

in production or in development,

where significant capital costs have

been sunk (i.e. in construction), are

expected to proceed as planned. Only

when oil price is persistently below

operating costs, which is estimated to

be below $15/boe for the APAC region,

is production from this category

expected to be impacted.

In the longer-term, sustained low oil

prices could potentially delay project

sanction of deepwater and complex

field developments such as high CO2

and HT/HP, which in turn will impact

the long-term deepwater production

outlook.

MARKET ANALYSISMARKET ANALYSIS

UnsanctionedSource IHS

Sanctioned Producing

-$4.00

Perc

entil

e

$0.00 $4.00 $8.00 $12.00

0%

20%

40%

60%

80%

100%

Development Forward NPV ($/boe)

In Malaysia, commitment from

PETRONAS and its partners coupled

with favourable development costs

are likely to mitigate the impact of

low oil prices on major deepwater

developments. The lesser capital

commitment required for EOR will

raise the priority of such projects

here.

A more immediate impact of low

prices would be the reduction in

exploration activities. In the current

price environment, it may be harder

for international oil companies to

justify undertaking exploration risk,

especially in technically challenging

and frontier plays. This, coupled

with distressed assets potentially

coming on sale, is likely to limit

exploration drilling to fulfillment

of work commitments. Looking

beyond upstream, low commodity

prices provide an opportunity for

Southeast Asian governments to

reduce subsidies without hurting

ASIA-PACIFIC DEEPWATEr ECOnOMICS ($70/BBL OIL)

DEEPWATEr PrODuCTIOn AnD OPErATIng COAST In ASIA PACIFIC

Source: IHS20000

200

400

600

800

mb

oe

/d

2003 2006 2009 2012 2015

$11.40/boe

$13.60/boe

$12.90/boe

$12.30/boe

Australia

Philippines

Indonesia

Malaysia

India

37% of the projects are expected to fall below positive development forward NPV. E&P companies worldwide have already begun implementation of strong cost cutting measures.

consumers, which ameliorates

the impact of low commodity

prices on revenues for integrated

National Oil Companies (NOC).

SHArP DECLInE In OIL PrICE

unLIKELy TO IMPACT SHOrT-

TErM DEEPWATEr PrODuCTIOn

Global demand for energy is not

expected to increase significantly

despite low oil prices. Thus, the

burden of a correction lies in

supply. The short-term deepwater

production outlook for APAC

is not expected to undergo

significant changes from earlier

projections as producing projects

and developing projects almost

onstream remain on target. With

significant capital cost accrued

at the beginning of the project,

suspension or termination of

existing projects is only expected

if oil price stays persistently below

operating cost. Source IHS

DEEPWATER PROJECTS IN ASIA PACIFIC

Among a sample pool of 20 deepwater projects in Asia-Pacific, Malaysia also boasts the lowest average operating cost of $11.40/boe.

MARKET ANALYSISMARKET ANALYSIS

Malaysia is forecast to be the

largest source of APAC deepwater

production growth in the short-

term, underpinned by the Shell-

operated Gumusut-Kakap project

and PETRONAS joint-operated

Kebabangan Gas Project that was

successfully brought onstream in

December 2014. Among a sample

pool of 20 deepwater projects in

Asia-Pacific, Malaysia also boasts

the lowest average operating cost of

$11.40/boe.

SuSTAInED LOW PrICES

POTEnTIALLy IMPACT LOng-TErM

PrODuCTIOn grOWTH

The impact of sustained low oil

prices on NOCs is less severe within

integrated domestic operations.

However foreign-run upstream

projects may face greater scrutiny.

NOC drivers include national social

and energy security commitments;

thus, domestic investments are more

likely to continue. This, combined

with relatively lower development

cost compared to other countries

in the region suggest that there will

be minimal project deferments in

Malaysia.

ExPLOrATIOn TO BE IMPACTED By

LOW PrICES

IHS believes is that given the current

low price environment, companies

will continue to target low cost

and low risk drilling prospects

while fulfilling their exploration

commitments.

