5 E. Timor Oil/Gas Reports: Oilex To Start 3D Seismic Survey; TSDA Mandate Extended; Wavefield; ConocoPhillips

Oilex expects to start a major 3D seismic survey before the end of March across Block 06-103 in the joint petroleum development area shared by East Timor and Australia, writes Russell Searancke.

The Australian operator said the Maura 3D survey would be shot by the Wavefield Inseis vessel Geowave Champion, and will cover 1657 square kilometres.

It is expected to start in the first quarter of 2008, depending on the vessel's current work commitments.

"With the purchase of modern third-party 3D data and the addition of the new 3D data to the existing data set, the (joint venture) will have a comprehensive seismic database over the entire prospective area of the block by mid 2008," said Oilex.

The company added it is hoping to drill two wells in the fourth quarter this year.

The partners, each on 25%, are operator Oilex and Indian trio Gujarat State Petroleum Corporation, Videocon Industries and Bharat Petroleum.

The block is east of the Laminaria, Corallina, Kakatua, Kuda Tasi and Elang fields and north of the Bayu-Undan field.

The petroleum regulator for the offshore joint petroleum development area shared by East Timor and Australia has had its mandate extended again, this time until 30 June.

The Timor Sea Designated Authority (TSDA) administers all oil and gas activity in the shared offshore zone and is due to be amalgamated with the country's National Directorate of Oil & Gas, a division of the Ministry of Natural Resources.

The new regulatory body was due to have already been operational under the terms of the Timor Sea Treaty between the two countries, but there were delays including civil unrest in East Timor in 2006 and presidential and national elections in 2007.

An earlier extension for the TSDA was valid until 2 January, and that has been extended again, said the agency.

The TSDA has developed a lot of expertise since it was established five years ago. As well as overseeing activity at ConocoPhillips' Bayu-Undan project, it has sharpened its skills by establishing a new financial and legal framework for the joint petroleum development area that culminated in the successful 2006 licensing round.

Norwegian seismic outfit Wavefield Inseis is set to shoot a major 3D seismic survey across the Oilex-operated Block 06-103 in the joint petroleum development area shared by East Timor and Australia.

Oilex said today the Maura 3D surve will be carried out by Wavefield Inseis' Geowave Champion.

The survey will cover 1657 square kilometres and is expected to start by the end of March, depending on the Geowave Champion's current work commitments.

"With the purchase of modern third-party 3D data and the addition of the new 3D data to the existing data set, the JV (joint venture) will have a comprehensive seismic database over the entire prospective area of the block by mid 2008," the Australian company said in its quarterly report.

The partners are operator Oilex (25%) and Indian trio Gujarat State Petroleum Corporation (25%), Videocon Industries (25%) and Bharat Petroleum (25%).

The block is located immediately to the east of the Laminaria, Corallina, Kakatua, Kuda Tasi and Elang fields and to the north of the Bayu-Undan gas and condensate field.

ConocoPhillips has given another indication of the growing impetus building behind the Woodside Petroleum-operated Sunrise liquefied natural gas project in the Timor Sea, writes Mark Hillier.

ConocoPhillips chief executive Jim Mulva told an earnings conference call last week that "the time has come to advance and develop the Sunrise project. Sunrise is really important to us".

However, he acknowledged that decisions still need to be taken on how to develop the project.

"We could do Sunrise by taking LNG to Darwin (the producing ConocoPhillips-operated export project in Australia), but Shell, our partner, has always had an interest in a floating LNG concept," he said.

However, he added that recently he came to the decision with the chief executives of Woodside and Shell "that this is the year we need to be moving out on Sunrise".

"In terms of whether it is a Darwin proposal, or offshore or something else, we are all agreed that this will come on our list of our list of projects to be developed," he said.

Operator Woodside said in its latest quarterly report in mid-January that feasibility studies on various concepts for the project were under way, with the aim of leading towards a preliminary development plan for the project.

The Sunrise project includes the Sunrise and Troubadour fields, which contain about 8 trillion cubic feet of gas and 300 million barrels of condensate.

The fields are located about 80% in Australian waters, but with 20% extending into the East Timor-Australia Joint Petroleum Development area.

It has been an interesting start to the year for the liquefied natural gas sector if you look below the surface.

It is true that none of the underlying factors that have created such a tough climate for the industry in the past couple of years has changed - costs and resources are still big issues, resource accessibility is a growing challenge and at the core of everything it is still exceptionally hard to put new LNG projects together.

However, after the late 2007 boost to the sector from the Angola LNG final investment decision there are further signs that behind the scenes operators are working increasingly hard to get their projects moving and starting to resolve some of the issues that have delayed fresh project sanctions.

That does not mean anybody should expect that the final investment decision logjam will suddenly end this year. However, it is encouraging to see big operators talking positively.

Last Friday, for example, ConocoPhillips boss Jim Mulva highlighted his company's desire to see movement on the Sunrise project in the Timor Sea between Australia and East Timor.

He did not hide the point that there are issues to be overcome on development solutions but chose to emphasise agreement with major project partners Shell and Woodside that they want to move the project forward in 2008.

ConocoPhillips is also a partner in Brass LNG, where a more active publicity campaign seems to be building on the potential for getting down to construction.

A land-lease agreement signed, after much haggling, with local communities is another sign that there could be progress, even if unrest in the Niger Delta, let alone Nigeria's talk of reviewing its gas policy, will make the partnership think long and hard before moving on to a project sanction decision.

Perhaps better placed for forward movement is the delayed, but potentially giant Gorgon project off Western Australia.

The Chevron-led partnership here seems to have concluded that it will stick to its planned location on Barrow Island and, if it manages to secure environmental approval later this year for three liquefaction trains instead of two, Gorgon could be set fair to head in the direction of a final investment decision.

There are others too where there are signs of progess. ExxonMobil, which along with Shell is Chevron's partner in Gorgon, is also taking some early decisions on the planned Papua New Guinea LNG project.

Agreement on a move into front-end engineering and design is still seen as possible this quarter for what, it has just been decided, would be a two-train project to produce 6.3 million tonnes per annum.

There are plenty of other projects too where operators are trying to make their sums add up and put the regulatory pieces in place for a workable LNG development.

Nobody should expect this to mean that there will quickly be a rash of new projects hurtling towards production.

StatoilHydro's start-up woes at Snohvit are a reminder, if any were needed, that LNG projects are big, expensive beasts that are tough, troublesome and very costly to put together.

However, there is also a market out there that wants to buy gas and sooner or later there will be more LNG projects coming together to help feed it.

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