An opportunity to develop An opportunity to develop Mae Sod oil shale, Mae Sod oil shale, TakTak, ,

Northern ThailandNorthern ThailandBy DMFBy DMF

May 27May 27thth , 2011 , 2011

An opportunity to develop Mae Sod An opportunity to develop Mae Sod oil shale, oil shale, TakTak, Northern Thailand, Northern Thailand

Content:Content:Background Background Studying areaStudying areaStudying PlanningStudying PlanningDrilling, wellDrilling, well--logging, samplinglogging, samplingGeology (Oil shale characteristic, Quality, reserve)Geology (Oil shale characteristic, Quality, reserve)Oil shale Mining Oil shale Mining Oil shale utilization in Power plantOil shale utilization in Power plantOil shale utilization in retorting plant Oil shale utilization in retorting plant ConclusionConclusion

BackgroundBackgroundIn 2006, In 2006, Permanent Secretary of Energy Ministry Permanent Secretary of Energy Ministry has appointed the Working Grouphas appointed the Working Group of Feasibility of Feasibility Study in Mae Sod Oil shale Development Project. Study in Mae Sod Oil shale Development Project. The working group was The working group was coco--operative betweenoperative betweenDepartment of Mineral Fuels (Herewith Department of Mineral Fuels (Herewith DMFDMF) and ) and Electricity Generating Authority of Thailand (Herewith Electricity Generating Authority of Thailand (Herewith EGATEGAT). ). In the first 2 years, the working group In the first 2 years, the working group rere--studied the studied the previous drilling geological logging and oil shale previous drilling geological logging and oil shale analysis data via Vulcan softwareanalysis data via Vulcan software and then we and then we assessed the oil shale geological resource assessed the oil shale geological resource in area of in area of 315 km315 km22 about 621 million Ton. about 621 million Ton. We also assessed in the We also assessed in the high potential areahigh potential area in Mae in Mae Sod basin around Sod basin around HuaiHuai KalokeKaloke village of 104 kmvillage of 104 km22

with oil shale geological reserve of 389 million tonwith oil shale geological reserve of 389 million ton..

Background (contBackground (cont’’))

At Dec 11At Dec 11thth , , 2007, 2007, the cabinet has the cabinet has approved the ministry of Energy by approved the ministry of Energy by DMF & EGAT to study andDMF & EGAT to study and exploreexplorethe Mae sod Oil shale deposit the Mae sod Oil shale deposit in in the the HuaiHuaiKalokeKaloke high potential area 104 kmhigh potential area 104 km2 2

within 4 yearswithin 4 years after the cabinet approval. after the cabinet approval. The The scope of study is consisted ofscope of study is consisted ofthe geology, mining, utilization and the geology, mining, utilization and environmental impactenvironmental impact..

Studying areaStudying area

The studying area is in the bold red line frame 104 km2

• The blue area is the highest potential area that assessed for oil shale

reserves calculation.

Studying PlanningStudying Planning

Geological study: Geological study: 20082008Mining study: Mining study: 20092009Oil shale use in power plantOil shale use in power plant: : the 2the 2ndnd half of half of 2009 to 20102009 to 2010Oil shale use for retortingOil shale use for retorting: : the 4the 4thth quarter quarter of 2009 to 2011of 2009 to 2011Environmental impact studyEnvironmental impact study: : 20082008--20112011

Drilling, wellDrilling, well--logging, samplinglogging, sampling

In the 1In the 1stst year, year, 20082008, , DMF & EGAT have coDMF & EGAT have co--operated to study and exploreoperated to study and explore in the Mae Sod in the Mae Sod oil shale area with included the oil shale area with included the 16 drilled holes16 drilled holesby EGATby EGAT’’ rig, rig, oil shale and rock sampling oil shale and rock sampling analysisanalysis for the study of for the study of geology, mining, oil geology, mining, oil shale useshale use for power plant and for retorting. for power plant and for retorting. The total depth of drilling is 4,749 metersThe total depth of drilling is 4,749 meters, these , these wells are ranged from 207wells are ranged from 207--382 meters. 382 meters. All wells had to run wellAll wells had to run well--logginglogging with types of with types of caliper, gamma, density and resistivitycaliper, gamma, density and resistivity..