For example, PETRONAS and

its partners are expected to drill

additional exploration wells in

deepwater block CA2 in Brunei in

the near-term, seeking upsides to

the Kelidang Northeast 1 discovery.

In November 2014, PETRONAS

launched a licensing round where

three deepwater (W, X and 2K) blocks

located in offshore Sabah were

offered.

While domestic exploration is

not immune to cost controls, it

is expected that PETRONAS will

continue its domestic exploration

programmes in pursuit of reserve

replacement.

Deepwater remains critical to oil

and gas production in Malaysia,

forecasted to provide 30% of national

oil production in 2020. Sustaining

activity through a period of low

oil price will require commitment

by PETRONAS and partners

to exploration and long-term

developments through effective and

efficient collaboration.


APR / MAY 2015

DR ILLING


INNOVATION INNOVATION

Prior to 1974, the Government, under

a concession system collected, tax

from oil companies which were

granted rights to explore and develop

petroleum resources with leases of up

to 40 years or more.

In 1974, the Petroleum Development

Act (PDA) vested PETRONAS with

the ownership and control of all

hydrocarbon resources in Malaysia.

This led to the adoption of PSCs to

replace the Concession Agreement

in 1976 so that the nation could play

a more direct role in controlling

PSCs set out the arrangements

for co-operation between

PETRONAS, which assumes the

role of a regulator, with qualified

oil companies as contractors for

the exploration, development

and production of petroleum

in a contract area for a specific

duration.

It is used to engage capable oil

and gas companies to participate

in the development of Malaysia’s

petroleum blocks, covering the

entire upstream value chain.

Since its introduction almost 40 years ago, Malaysia’s production sharing contract (PSC) scheme has been a key platform for the growth of the country’s oil and gas sector.

Partnering for ProfitProduction Sharing Contracts have been key in the growth of Malaysia’s petroleum resources for the past two decades.

and managing its petroleum

resources. The first PSC was

awarded in 1976 to Esso for the

Duyong oil field in Terengganu.

Unlike the old concession

system, the key advantage

of the PSC is that it allows

PETRONAS to have input

in strategic and operational

decisions, ensuring that the

operations are aligned with the

group’s business objectives and

nation building agenda.

Malaysia has awarded over

150 PSCs since the inception

of the scheme in 1976, of

which more than 100 are

currently actively managed by the

Malaysia Petroleum Management

organisation in PETRONAS.

INNOVATION

What is a PSC? PSC or Production Sharing Contract serves as a vehicle for partnership for PETRONAS and multnational oil & gas companies in conducting hydrocarbon exploration & production activities in Malaysia.

100PSC’s

Oil and Gas ServiceCompanies

4,000+

From 27 PSCContractors

20,000Kilometres traveled in a car

215 billion

Contribution to20%GDP(2012)

of DiscoveredResources

22.2billion BOE

MALAYSIA: SOCIO ECONOMIC BENEFITS

MALAYSIA: UPSTREAM

ProducingFields

132

Production

14 billion BOE

KBOE/D AnnualProduction Ratein 2012

1,587

(Proven Reserves)

WORLD RANKING

#34 Oil#21 Gas

OffshorePlatforms

320

Terminals10

of UpstreamPipeline

OVER

7000KM

of DiscoveredResources

22.2billion BOE

of TotalUpstream Investment

330billion *

100PSC’s

APR / MAY 2015

DR ILLING


INNOVATIONINNOVATION

1. tell uS hoW your PartnerShiP With PetronaS Came about?

In the late 1990s, Murphy was looking to expand its business into Asia and was looking for a strategic partnership in the region. At the time, PETRONAS was encouraging participation from small to medium sized independent oil & gas companies and focusing on development of marginal and deepwater fields.

Murphy wanted to leverage on its deepwater experience in the Gulf of Mexico. Malaysia has the geographical advantage: large reserves, a well-defined oil and gas ecosystem, political stability, sound economic policies, good regulatory framework and well-developed infrastructure. It was a good business fit. All these factors combined made it ideal for us to enter Malaysia. As such, we signed our first PSC with PETRONAS on Jan 27, 1999 for Blocks SK309, SK311 and Deepwater Block K.

