Unocal to apply cheap technology to new reserves

Unocal to apply cheap technology to new reserves

JAKARTA (JP): Oil and gas company Unocal Indonesia, a
subsidiary of the giant United States energy company Unocal
Corp., will apply low cost technology to the development of its
new oil and gas contract areas in the Makassar Straits and South
Sulawesi.

State oil and gas company Pertamina spokesman Ramli Djaafar
said in a statement on Saturday that Unocal would explore the
Sengkarang block offshore South Sulawesi and the Lompa block in
the Makassar Straits with its Saturation Exploration (SX)
technology.

The company can drill deepwater wells in both blocks for as
little as one-third of the normal cost of conventional wells,
Ramli said.

"Low cost exploration approaches and an optimum work
commitment will allow Unocal to explore these areas as
efficiently as anyone in the industry," Ramli said.

Unocal signed production sharing contracts (PSCs) for the
development of the Sangkarang and Lompa blocks on Nov. 16.

The two blocks lie approximately 480 kilometers south of
Unocal's production operations offshore East Kalimantan.

The Sengkarang PSC covers nearly 7,957 square kilometers
offshore South Sulawesi, while the Lompa PSC covers nearly 10,268
square kilometers in the Makassar Straits.

The primary areas of interest lie in water depths ranging from
1,000 feet to 3,100 feet (300 meters to 900 meters).

"Sangkarang and Lompa are the fifth and sixth PSC areas that
Unocal has added to its Indonesian portfolio in the past two
years," Ramli said.

Unocal holds a 100 percent working interest in the new PSC
areas through its subsidiaries, Unocal Sangkarang Ltd and Unocal
Lompa Ltd. The company will spend about $24.5 million for the
exploration of each block over the next ten years.

Ramli said both blocks were categorized as frontier areas,
qualifying Unocal for a net production share of 35 percent for
oil and 40 percent for gas.

Under PSCs for conventional areas, the government takes 85
percent of the oil output of contractors and 70 percent of their
gas output.

But, the government has introduced incentive packages to
encourage exploration in deepwater and frontier areas. Under the
incentive packages, the government reduces its shares to 65
percent for oil and 60 percent for gas for deepwater and frontier
areas.

Unocal is presently delineating two significant deepwater
discoveries in West Seno and Merah Besar offshore East
Kalimantan.

Under a production-sharing contract with Pertamina, Unocal
operates nine fields offshore East Kalimantan. It holds a 100
percent working interest in eight fields -- including Santan,
Serang, Sepinggan, Melihin, Kerindingan, Seguni, Pantai and Yakin
-- and a 50 percent working interest in the super-giant Attaka
field.

Current gross daily production is approximately 77,000 barrels
of oil and nearly 300 million cubic feet of gas. All of the
production is in water depths of less than 300 feet (100 meters).
(jsk)