Drilling, wellDrilling, well--logging, sampling (contlogging, sampling (cont’’))Oil shale samples have been portioned out to Oil shale samples have been portioned out to analysis for analysis for combustion properties in power combustion properties in power plantplant and for and for the oil characteristic analysisthe oil characteristic analysisregard with the oil shale use in retort plantregard with the oil shale use in retort plant. . The oil shale analysis in part of The oil shale analysis in part of combustion combustion for power plant performed by EGAT for power plant performed by EGAT laboratories.laboratories.The The oil extraction analysisoil extraction analysis was performed by was performed by the the Chiang Mai UniversityChiang Mai University, Thailand and the , Thailand and the Colorado School of MineColorado School of Mine, USA., USA.

GeologyGeologyBased on the information of 16 drilled holes, we Based on the information of 16 drilled holes, we found found 13 oil shale seams13 oil shale seams and each seam has and each seam has consisted thinly split bedded subconsisted thinly split bedded sub--seams seams with with totally 43 subtotally 43 sub-- seams.seams.Each oil shale subEach oil shale sub--seamseam thicknessthickness is varied is varied from from 0.01 to 16.60 meters0.01 to 16.60 meters. . These thinly oil shale beds have found These thinly oil shale beds have found near near surfacesurface throughthrough >380 meters depth>380 meters depth..The The lateral and vertical continuitylateral and vertical continuity of each oil of each oil shale sub seam shale sub seam is limited by nature of the is limited by nature of the deposit type in deeplydeposit type in deeply lake and lake and frequently fault frequently fault setset..

Geology (contGeology (cont’’))

Generally, in the Mae Sod basin, we found Generally, in the Mae Sod basin, we found laminated oil shale intercalated with shalelaminated oil shale intercalated with shaleor rarely siltstone and very fine grained or rarely siltstone and very fine grained sandstone. sandstone. The The average heating value of the Mae Sod average heating value of the Mae Sod oil shale is 902 kcal/kgoil shale is 902 kcal/kg with cut off <500 with cut off <500 kcal/kg. kcal/kg. The ash contentThe ash content is relatively high between is relatively high between 60.60 to 70.83%60.60 to 70.83% while while the average water the average water content content is fairly low betweenis fairly low between 7.157.15--11.12%.11.12%.

Geology (contGeology (cont’’))

The The highest potential area of the Mae highest potential area of the Mae Sod oil shale has limited in 18 kmSod oil shale has limited in 18 km22. . The The geological resources of the selective geological resources of the selective oil shale within 18 kmoil shale within 18 km22 about 1,051 M tonsabout 1,051 M tons(cut off H.V.< 500 kcal/kg. (cut off H.V.< 500 kcal/kg. In the part of H.V. (heating value) In the part of H.V. (heating value) higher than 900 kcal/kghigher than 900 kcal/kg and the depth and the depth shallower than 100 meters; shallower than 100 meters; the geological the geological resources of oil shale were about 99 M resources of oil shale were about 99 M tons. tons.

Geology (contGeology (cont’’))

Based on the equally H.V. but the depth is Based on the equally H.V. but the depth is shallower than 200 meters, the geological shallower than 200 meters, the geological resources of oil shale were about 175 M tons. resources of oil shale were about 175 M tons. Unfortunately, Unfortunately, there are just only 1.2 M tons there are just only 1.2 M tons of the geological reserves that have H.V. of the geological reserves that have H.V. over 2,000 kcal/kgover 2,000 kcal/kg. . The subThe sub--seams M10B & M11B are selected seams M10B & M11B are selected for mining and utilization purposefor mining and utilization purpose because because they are shallow and greater thicknessthey are shallow and greater thickness, , even even they are relatively low in H.V.they are relatively low in H.V.