2. Can you deSCribe the termS of the PSC and hoW haS it Performed SinCe itS inCePtion?

The PSC created by PETRONAS is a comprehensive and dynamic document which provides fair opportunities for both the investor and the owner of the resource. Its terms promotes sustainable exploration, development and production of natural resources. It also covers the long term development of the country’s petroleum resource for the benefit to the nation and is a good way to bring in foreign investment and technology.

3. What haS the exPerienCe of Working With PetronaS been like So far?

It has generally been good. PETRONAS Carigali is a strong partner and a professionally run company. PETRONAS as a regulator has been supportive of our ongoing activities.

Murphy’s initial success in Malaysia was the West Patricia

field, which began production in 2003, two and a half years after discovery, which was a benchmark for us.

The Kikeh deepwater field offshore Sabah, the first deepwater development for Malaysia, came onstream 5 years from discovery – another benchmark.

In all of our development projects, we have received tremendous support from PETRONAS, which assisted us significantly in making these projects successful.

4. What have been the Some of the ChallengeS under the PSC and hoW Were they overCome?

Undertaking the first deepwater development in Malaysia, Kikeh, was very challenging. We were managing one of the largest resource developments in Southeast Asia and bringing in deepwater technology which was then new in the country and region.

flow speaks to Mr John James, Vice President, Murphy Malaysia, about his company’s experience as one of the contractors under Malaysia’s PSC scheme.

A FRUITFUl relationShiP

“PETRONAS has shown tremendous growth in its employees’ technical capabilities. The company is bold and willing to take calculated risks in unconventional energy. It is also a professionally-run organisation that operates like an international oil company.”

John James Vice President, Murphy Malaysia

APR / MAY 2015

DR ILLING


INNOVATIONINNOVATION

tyPeS of PSCs in malaySia

PETRONAS has introduced a variety of PSCs including contracts for Deepwater, Revenue-over-Cost (R/C), High-Pressure/High-Temperature (HPHT) and Progressive Volume Based (PVB).

1976 PSC – Used as a contractual

vehicle to convert pre-1974

concession agreements into

Production Sharing Contracts, in line

with the enactment of PDA 1974.

1985 PSC – Incentives to attract

more foreign investments, which

included a higher cost ceiling

and sliding scale profit split, were

introduced. For the first time, the

contract also mandated a minimum

level of PETRONAS’ participation,

through PETRONAS Carigali.deepwater PSC – Introduced

to spur and intensify activity

in deepwater blocks where

prospectivity is higher compared

to shallow water but also riskier.

More technology and capital

investments are also required. The

PSC features a higher cost ceiling

to accommodate higher capital

costs and better profit split to PSC

Contractors to encourage major

players with deepwater experience

to invest.

revenue-over-Cost (r/C) PSC –

This was introduced to encourage

PSC Contractors to be more cost

effective in view of increasing

cost of materials, as well as

to promote the application of

new technologies for higher

risk plays. Profit split and cost

recovery tranche for R/C PSC

are determined by a profitability-

based sliding scale fiscal regime.

high-Pressure/high-temperature

(hPht) PSC – An enhancement to

the R/C PSC, this contract includes

reservoir depth as a trigger for

better profitability sliding scale.

It was introduced to attract

investments from technology-

driven multinational oil companies

to explore deeper reservoirs that

are high risk as it typically operates

at extremely high temperatures

and pressures.

Progressive volume based (Pvb)

PSC – The PVB PSC was recently

introduced to encourage

investments in the redevelopment

of matured fields. This fiscal

arrangement is volume-based

and progressively increases profit

sharing in favour of PSC Contractors

based on cumulative production

volume. This mechanism ensures

PSC Contractors are given sufficient

incentives to pursue further upsides

in matured fields in the most cost

efficient manner.

the SK Gas Phase 1 project into these projects’ execution strategy and operational philosophies were instrumental in bringing these fields online.

5. hoW haS the StruCture of the PSC benefited your ComPany?

The PSC provides for an equitable partnership. It is also well defined in terms of contractual period, management of operations, cost recovery, division of profit and obligations of parties. It is structured in such a way that it provides a fair risk-reward scenario.

