Shell trying to boost production, longevity

Shell trying to boost production, longevity

BANDAR SERI BEGAWAN, Brunei (AP): Shell is using new technology in a bid to squeeze more oil from its Brunei fields, and to extend their production life, Brunei Shell Petroleum Co. managing director John Darley said Saturday.

"We're talking about modest potential for increases," Darley told The Associated Press. "We're talking in terms of 5 to 10 percent, at the moment, in the current year."

This would mean an increase from a current average production level of roughly 160,000 barrels per day to a range of 170- 180,000, Darley said.

But he stressed that extending the life of current oil fields was the crucial concern.

"What is important in Brunei is the long-term stability of the production levels and the long-term stability of the industry. And therefore we really look for longevity," he said.

"Some of these fields are on decline. What we are looking at is making sure that we reverse the decline and add new reserves to that process," he added.

Oil and natural gas, produced mainly by joint ventures between Shell and Brunei's monarchy government, are the Southeast Asian tiny country's lifeblood.

The industry is a major employer in Brunei. It accounts for more than 90 percent of exports and half of gross national product - the total of all goods and services produced in the country.

Oil and gas have made the quiet sultanate one of the world's richest countries. But Asia's recent economic crisis, coupled with the collapse of Brunei's largest private company last year, hit the economy hard.

Brunei Shell plans to use sophisticated seismic tests to find oil, and new horizontal drilling techniques to find reserves that were once unreachable, Darley said.

Brunei may also push its offshore drilling operations into much deeper water farther off its coast.

"There is talk about licensing the deeper offshore areas," Darley said.

Most of Brunei Shell's current offshore wells are in 10 meters to 30 meters (33 feet to 99 feet) of water up to 40 kilometers (24 miles) offshore. New deep-water wells could be as far as 100 kilometers (60 miles) offshore in 1,000 meters (3,300 feet) of water, Darley said.

Though the government has asked Brunei Shell to help study the project, others would probably be able to bid for it, he added.

"I think the government is quite rightly looking to encourage more players in the industry," Darley said.

French company Elf Aquitaine and New Zealand's Fletcher Energy are relative newcomers to Brunei's oil and gas industry, dominated by Shell for most of this century.

Brunei has long been dogged by speculation that its oil reserves could run dry within decades. But improving technology could keep the industry a cornerstone of the economy "well into the next millennium," Darley said.