Shell announces new gas discovery in Malaysia

Out-Law News | 29 Aug 2014 | 10:28 am | 1 min. read

Shell has announced a further discovery of gas in Malaysia, at its deep-water Marjoram-1 well some 180 kilometres off the Malaysian coast.

The discovery at Marjoram-1 in 800 metres of water in block SK318, follows the discovery of gas last April in the same block at the Netherlands group’s Rosmari-1 well.

Shell upstream international director Andrew Brown said: “Our strategy to expand our heartland areas through technologically advanced exploration is delivering tangible success in deep-water in Malaysia.”

Brown said: “We have a long history in the region, and the addition of new natural gas resources this year ensures we are able to continue to provide cost-effective, reliable, cleaner energy options for the future.”

Block SK318 is operated by Shell with an 85% stake. The remaining 15% is held Petronas Carigali International Sdn Bhd, a subsidiary of the Malaysian government-owned Petronas group.

Rosmari-1 was drilled to a total depth of 2,123 metres, encountering more than 450 metres of gas column, Shell said. The group did not give an estimate of the size of the Marjoram discovery.

According to the Malaysia Petroleum Resources Corporation (MPRC), Malaysia has to date some 28.35 billion barrels of oil (BBOE) reserves and about 1.2 per cent of the world’s natural gas reserves (2.35 trillion cubic metres) of proven reserves. Malaysia has a current production rate of 730,000 barrels per day of crude oil products.

The MPRC said the Malaysian government’s “main objective” is to increase aggregate production capacity by 5% every year up to 2020 to meet domestic demand growth while sustaining crude oil and liquefied natural gas exports to overseas markets. “In the Asia Pacific region, Malaysia aims to be the number one oil and gas hub by 2017, taking advantage of its strategic location at key shipping lanes as well as strong economic fundamentals in China, India and within Southeast Asia,” the MPRC said.

A 2013 report by the International Energy Agency (IEA) (138-page / 3.59 MB PDF) forecast a “reduced surplus of natural gas and coal for export as production is increasingly diverted to domestic markets”. The IEA said: “Despite increasing gas production, Southeast Asia’s net gas exports, which come mainly from Indonesia, Malaysia, Myanmar and Brunei Darussalam, are cut from 62 billion cubic metres (bcm) to 14 bcm in the period to 2035.”

The IEA said: “While Southeast Asia is considered to be a mature oil-producing region, there is still potential to boost output, as there remain relatively unexplored areas that are thought to hold significant resources particularly in deepwater. However, in some parts of the region, efforts to increase production are constrained by factors such as challenging legal and ownership issues, difficulties in raising finance and technological issues.”