However, I think we need to continue to look at more innovation in terms of sharing risks and rewards, especially now that exploration and production efforts are becoming increasingly challenging and complex.

For shallow water development, the Revenue Over Cost concept is good and innovative – it encourages the PSC to continue investing in the development of both green and brown fields.

For deepwater development, the fiscal terms provide fair returns relative to the risk taken in the exploration and development of a deepwater field.

6. What do you think are

PetronaS’ key StrengthS aS a Partner?

PETRONAS has shown tremendous growth in its employees’ technical capabilities. The company is bold and willing to take calculated risks in unconventional energy. It is also a professionally-run organisation that operates like an international oil company.

All decision making on oil and gas matters rests with PETRONAS, unlike some countries where decision making lies with multiple parties, such as the national oil company, a host of ministerial departments and government agencies.

Being a global player as well as an operator, PETRONAS understands the perspective of an investor.

7. hoW do you See your PartnerShiP With PetronaS evolving?

We are partners with PETRONAS in Brunei and also in Suriname. We would like to extend this working relationship to other parts of the world.

This dovetails with Murphy’s strategy of being a preferred partner to national oil companies.

PETRONAS has shown tremendous

growth in its employees’ technical

capabilities. The company is bold

and willing to take calculated risks in unconventional

energy.

There were a lot of unchartered territories and new engineering challenges; contracting work was being carried out on a global scale in a multitude of places. PETRONAS’ support was vital in making the project a success.

In overcoming these challenges, effective project management is key. There were synergistic efforts between partners and Murphy in sharing of best practices and knowledge. These include a small team approach that allows for timely decision making and accountability. This work culture allows us to come up with innovative methods and technology application.

More recently, one of the main challenges in 2013 was bringing five fields under our Sarawak Development team into first production. In the face of multiple deadlines, the application of lessons learned from Kikeh, West Patricia, and

establishcontact

datareview bidding award PSC

signing

How is a PSC signed?

hoW iS a PSC Signed

APR / MAY 201500


HOPEA BEACON

Walk along the coastline of Similajau National Park, the beauty of the blue skies and golden sand can lull one into a comforting sense of serenity. The waters off this picture-perfect postcard, however, tell an entirely different story.

SUSTAINABILIT Y

“By installing the reef balls, we hope to improve the marine life and perhaps the local fishermen can get more fish.”

Azizah Mohd DeliChairman of the BEACON Project Taskforce

For the past 20 odd years, the corals in the waters here have been dying, the number of fish dwindling and scores of turtles found dead on the beach; and all because of the fishing by trawlers that takes place here. It didn’t use to be this way.

Marine biologist James Anak Bali, an official with the Sarawak Forestry Corporation (SFC), remembers the first time he dived at the age of 20. He was exposed to marine life of all shapes, sizes and colours; as well as corals that appeared in hues that only seemed to exist underwater. It was the allure of

this underwater paradise that led to him become a marine biologist.

“Watching the ocean’s rich marine life decline over the years really upset me. The trawlers and their dragnets – they’ve destroyed a lot of the corals here,” he says.

“When the corals die, the marine life goes with it. They’ve fished here undeterred for so long, even the turtles have suffered. Once tangled in the dragnets, they don’t stand a chance. Fewer and fewer make it to shore to lay eggs,” explains James.


An ambitious project to save the corals off Similajau National Park from trawlers’ nets is

already showing impressive results.

By BRIGETTE ROZARIO

OF

Watch the BEACON

project video on PETRONAS

YouTube Channel


56

SUSTAINABILIT YSUSTAINABILIT Y

He sits on the taskforce committee of the Biodiversity, Environment & Conservation (BEACON) Project, an initiative aimed at saving the corals from the trawlers. The project was initiated by the Malaysia LNG Group of Companies (MLNG), with the SFC providing technical expertise and consultation.

Says Oswald Braken Tisen, the general manager of SFC’s Protected Areas and Biodiversity Conservation division: “We had a high number of dead turtle reports per year, in the region of about 100 in Sarawak alone, and the main cause was illegal trawling. The turtles would get caught in the trawlers’ dragnets and they would drown.”