Oil shale out crop,Oil shale out crop,nearnear MoeiMoei RiverRiver

Oil shale coreOil shale core

Mae Sod oil shale Mae Sod oil shale seseaam m

xx--sectionsection

M10

M11

Structural roofStructural roofofof

sub seamsub seam M10bM10b

Structural roof of Structural roof of sub seam M11bsub seam M11b

Oil shale MiningOil shale Mining

• Mine type: open pit mine• Mineable reserves

@depth 100 m for mining pit : 32.36 m tons • Stripping ratio

(overburden/oil shale, m3/ton): 16.09:1 • Annually production planning

for power plant or retort plant @ life of 30 yrs: 1.08 m ton

Oil shale Mining (contOil shale Mining (cont’’))Oil shale quality Oil shale quality Heating value (as received basis): 957 kcal/kg Heating value (as received basis): 957 kcal/kg Ash content: 65.44% Ash content: 65.44% Moisture content: 8.62% Moisture content: 8.62%

Real Average Cost Real Average Cost at discount rateat discount rate 1010 %%::11,,270270 baht/ton ($39/ton, 2009) baht/ton ($39/ton, 2009)

RemarkRemark: : 67% of cost67% of cost is the part of overburden and interis the part of overburden and inter--

burden removalburden removal..

Oil shale utilization in Power plantOil shale utilization in Power plantThe preliminary study of Thermal power plant The preliminary study of Thermal power plant by using Mae Sod oil shale as fuel with the by using Mae Sod oil shale as fuel with the reserves at 32.36 million tons serving for reserves at 32.36 million tons serving for 1 1 unit of 52 MW thermal power plant. unit of 52 MW thermal power plant. The plant life The plant life is 30 yrsis 30 yrs & will be equipped with & will be equipped with high pressure high pressure circulating fluidized bed boilercirculating fluidized bed boiler. . From the detailed studies by EGAT, it shows From the detailed studies by EGAT, it shows that the electricity that the electricity production costproduction cost is 5.87 is 5.87 baht per unit with project IRR at 10%. baht per unit with project IRR at 10%. This cost is totally higher than the other This cost is totally higher than the other electricity electricity production costproduction cost of EGAT power plant of EGAT power plant at least doubleat least double. .

Oil shale utilization in retorting plantOil shale utilization in retorting plantThe The average oil yield average oil yield of the subof the sub--seamseam M10B M10B and M11B are about 8%.and M11B are about 8%.We assumed We assumed to use the Alberta to use the Alberta TaciukTaciuk Process Process retortretort which belonging to UMATAC, Canada. which belonging to UMATAC, Canada. The The synsyn--crude product propertiescrude product properties are consisted are consisted of of mainly heavy and light fuel oilmainly heavy and light fuel oil with some with some diesel. diesel. The The synsyn--crude production cost is ranged crude production cost is ranged between $110between $110--$160 per barrel$160 per barrel. . This This production cost is still very high and has production cost is still very high and has not yet included the environmental not yet included the environmental management costmanagement cost..

Naphtha Naphtha Naphtha

KeroseneKerosene Kerosene

Diese lDiesel

Diesel

Light Oil GasLigh t Oil Gas L igh t Oil Gas

Heavy Oil Gas Heavy Oil Gas Heavy Oil Gas

0%

20%

40%

60%

80%

100%

MS-ATP-002 MS-ATP-008 MS-ATP-011

Mas

s Pe

rcen

t

Naphtha Kerosene Diesel Light Oil Gas Heavy Oil Gas

>449 °C

344-449 °C

271-344 °C

174-271 °C

IBP-174 °C

Compositional Properties of Product Oil, Cut Point chart for three Mae Sot Basin shale oil samples.

Cut point ranges are shown. IBP – Initial Boiling Point.

