Budong Budong Production Sharing Contract (PSC)
- 1099 square km area after final relinquishment
- Cost Recovery of 100%
- Cost recovery pool at over $80 million
- Production Split of 62.5% to Contractor
- Royalty of 10%
- Exploration term expires Jan 15, 2017
- LG-1 and KD-1 wells discovered oil and gas at shallow depths (450-750m)
- Sonoro is seeking to either drill 1-2 appraisal wells (600m TD) by late 2016 or obtain an extension
- 20 year production term on commercial discovery and plan of development
- Balikpapan refinery is 280km across straight with several ports on Sulawesi capable of export
- Fast track PoD with successful appraisal wells can achieve sustained production in 2017
The Budong Budong Production Sharing Contract ("BB PSC") lies on the coast of western Sulawesi almost directly opposite Balikpapan. Sonoro has remapped the shallow LG Prospect from existing 2D seismic to better define the 4-way closure drilled by the LG-1 well and has confirmed that it was drilled on the flank of the structure. More importantly Sonoro has looked in detail at the pressure data collected during the drilling of the well and confirmed that it intersected a series of hydrocarbon reservoirs with clear oil gradients. The result is that LG-1 up-dip is a oil prospect with a crest some 110 metres up-dip from LG-1 well. LG-1 up-dip is therefore a low risk appraisal project with all pay intervals between 200 to 600 metres depth and an estimated TD of around 750 metres. There are at least two further follow up shallow prospects of similar if not larger size in the northern area of the PSC and a really impressive lead in the southern area with a preliminary mapped 15km x 3km closure, a TD of around 1000 metres with an oil seep on crest but which will need more low cost seismic (weight drop 2D) to firm up.
Initial interest in the area was related to discovery by early Dutch explorers of a "giant" oil seep at the end of the nineteenth century. The Doda Oil Company drilled a series of shallow wells in a coastal location around the seep with all encountering hydrocarbons, one produced small volumes of oil from 1890-1900's and others blew out. Eventually the area fell into the hands of BPM (Shell) in the late 1920’s/early 1930's. They conducted an extensive field mapping programme which lasted until the late 1930's and identified two main surface anticlines with oil seeps (Bula Bae and Madjene). For whatever reason they were not drilled although the pending Japanese invasion may have been a concern. Post WW2 the acreage lay dormant until the early 1970's when Gulf shot some very poor quality 2D and drilled 2 stratigraphic holes from a drilling barge at the coast. The inland area was still largely jungle at that point. One of these wells suffered a gas blow out near the old Doda wells and was abandoned at a shallow depth.
Subsequently BP farmed into the Gulf acreage. BP conducted an extensive field programme and confirmed BPM's original findings with regards to the Bula Bae and Madjene surface structures. They also shot some poor quality coastal 2D (coastal areas being deforested at that time) and went on to drill what turned out to be a ghost feature on the 2D (Tike-1 well) which drilled the steeply dipping flank of a monocline. The well intersected almost 8000 feet parallel to bedding but with impressive oil shows throughout. BP then switched attention to South Sulawesi and the area was forgotten about and not re-awarded untill Tately and Harvest entered the picture in 2001. Their plan was to reach the Eocene objectives being drilled offshore Makassar in the onshore area. They drilled two wells at a cost of over $80 million (sunk cost pool now) without reaching the Eocene. They bypassed the shallow structures. Fortunately they drilled the LG-1 well on flank of a shallow 4-way structure (not Bula Bae or Madjene) defined by their new 2D grid. The top 750 metres of this well had great oil and gas shows, significant pore pressures and actually blew out at one point. They had to eventually control with 22lbs mud before they could set casing.
Geology (LG-2 Up-dip Appraisal Well)
The proposed up dip LG-1 appraisal well ("LG-2 ") is located approximately 674 meters to the west of the original LG-1 well, which was drilled in 2011 to evaluate deeper Miocene and Eocene reservoir targets. This well encountered numerous strong oil and gas shows whilst drilling the shallower, early Pliocene to late Miocene, turbidite sands and interbedded limestones of the Upper Lisu Formation. Recalculated net sand thickness over the three zones with shows was greater then 30 meters with an average porosity in the region of 20%.
The LG-2 up-dip well will test a shallow, four-way dip closure on a fault-bound anticline, clearly visible on seismic Line 90BP-09. At the LG-2 location the equivalent Pliocene section is some 115m high to the hydrocarbon bearing sands in the LG-1 well. The gross closure, trending NNE-SSW is controlled to the east by a north - south trending fault, and has been mapped on a 3x5 km seismic grid (in 2008) to have a closure in excess of 6.2 square kilometers.
The LG-2 Well will be drilled to a total vertical sub-sea depth of about 600m, and will test three Pliocene sand objectives in the Upper Lisu Formation, (referred to as 415, 450 and 490 in the LG-1 well). Target depths (TVDSS) are estimated at: 300m, 381m and 419m respectively. In LG-2 the uppermost unit (415) is as yet unknown, as it was poorly developed down-dip in the LG-1 Well; however, at LG-2 the 415 unit appears on seismic to be very well developed over the crest of the anticline and has thickened considerably. On adjacent seismic data, this unit also appears to be well developed, and presents potentially exciting reservoir upside over a wide area. Notwithstanding, as a general statement there is a question-mark over the reservoir quality of the Pliocene to Miocene sands due to; a) locally pervasive distribution of tuffaceous material and b) the general mineralogical immaturity associated with turbidite sand units. However, in the LG Structure, the reservoirs are at shallow depth and significant wash-out were encountered in the Upper Lisu sandstones in LG-1, which may be an indicator that thicker unconsolidated sand members were present. Additionally, evidence from field studies of over 2,000m of outcropping Lisu formation shows that whilst the majority of Lisu formation sandstones are mineralogically immature greywackes and arkoses (poorer reservoirs) the uppermost part of the Lisu formation, is predominated by quartz litharenites, which could be expected to be cleaner, better quality reservoirs in the sub-surface. It is these reservoirs that are expected at the up dip LG-2 appraisal well.