REEF BAlls TO ThE REsCuE

In the 1990s, the SFC discovered artificial reef balls – big and heavy, and made of a special material that mimics natural limestone. Their rough texture encourages corals, algae and other micro-organisms to settle and propagate on them. More importantly, the reef balls act as a deterrant to

trawlers because their dragnets get caught on their rough surface and tear.

These artificial reef balls have been placed in various areas along the Sarawak coastline, and now through the BEACON Project, which was conceptualised in 2012, they want to do the same in the waters off Similajau National Park.

Azizah Mohd Deli, chairman of the BEACON Project Taskforce and also a staff engineer at MLNG’s HSE Department, Environment Section, explains that the project consists of two parts. The reef ball deployment is a three-year project that aims to place 1,500 reef balls, while the Conservation, Education, Promotion and Awareness (CEPA) programme will last the duration of the whole project. A total of RM4.7mil is being invested for the three-year reef ball deployment project alone.

According to Azizah, 1,000 reef balls have already been planted in the Similajau National Park in the past two years. This year, another 500 balls will be deployed.

NOT All sMOOTh sAIlING

There were some early teething problems, such as getting the two partners behind the BEACON Project on the same page. SFC consists primarily of environmentalists and conservationists, while MLNG staff speak the language of the oil and gas industry. Previous initiatives to minimize environmental impact were centred around improving plant operations.

“Now, if you talk to MLNG, they talk like me; they are very much focused on conservation,” says SFC’s Braken.

Planting reef balls is also a lengthy process as divers need to survey the area, find the right spots and mark them. Typically, the entire process of dropping a total of 250 reef balls can take up to 10 days.

Finding sufficient numbers of qualified divers was another challenge. To overcome this hurdle, MLNG has been providing diving lessons to get its staff certified as licensed divers. The divers

56

1

2

3 4

5

6

7

8

9

1 Displaying the reefballs

2 BEACON Project divers cleaning up the reef

3 Participant at the Friends of Nature camp

in 2014

4 The team building turtle hatchery

5 A reefball being lowered into the sea

6 Mind-mapping and preparing for a

presentation at the Friends of Nature camp

7 Friends of Nature participants shoveling

Similajau National Park

8 MLNG staff shaveling sand for the

construction of the hatchery

9 BEACON Project members cleaning up the

beach


were mainly members of MLNG’s I LOVE Volunteering group, passionate people from MLNG who had been giving their time to a variety of causes before the BEACON Project began.

One such volunteer is MLNG fire marshal Wahed Kep, 54, who always wanted to learn to dive. He started diving at the age of 10, albeit in the “kampung” style. It was only in April 2013, at the age of 52 that he became a certified diver because of the BEACON project.

“I was very nervous. The first time I hit the water, I was very, very unlucky. My adjustment was incorrect, and I only had a half metre of visibility. I could not enjoy the experience much, but I enjoyed my nervousness in the water,” says Wahed light-heartedly. Thankfully, he was not deterred and after several dives, he is now looking forward to his next big underwater challenge – decoration and landscaping. The divers will have to manually lift the 2.5 tonne reef balls using air bags, in limited visibility conditions underwater, all to create a landscape with the best value for marine life.

“Places like the Similajau National Park are part of the turtle highway. So the conservation of turtles is not just local work; it’s about regional work as well as international collaboration.”

Oswald BrakenGeneral Manager of SFC Protected Areas

SUSTAINABILIT Y

According to Azizah, BEACON is MLNG’s first Corporate Social Investment project that focuses on environmental conservation. “By installing the reef balls, we hope to improve the marine life and perhaps the local fishermen can get more fish,” she says.

“Divers say Bintulu has beautiful corals so we should protect the marine life here. MLNG has been operating in Bintulu for more than 30 years and this is part of PETRONAS’ contribution for the people of Bintulu.”

BuIlDING AwARENEss

Education and awareness through the CEPA programme is equally important, she adds. One of its initiatives is a three-day long programme for Form 4 students called Friends of Nature, where the children are exposed to nature and taught about conservation.

