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Malaysia: Second Deepwater Gas Find

This article appeared in Vol. 11, No. 5 - 2016

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For the second time in 2014 Shell has confirmed a deepwater gas discovery in Block SK318 offshore Sarawak, results that are seen as very positive indicators for the gas potential of the area. The latest find, Marjoram 1, was abandoned early July at a depth of 3,900m. Located in 800m of water, the well was targeting a gas prospect within the Cycle IV/V and Cycle 1/II Miocene carbonate; the new gas accumulation is probably in the former.

Shell signed two exploration and production sharing contracts with Petronas in April 2012 for deepwater blocks 2B and SK318, both offshore Sarawak. Block 2B is located some 300 km offshore in water depths ranging from 300 to 2,000m, while Block SK318 is about 200 km offshore in water depths of between 200 and 1,000m. Under the agreements, Shell will undertake an aggressive drilling campaign to comprehensively explore an area totalling an estimated 9,000 km2. The minimum work commitment includes the acquisition of 3D seismic data, five electromagnetic surveys and the drilling of five exploration wells in order to de-risk the challenging deepwater environment in the waters of North Luconia. Shell is operator and has an 85% interest in both contracts, with Petronas holding the remaining 15%.

The focus of exploration has moved to deeper water in Central Luconia, following major discoveries by Petronas in the area. Petronas is building a floating LNG (FLNG) development in the Kumang gas cluster in Central Luconia, which could be the world’s first FLNG plant to come onstream when it begins operations in late 2015. 

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