ConclusionConclusionThe Mae Sod oil shale comprises of very The Mae Sod oil shale comprises of very thin bedthin bed. . This characteristic This characteristic becomes the main barrier becomes the main barrier to make the Mae Sod oil shale project to make the Mae Sod oil shale project possible. possible. The most important is the removal cost of The most important is the removal cost of overburdenoverburden and interand inter--burden which is burden which is extremely high; extremely high; it is about 67% of the total it is about 67% of the total costcost ($39/ton)($39/ton)

Conclusion (contConclusion (cont’’))

It seems that It seems that both both electricity production electricity production costcost and and synsyn--crude production costcrude production cost of of the Mae Sod oil shale are proved that it the Mae Sod oil shale are proved that it is still noncommercial at the present is still noncommercial at the present situation. situation. However, it may be commercially However, it may be commercially whatever the crude price is brought up whatever the crude price is brought up close to $200 or can be useful under close to $200 or can be useful under emergency situation.emergency situation.

The endThe end

Applications of “Newer” Wireline Technologies, Some examples from POTL 2009/10 Exploration Drilling

DMF 4th Petroleum Forum Bangkok26th_27th May 2011

1

Wattanaporn P. and Theeranun L.

Pearl Oil Thailand.

Outline

Introduction

Pearl Gulf of Thailand (GOT) Concessions status 2009/10, drilling focus areas.

Rotary Sidewalls (MSCT) for advanced reservoir characterization.

Elemental Capture Spectroscopy (ECS) usage radioactive reservoir section

Oil Base Mud Imager (OBMI)example for reservoir geometry input into deterministic GRV modeling.

Array Dialectric (ADT) example for characterization of varying salinity reservoirs.

Progressive changes in WFT (Wireline Formation Tester) configuration.

Fluid ID challenges, Weak formations, CGR, Low GOR µ variations

Success of Focus Probe sampling

Mini DST TST comparison

Conclusions

POTL 2009/2010 Exploration/ Delineation

PattaniBasin

Jasmine field

Base Tertiary Depth map

Extensive (Expensive) Database Acquired

(90 wireline jobs, 1341 hrs logging, 516 pretests,140 fluid samples, 494 CST, 310 MSCT, 320’ in 4 cores, 18 TST)

Wireline TechnologiesMSCT Advanced Reservoir

Characterization

Wireline TechnologiesFE…ECS Theory

Highlight Summary

Wireline TechnologiesFE…ECS in Radioactive Sands

Interpretation

Highlight Summary

l

Wireline TechnologiesFE…ECS

Highlight Summary

Wireline TechnologiesFE…OBMI results Influencing Sand

Body Geometry and GRV

Sediment source and thus sandthickening directions formapping changes from Westerlyorigin at the top of the intervalto a southerly source at the base of the displayed interval

Wireline TechnologiesFE…ADT

Highlight Summary

Wireline TechnologiesADT…Variable Salinity, m

Wireline TechnologiesProgressive Changes in WFT

Configuration (SPE 133896)

Tool Enhancements Benefits

1. Focused Probe Sampling - Achieve uncontaminated samples within a limited time

2. Utilize fine mesh screen in sand filter bottles for unconsolidated reservoirs

- Prevent sand plugging in a pump-out module

3. Dual packer mini DST with IFA (In-situ Fluid Analyzer)

- Obtain oil composition, viscosity, GOR, %OBM contamination of samples from IFA

- Interval Pressure Transient Testing to obtain reservoir properties

Wireline Technologies…WFT filter / Focus Probe

Highlight Summary

Sand trapped in the filter from inside modified filter bottle

0

50

100

150

200

250

300

350

0

10

20

30

40

50

60

70

80

90

100

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

Mob

ility (

mD/

cp)

wt %

Con

tam

inat

ion

/Flo

wlin

e cle

an up

time (

min

ute)

Sampling station

ContaminationFlowline Clean up timeMobility

Conventional WFT process Proposed WFT process

Wireline Technologies…WFT mini-DST

Highlight Summary

Station #1

Station#2

Wireline TechnologiesIn-Situ Fluid Analyzer

Highlight Summary

Conclusions

Commencing February 2009 until October 2010 Pearl Oil Thailand and subsidiaries drilled 27 exploration and delineation wells of which 19 contained hydrocarbons.