The results of BEACON’s reef ball project have been positive so far. The number of dead turtles on the beaches has been reduced to less than 10 a year.

Last year, turtles were spotted feeding very close to the coastal area; a rare sight as recently as five years ago. Various species of dolphins were also spotted in the waters, including the Indo-Pacific bottlenose, Long-Snotted Spinner, Pan-Tropical Spotted and Dwarf Spinner. This is the first time that the Dwarf Spinner dolphin has been reportedly sighted in Sarawak waters.

“Places like the Similajau National Park are part of the turtle highway. So the conservation of turtles is not just local work; it’s about regional work as well as international collaboration,” says Sarawak-born Braken.

He adds: “One of the important aspects of conservation is education and awareness. Once you appreciate the gift, you will protect it. Conservation is a very simple thing that people can contribute to, for example by not littering. Things like plastic end up in the ocean, where fish, birds, turtles or even crocodiles eat them, mistaking them for food. The plastic would clog their digestive system and kill them in the process.”

SUSTAINABILIT Y

BEACON AT A GlANCE

BEACON Reef Ball Project

• 1,500reefballsover3years(2013-2015) amounting to RM4.7 million

Conservation, Education, Promotion and Awareness Programme

• BEACONCetaceanAerialandBoat survey

• FriendsofNature• BEACONDiversTraining• TurtleHatchery&Conservation

Programme• Beach&ReefCleaning

Programme

APR / MAY 201558

APR / MAY 201500 P E T R O N A S U p s t r e a m M a g a z i n e 00

DEEPWATER


PETRONAS’ successful intervention campaigns at the Chinguetti field in Mauritania have proven its ability to handle deepsea operations under challenging conditions.

PROVING ITS METTLE IN THE DEEP

When PETRONAS took over the running of the Chinguetti field in Mauritania in 2007, production had been falling rapidly and prospects for the West African country’s only producing field looked dire.

Chinguetti had achieved its first oil on 24 February 2006, but within a few months production rates had plunged from 75,000 barrels per day (bbl/d) to 30,000 bbl/d due to a lack of pressure support. By the time PETRONAS entered the picture through it’s through its wholly-owned subsidiary PC Mauritania 1 Pty. Ltd. (PCMPL), production had fallen further to just 11,000 bbl/d.

Given the rapid production decline, coupled with high operation expenditure and decommissioning costs, the field was expected

to reach its economic limit in 2013 if nothing was done to reverse the situation.

Significantly, PETRONAS’ operations at Chinguetti were the first for the company involving Subsea Production systems (SPS). To boost production, PCML implemented an aggressive development and intervention program involving both drilling and intervention activities in 2008.

The field was developed in two main phases, using subsea wells located within manifold-templates that are tied back to a Floating Production Storage and Offloading (FPSO), the Berge Helene.

DEEPWATER DEEPWATER


To boost production, PETRONAS implemented an aggressive development and intervention program involving both drilling and intervention activities.

EffECTIVE TEAMwORk

Key to the project’s success was the support rendered by PETRONAS’ Projects & Engineering Division in the form of subsea engineering resources and capabilities to PCMPL.

Through effective planning, collaboration and teamwork between PCMPL, the subsea engineering team and facilities team in Mauritania’s capital Nouakchott and in Kuala Lumpur, the decline in production was slowed to just 7 per cent a year instead of 26 per cent previously.

The first campaign in 2008 consisted of drilling an exploration well in Sub-Block C6 and two appraisal wells in Banda gas field. A development campaign of Chinguetti field was also executed, involving drilling two infill wells and the intervention of three wells to increase the production to 15,000 bbl/d.

PCMPL had set-up a multi-disciplinary Project Management Team (PMT) to manage this first campaign, comprising of members from the drilling, facilities, subsea and the petroleum engineering disciplines. The Subsea Engineering team was established in Nouakchott in March 2008 to plan and execute the well intervention and infill well development activities.

