Shell to compare FPSO with tie-back on Gumusut
The Netherlands-based major company Shell is investigating through its joint venture Brunei Shell Petroleum (BSP) the optimized solution to develop the Geronggong oil field offshore the Sultanate of Brunei Darussalam (Brunei).
Located 100 kilometers offshore Brunei by a water depth of 1,000 meters, the Geronggong oil field was discovered in early 2011.
Thus, the Geronggong field is so far the deepest offshore and most remote reservoir discovered in the Brunei territorial water as part of the third Offshore Acreage area.
As a joint venture between Shell and the Sultanate, the working interest in BSP are shared between:
-Shell 50% is the operator
- Sultanate of Brunei 50%
Brunei is currently the third largest producer of crude oil and natural gas and the largest net exporter in Asia with 125,000 barrels per day (b/d).
The oil and gas production started in 1899 with a first well close to the city of Bandar Seri Begawan, but it really picked up with the discovery of the Seria onshore field in the southwest of the Sultanate in 1925.
On the same year Shell established the Brunei Shell Petroleum (BSP) to carry on the development of the Seria field.
In the 1960s, the crude oil production took a new leap with the discoveries of the giant offshore fields of Ampa in the southwest and Champion in the North.
These discoveries attracted many companies but the complexity of the reservoirs split in different levels with different hydrocarbon compartments and a large variety of hydrocarbons motivated only very few operators such as Shell to invest in long term programs of development.
As a result, the oil production increased constantly over the decades up to reach its peak in 2006 to 220,000 b/d.
Since then the large fields of Southwest Ampa and Champions matured so that Brunei oil production declined to 141,000 b/d in 2012.
In parallel, Brunei decided to expand its refining capacity to meet its domestic demand.
The Zhejiang Hengyi Group from China is in charge of building a new refinery of 135,000 b/d capacity that should come on stream in 2015.
Taken in scissors effect between the depletion of the maturing fields and the increasing consumption of crude oil, Brunei welcomed the perfect timing of the Geronggong field discovery in 2011.
In this context, Brunei Shell Petroleum performed a comprehensive program of exploration and appraisal to evaluate and develop the resources of Geronggong on fast track.
Shell favors the tie-back while Brunei the FPSO
While requiring further tests, BSP first estimations are quantified in several millions barrels of crude oil that should be able to produce between 25,000 and 42,000 b/d of crude oil.
In addition Geronggong contains natural gas and condensate.
To develop Geronggong in the most efficient way, given its remote location from the other fields, Shell is currently considering two options:
- Floating production, storage and offloading (FPSO) vessel
- Tie-back to the existing Gumusut offshore facilities
The FPSO should run as a standalone unit that would also process the gas and re-inject the water after treatment.
Until now the solution of the FPSO was the most advanced.
But in November 2012, Shell started the commercial operations of its Gumusut-Kakap project, in the offshore deep water of Sabah in East Malaysia.
So came the idea to investigate an alternative solution to tie-back Geronggong into Gumusut.
This solution would optimize Shell capital expenditure in Gumusut and Geronggong in full loading both facilities from start and could be implemented on fast track.
But Gumusut is operating in the Malaysia territorial water while Geronggong lies in Brunei.
This dual position would suppose the two countries to sign an agreement to allow this tie-back and to adjust the production sharing contracts (PSC) on both sides accordingly.
Such option comes up in a context of intense discussions with the neighboring countries, Philippines, Thailand, and China to clarify the contested territorial water, so it has added one more sensitive topic to the list.
In this context, Brunei Shell Petroleum (BSP) may postponed its final investment decision (FID) to develop Geronggong from actual second half 2013 to first half 2014.