Wireline Database derived from 90 separate runs acquired over 1351 hours operating time.

Many of the “newer” wireline technologies were employed to solve a diverse set of formation evaluation problems encountered in the exploration and delineation phases. Examples presented :-

MSCT

ECS

OBMI

ADT

2010 SPE 133896 paper & poster in Brisbane,” Documented Progressive changes in WFT configuration. Examples presented :-

Fluid ID challenges, Weak formations, CGR, Low GOR, µ variations

Success of Focus Probe sampling, IFA

Mini DST TST comparison

Acknowledgements

Pearl Oil Management for encouraging the assembly of a progressive logging tool basket stocked with the best offerings from our wireline services provider, Schlumberger

Co-venturers, Northern Gulf, Tap Oil and Kris Energy for allowing permissionto present some of the well data and ongoing interpretations.

Rig and service company personnel (especially Khun Tun P.) who kept me company during the long hours (mostly at night time) of the 90 separate wireline runs.

Department of Mineral Fuels

1

the 4th Petroleum Forum

IntroductionPetroleum arrangement is the legal tool for oil company to explore for, and exploit of petroleum.Parties: the host country(HC) and oil company(OC)3 basic types

ConcessionProduction Sharing Contract (PSC)Service Contract (SC)

However, variations of these 3 types are commonly seen nowadays.

2

3Source: Daniel Johnston

Types  Concession

A grant of exclusive right to explore for and develop petroleum under given area for a specific period of time

4

Concession

Production Sharing Contract

Service Contract

5

Concessionaire operates at sole risk and expense.

Concessionairehas title to production.In return,

concessionaire pays royalty and income taxation.

66

Current Petroleum Concessions

65 concessions 84 blocks(March 2010)

No. of concessions

No. of block

Onshore 34 44Gulf of Thailand

30 37

Andaman 1 3Total 65 84

Concession Bidding:

During 1971-2009; 20 rounds

(1)(1)

RoyaltyRoyalty(2)(2)

Income Income TaxationTaxation

(3)(3)

SRBSRB

7

Types PSCPSC was originally created in 1960’s in Indonesia.

Like concession, OC operates at sole risk and expense.

But….Ownership of production remains with HC.

8

Concession

Production Sharing Contract

Service Contract

PSC

Cost recoveryPSC allows  OC to recover its costs and expenses from the production, referred to as “Cost Oil”.

Production SplitAfter the deduction of cost oil, the remaining production is shared between HC and OC as agreed in the contract, referred to as “ Profit Oil”.

Profit oil is subject to taxation.

9

10

GULF OF THAILAND

APPROX. 260 KM

APPROX. 180 KM

APPROX. 120 KM

APPROX. 150 KM

APPROX. 310 KMTO KERTEH

JERNEH

Songkhla

Pattani

THAILAND

Kota Bharu

MALAYSIA

Narathiwat

LEGEND

PCJDAL/HESS (Block A-18 GHA)

PCJDAL/PTTEPI (Block B-17&C-19 GHA)

PCJDAL/PTTEPI (Block B-17-01)

50 km.

N

S

EWTripartite Area

JDA ⇒ 7,250 sq. km.

MTJA’s PSC

11

Cost RecoveryRoyalty

Research cess 0.5%

Fiscal TermsIncome Tax

10% 50 %

Profit ShareMTJA:Contractor

50:50• first 8 years = 0%• next 7 years = 10%• subsequent years = 20%

Types                          SC

OC provides capital investment, technology, and equipments.

Ownership of production remains with HC.

In return, OC receives the service fee.

12

Concession

Production Sharing Contract

Service Contract

OC is paid only ifthe commercial discovery is declared.

OC is paid for service rendered, not depending on the success of the discovery.

13

Service ContractService Contract

Risk SCRisk SC Non‐Risk SCNon‐Risk SC

13

Possibility of SC in Thailand?Some concessions are going to be expired.

Mature fields, with some potential left

Fully‐equipped facilities and access to existing infrastructures

Thank you for your kind attention.

15