Quest Petroleum closer to South Sumatra oil and gas drilling Tuesday, September 11, 2012 by Bevis Yeo
With approval from Indonesian upstream regulator BPMIGAS imminent for its first Ranua well, Quest Petroleum is putting together all the pieces needed for drilling to start including the appointment of a veteran drilling and operations executive as its chief operating officer. Quest Petroleum (ASX: QPN) is preparing to start its South Sumatran drilling program with approval from Indonesian upstream regulator BPMIGAS for the first well imminent.
BPMIGAS is also expected to approve Quest’s 2012 work plan and budget, following which the company will advise on the planned spud date for Kayumanis-1.
The drilling contractor is being finalised with materials and personnel mobilised.
As part of these preparations, the company has also appointed oil and gas veteran Kenneth Bull as its chief operating officer to head its South Sumatran operations and drill program.
Kayumanis-1 is one of 16 leads identified in the Ranau Production Sharing Contract with total potential of up to 6 trillion cubic feet of gas and/or 300 million barrels of oil.
It is located about 10 kilometres south of the town of Baradatu on the edge of an identified structural high proximate to three significant sub-basins with clear potential for hydrocarbon generation.
Kayumanis-1 targets the Baturaja and Talang Akar Formations, both of which are prolific oil and gas reservoirs throughout South Sumatra.
The drill site is on well drained, elevated land adjacent to a paved asphalt road which will accelerate the start of drilling.
Kayumanis is expected to be followed by the Sawat and Tabat leads, all three of which are located within the Jaya sub-Basin.
New chief operating officer
Bull has over 30 years international experience in the oil and gas sector, primarily in the management and operation of onshore and offshore drilling, well completion and production operations.
He joins Quest from Entek Energy (ASX: ETE) where he was responsible for all drilling, workover, completion and safety at their operations in the U.S.
He was previously employed by Indonesian based Kufpec and Kalrez Petroleum where he managed the drilling and production operations of the Seram Island Oil and Gas Project.
Bull also has a combined five years of direct operating experience in South Sumatra working with Stanvac, Asameria Petroleum and ARCO conducting workovers, completions and well testing in and around the South Sumatran Basin. Ken has also worked with for PDO (Shell) Oman, BSP (Shell) Brunei, Delhi/Santos Petroleum and New Guinea Energy (ASX: NGE).
“With the BPMigas approvals imminent, the company is pleased to appoint Ken to manage the Company’s operations in Indonesia,” Quest managing director Anthony Milewski said.
“With his extensive drilling expertise and significant Indonesian operational experience he is ideally suited to manage Quest's operations going forward.”
With Bull’s appointment, Saxon Palmer has stepped down a director after overseeing the work program that led to the award of the Ranau PSC and activities up to the present phase.
Ongoing technical oversight at Board level will continue to be provided by the deputy chairman Mochamad Thamrin and director Greg Lee.
Bull speaks fluent Indonesian and will be based in Jakarta.
Ranau production sharing contract
The Ranau PSC is located in South Sumatra, which 189 oil and gas fields with total reserves of about 12 billion barrels of oil equivalent.
Notable operators include ConocoPhillips, which operates the Corridor Block and South Jambi ‘B’ PSCs, and Santos (ASX: STO) with the Ogan Komering I and Ogan Komering II coal seam gas licences.
Data from a 225 kilometre gravity survey and 247 kilometres of 2D seismic have allowed Quest to identify four new and very lightly explored sub-Basins that contain up to 3 kilometres of sediment that are believed to be same oil and gas source rocks and reservoir rocks as those in the prolific South Sumatra Basin.
The 16 leads are located within these basins, with three in the Jaya sub-Basin prioritised for drilling.
In addition, exploration in the surrounding areas has already proven that a hydrocarbon system exists in the area, which is close to existing infrastructure.
Analysis
With approval from BPMIGAS imminent, Quest will soon be able to evaluate its first leads in the Ranau PSC, where the proximity to existing infrastructure allows for quick commercialisation of any discoveries.
Gas will find a ready market for both local and foreign power generation, the latter through exports to West Java and Singapore, while oil can be commercialised through facilities located within 50 kilometres of Ranau.
This is enhanced by Quest’s attractive 62% revenue split for both oil and gas in the Ranau PSC, which is more favourable than the fiscal terms Santos secured.
Quest’s appointment of Kenneth Bull to head its South Sumatran operations is also a positive as it places an experienced executive in charge of the key operations that are set to begin there.
The company presents a more leveraged way to gain exposure to the highly prospective South Sumatra Basin than Santos, sitting at a market valuation that is primed to move upon spudding of first well and any commercial discovery.