This team consisted of two dedicated subsea engineers and two underwater engineers based in-country who were supported by another team in Aberdeen, UK, made up of two subsea supervisors, two underwater engineers and a subsea package engineer. The team members worked on a rotational basis with engineering support provided by the Subject Matter Experts (SMEs) based in Kuala Lumpur.

The well intervention program offered a great opportunity for PETRONAS’

young subsea engineers to participate and gain first hand experience in the planning and execution of the well intervention activities. Additionally, the engineers were also involved in the infill development campaign that included drilling and well completion activities for the two infill wells.

The successful completion of the campaign resulted in the increase of the crude oil production for both wells by 2,400 bbl/d and 3,500 bbl/d respectively, which contributed significantly to the overall production levels of the Chinguetti field. Notably, this was achieved without any recorded Loss Time Injury (LTI).

The successful execution of the first campaign resulted in similar programs by PCMPL in 2009, 2010 and 2012, aimed at sustaining production levels and maintaining the economic viability of the field.

Run Anchors

Activities involving Subsea Engineers

Rig Up &Run

CDP / LRP

Rig Up &Run

EDP / LRP

Slick LineDrift Run Change GLV Rig Up

E Line

Run E-LineDump Bailer

BullheadWater Glycolto EDP / LRPConduct Test

BullheadWater Glycolto EDP / LRPConduct Test

DisconnectEDP / LRP

DisconnectEDP / LRP

DisconnetAchors

Run & SetHPI Plug

1 2

7 8 9 10

3 4 5

6

• Subsea team’s preparation work prior to the execution of well intervention scope. • This includes ROV readiness, inspection of final valve position on the XMT, removal of XMT cap, installation of annulus reeler, deployment of EDP (Emergency Disconnect Package) / LRP (Low Riser Package) assembly, locking of assembly to XMT and testing activities.

• Activities carried out after the completion of well intervention scopes.• This ensures that all well protection barriers (XMT valve and SCSSV (Surface Control Subsurface Safety Valve) are intact and in good condition before being handed over to Operations (FPSO)).

• Final handover activities performed prior to ‘releasing’ the well back to Operations (FPSO). • This consists of the disconnecting of LRP EFL (Electrical Flying Lead) from the XMT, unlocking of EDP/LRP from XMT, recovery of risers, installation of the XMT Cap and installation of EFL from manifold to SCM (Subsea Control Module) at XMT and lastly, monitoring of the XMT and manifold valves commissioning from FPSO.

Well intervention activities. Chinguetti SPS facilities layout

Deepwater subsea development well (infill) drilled

Deepwater subsea Christmas tree installed

Deepwater well with level 1 smart well technology (Permanent Downhole Gauge) installed

1

1

1

st

st

st

firsts for PETRONAS at Chinguetti

More on PETRONAS Deepwater projects on our YouTube channel


The Chinguetti

field lies 80 km offshore Mauritania and

lies in water depths of between 700 to 960 meters, qualifying it as a deepwater operation. PETRONAS acquired its stake in the asset from Woodside Petroleum in December 2007. It currently holds a 47.38 per

cent share, with the remainder owned by Tullow Oil, Kufpec,

Premier Oil and an entity owned by the Mauritanian

Government.

OVERCOMING CHALLENGES

The key challenge in operating the Chinguetti field was its geographically remote location, and the limited availability of local resources. This meant that technical support services and vessels required for the intervention campaigns had to be sourced from other regions.

Despite this and other challenges, the planning and execution of the development and intervention campaigns were conducted successfully. The completion of the subsea intervention work, ahead of schedule and below budget, was

attributed largely to the dedication and hard work of the team comprising of the PMT, subsea engineers and operations team.

For PETRONAS, the experience at Chinguetti has benefitted the company not only in terms of asset value but also in capability development, particularly in the area of subsea engineering capability, which was key to supporting deepwater operations. On a broader level, PETRONAS’ achievements in Mauritania have demonstrated the company’s ability and readiness to handle any other deepwater operations in the group’s portfolio.

DEEPWATER

Christmas Tree being installed through the rig’s moonpool PETRONAS Subsea Engineering Team in Chinguetti Field

flow, Volume 02

Documents