First Onshore Oil & Gas Find In Malaysia In 24 Years

About 349 metres of net hydrocarbon thickness was found in the Adong Kecil West-1 well after Petronas Carigali Sdn Bhd and its joint-venture partner, JX Nippon Oil & Gas Exploration (Onshore Sarawak) Ltd, drilled the well in Block SK333, which is located about 20km northeast of Miri.

"Two drill-stem tests achieved flow rates of about 440 barrels of crude oil per day and 11.5 million standard cubic feet of gas per day.

"Technical assessments are currently being undertaken by the operator to determine the resource volume of the field," Petronas said in a statement yesterday.

Analysts contacted by Business Times were upbeat on the announcement, describing the onshore discovery as positive to the country's oil and gas industry.

"I do think that the news is positive as this is the first onshore oil discovery in the last 24 years.

"While the news is positive as onshore drilling is much cheaper than offshore drilling, there are not many companies who are actually doing onshore drilling in Malaysia and more reserves will need to be discovered before it is commercially viable to extract the oil out," said OSK Research analyst Danny Chan Tzu Zhung.

RAM Holdings group chief economist Dr Yeah Kim Leng also shared the same sentiment, saying that the discovery will boost the country's economic growth.

"Coming on the heels of several new offshore strikes announced recently, the first onshore oil and gas discovery after a lapse of 24 years will add to positive investor and consumer sentiments prevailing currently as well as boost the country's economic growth prospects in the coming years.

"Additionally, given that development and production costs will be lower than offshore sites, Petronas' profit margin will be higher from these fields," he said.

Based on the drilling results at the Adong Kecil West-1 well, Petronas said there are also indications that the deeper sections in the onshore area may hold additional upside potential for hydrocarbon accumulation.

"However, with the higher borehole pressures expected, drilling operations will be more challenging for the deeper reservoirs and rigs with higher specifications will be required to test such intervals," it said.

To date, three discoveries have been made onshore Sarawak, namely in Miri, Asam Paya and now Adong Kecil West fields.

"These discoveries prove that onshore Sarawak has the potential for more oil and gas accumulations where the Miri Field, Malaysia's first oil field, was discovered way back in 1910," it said.

Further onshore exploration activities will be undertaken by the joint venture to support Petronas' effort to rejuvenate the nation's onshore oil and gas exploration, the company added.

Petronas' total hydrocarbon or oil reserves stand at 27.12 billion barrels of oil equivalent (boe) with an average production of 1.1 million boe per day.

- Btimes