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Joint Petroleum Development Area:
Past Activity --
Future Opportunities and Challenges

A Paper by Nick Kyranis, Technical Director, Timor Gap Joint Authority
As presented at the International Energy and Mineral Resources Conference
5 7 March 2003, Dili, Timor Leste.

Click here for the PDF file with diagrams to accompany this paper.

It has been more than 12 years since the Joint Authority was established to administer that portion of the Zone of Cooperation known then as Area A. The Darwin Office opened in March 1991, and a wide range of technical and administrative activities commenced, such as review of prospectivity, acreage subdivision, advertising, bidding supervision and assessment, and award recommendations to the Ministerial Council, whilst simultaneously implementing internal guidelines and business plans to ensure an efficient regulatory organisation.

Area A was subdivided into 14 Contract Areas, and the first round of bidding was highly competitive, and resulted in the award and execution of Production Sharing Contracts to 11 consortia representing more than 20 companies. Expectations for success were high.

Field programs commenced in January 1992. During the next 10 years, exploration programs included the acquisition of 50,000+ kilometres of 2D seismic, 3000+ square kilometres of 3D seismic, and the drilling of 45 wells, with an overall discovery ratio of about 1:5 (20%), for exploration wells drilled. While this is a good discovery ratio, it is important to note that not all discoveries are commercially viable, particularly in offshore remote areas. Slide 2 shows the discovery locations, and areas currently under Contract are shown on Slide 3. Discoveries include the commercially significant Elang & Kakatua (oil), Bayu & Undan (gas/condensate), and Sunset (gas) wells, and the sub‑economic Jahal (oil), Kelp Deep (gas), Chuditch (gas) and Kuda Tasi (oil) wells. The Elang/Kakatua oilfields commenced production in July 1998, and have produced more than 26.5 million barrels of oil during the past 4.5 years. Slide 4 shows the Elang/Kakatua Floating Production Storage and Offtake Facility.

Development of the major Bayu‑Undan gas/condensate field is at an advanced stage of construction, and development drilling commenced in May 2002. This field contains proven and probable recoverable reserves of 3.4 Trillion Cubic Feet (TCF) gas and 400 million barrels of condensate and Liquid Petroleum Gases (LPG's). A gas‑recycling project will allow production of liquids at a rate of about 110,000 barrels per day. This project will cost more than US$2,100,000,000 (excluding an optional gas pipeline to shore, and ultimate abandonment costs), and is programmed to commence commercial production about April 2004. A Gas Development Plan for exporting the resultant lean gas is currently being reviewed by the Contracting States and the Joint Authority. Slides 6 and 8 depict the present status of construction in South Korea of the two Platforms. Slide 9 shows the Floating Storage/Offtake Facility, also being built in South Korea. Slides 10 (development drilling), and 11 (platform jackets or legs) show the current status of field activity. Slide 7 is an artist's impression of project completion.

In mid‑2001 it was agreed that the Joint Authority would fund the reconstruction (and conversion to offices), of a damaged house located at Farol No.4 in Dili, for use of the future Designated Authority. The reconstruction and furnishing were completed in May 2002, and the Prime Minister of Timor Leste, Dr Mari Alkatiri, officially opened the Dili Office in June 2002. This office currently accommodates 5 employees, as well as Darwin-based personnel from the Authority who are assigned rotational duties in Dili on a regular basis.

A number of opportunities and challenges will confront the Designated Authority that will succeed the Joint Authority. There are job opportunities in a variety of different disciplines, but the main challenges are to preserve the high standards of efficiency and safety in the Petroleum Industry. This is not easy to achieve, but safety and standards cannot be compromised. Successful employees are required to have developed excellent communication skills, a high degree of technical, financial or legal competence, intensive Petroleum Industry training, and adapt to current standards of professional integrity, including sound work ethics.

In regard to employment opportunities with the oil companies, recruitment is not a matter for the Authority. However companies are required to give preference to candidates who are Nationals from the Contracting States, and who meet competitive standards.

Mostly (as with employment), investment opportunities go hand in hand with challenges. Here are a few examples:

  1. Reserves of 8+ Trillion Cubic Feet (TCF) of gas are proven in the Greater Sunrise Gas Province (of which about 1.6 TCF is in the JPDA). (Slides 2 and 14). The Contract Operators favoured development option for this resource involves a Floating LNG Facility about 0.4 Kilometres in length. The alternative option is to bring this gas to shore. Because of the number of development, marketing, and fiscal uncertainties and its remoteness, this project has been deferred. With the highly competitive Gas Market worldwide expected to continue indefinitely, it will be a major exercise in cooperation to prevent the voiding or lapse of "conditional" Gas Agreements in order to achieve economic viability of this giant gas field. We should not forget that the Sunrise and Troubadour fields also contain approximately 250 million barrels of associated saleable Condensate.

  2. The oil fields of Jahal and Kuda Tasi (slide 15) contain combined reserves in excess of 12 million barrels of recoverable oil. Although these small fields cannot be economically developed in their own right, they might be developed profitably, by connecting them to adjacent producing infrastructure. However there are many cross‑border and inter‑consortia issues to be resolved, and the challenge will be to monetise these small fields before production declines too far in nearby fields, and while there is still an opportunity for profitable co‑existence.

  3. One of the most important challenges is to develop a strategy for the exploration and exploitation of remaining prospectivity. Vacant Acreage is shown in Slide 16. It is perceived by many, that the biggest and best hydrocarbon resources have been already discovered. This is likely, but there are still opportunities for bona fide explorers to find more gas adjacent to the Chuditch gas discovery and within the giant Kelp structure, as well as possibly a few small oil accumulations in the western and central part of the JPDA. Because the remaining vacant acreage is not considered to be highly attractive (geologically), the challenge for the Contracting States will be to implement PSC and fiscal terms necessary to lure explorers to the JPDA. Marginally economic gas accumulations may become more economically attractive to potential explorers as soon as a pipeline grid is established in the region.

In conclusion, opportunities exist, but should not be taken for granted. The challenges lie not only in the field and other technical arenas, but also with the political, legal, and financial administrators who have been entrusted with this important work.

The Timor-Leste Institute for Development Monitoring and Analysis (Lao Hamutuk)
Institutu Timor-Leste ba Analiza no Monitor ba Dezenvolvimentu
Rua D. Alberto Ricardo, Bebora, Dili, Timor-Leste
P.O. Box 340, Dili, Timor-Leste
Tel: +670-3321040 or +670-77234330
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