PETRONAS Upstream Magazine
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TRANSFORMING KERTIH AND BINTULU
COMMUNITIES
Our Commitment To Strict International Standards
LET THERE BE LIGHTPOWERING THE PENAN COMMUNITY WITH MICRO-HYDRO
We’re SAFE and we KNOW it
DRILLING
EDITOR’S NOTE
1 P E T R O N A S U p s t r e a m M a g a z i n e
Today’s global oil and gas environment remains challenging, amidst depressed prices, oversupply, and deferred investments.
PETRONAS Upstream continues to
revise our growth strategies with
consideration of current profitability
and affordability. We continue
to weather the storm by doing
well operationally in production,
LNG sales, strategic initiatives,
optimising capital and operational
expenditure, as well as placing
utmost importance on health, safety,
and environment.
Like other oil and gas companies,
impairments coupled with lower
crude and LNG prices have also
put a strain on us. Nonetheless,
PETRONAS prides itself on our focus,
resilience, and experience in riding
Dato Wee
OUR ASSETS ARE ALWAYS SAFE
PETRONAS’ record for the past four
decades show that our assets are
safe and we know it. In this issue, we
talk about how we are committed to
continually ensuring that we adhere to
strict international standards and best
practices in safety and asset integrity
management wherever we operate,
both locally and internationally, and
why we do it.
LOOKING FORWARD
Each and every one of us at PETRONAS
remains focused in our delivery and are
resilient in overcoming the challenges
ahead. Our mindset is tuned for
continuous improvement, anchored on
delivering value, while staying positive
and energised.
We have climbed up many steps to
be where we are today. And during
this tough time, we continue to look
forward.
Dato’ Wee Yiaw Hin
Executive Vice President & CEO
PETRONAS Upstream
FOCUS AND RESILIENCE
out various storms for the past four
decades.
TRANSFORMING COMMUNITIES
This fourth issue of flow looks at how
PETRONAS continues to fulfill our
mandate of developing communities
where we operate. We look at how
our operations in Kertih, Terengganu,
have transformed a sleepy fishing
village into a bustling hub with
various economic opportunities.
Meanwhile, our transformation of
Bintulu, Sarawak, has made Malaysia
the second largest LNG exporter in
the world.
Internationally in Iraq, PETRONAS
has embarked on several sustainable
long-term projects, working towards
a brighter future for both the business
and the community. Meanwhile, in the
hinterland of Sarawak, our award-
winning micro-hydro project brought
24-hour electricity to a remote Penan
village for the first time.
2 MAR 2016
FIND INSIDE TABLE OF CONTENTS
01 Editor’s Note Focus and resilience
04 News Briefs
A new deal for PETRONAS Floating LNG, more milestones reached with LNG Train 9, and other exciting news
From Fishing Village to Bustling Hub Kertih’s transformation from its humble beginnings
10 The Heart of LNG How Bintulu supports the second largest LNG exporter in the world
22
Feat
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Fo
cus
Feat
ure
Fo
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Co
ver
Min
i Sto
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No
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nd
New
s
Co
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So
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Inve
stm
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PETRONAS Upstream Magazine
Vo
lum
e 0
4
TRANSFORMING KERTIH AND BINTULU
COMMUNITIES
Our Commitment To Strict International Standards
LET THERE BE LIGHTPOWERING THE PENAN COMMUNITY WITH MICRO-HYDRO
We’re SAFE and we KNOW it
14 Transforming Communities A brighter future for both the business and the community in Iraq
18 Integrating into One
A recipe for the future: Pengerang Integrated Complex
Sunset at thePETRONAS LNG Complex in Bintulu, Sarawak.
Cutting Costs
Contractors playtheir part
06
24Powering the Penan Community
How PETRONAS Wired a Remote Penan Village in Sarawak’s Hinterland
DRILLING
3 P E T R O N A S U p s t r e a m M a g a z i n e
We’re Safe and We Know It
Asset integrity management: the cornerstone of PETRONAS’ operations
33 Best in Class
Progress Energy’s mission of “Safe, Responsible, 100% Reliable, Lowest Cost Production”
The InField Liner®
Towards a “Zero High Risk Pipeline” by 2020
Tech
no
log
yIn
tern
atio
nal
Un
con
ven
tion
alSp
ecia
l
First Fruits of a Long Labour
Achieving First Oil and First Gas in Indonesia
44First Cargo
Gladstone LNG Project and PETRONAS Australia Reaches Major Milestone
36
40
28
Petroliam Nasional Berhad (PETRONAS)
PETRONAS
Go with the flow
4 MAR 2016
NEW DEAL FOR PFLNG 1
ConstruCtive Collaboration
Train 9 Project Marks Safety Milestone
PETRONAS signed a Gas Sales Agreement (GSA) in April 2015 to supply PETRONAS LNG Ltd. (PLL) with the gas produced by PETRONAS Floating LNG (PLFNG) 1 for a period of 20 years.
According to the agreement, gas supply as produced by PFLNG 1 will be delivered to PLL by PETRONAS, and PLL shall subsequently market the gas supply to various end buyers.
PETRONAS LNG 9 Sdn. Bhd. (PL9SB) marked yet another significant milestone on 17 December 2015 following a Gas Sales Agreement (GSA) with PETRONAS.
The PETRONAS LNG Train 9 Project in Bintulu crossed a significant milestone on 3 October 2015 by achieving 30 Million Safe Manhours without Lost Time Injury (LTI).
The feat was accomplished as a result of the Incident and Injury Free (IIF) programme that was
adopted by PETRONAS LNG 9 Sdn. Bhd. (PL9SB) and JGC Corporation.
Pandai Othman, CEO of PL9SB and Project Director, said that the project’s performance is the result
The GSA was signed at the PETRONAS Twin Towers by Adif Zulkifli, Vice President of Malaysia Petroleum Management (MPM) and Ahmad Adly Alias, Vice President of LNG Trading & Marketing.
As PETRONAS’ first FLNG facility, the PFLNG 1 enables PETRONAS to secure additional LNG to meet growing demands, and enhances the company’s reputation as a global LNG player.
“This is an example of our Shared Success value, where the teams negotiate and collaborate for the greater good of PETRONAS. Both teams have indeed accomplished that,” said Pandai Othman, CEO of PL9SB.
Additionally, PL9SB also signed a LNG Sales and Purchase Agreement (LNG SPA) with PETRONAS LNG Ltd. (PLL) for the supply of 3.6 million tonnes of LNG from the Train 9 facility over the course of 20 years, commencing in January 2017.
The agreement demonstrates the significance of Train 9 LNG volumes in meeting regional demand and also PETRONAS’ capability to capture increased margins and new LNG markets.
Under the agreement, gas supply will be delivered by PETRONAS from several identified Production Sharing Contracts (PSC) to meet the requirements of PL9SB for a 20-year term.
NEWS BRIEFS
of the collective efforts of everyone in the team, all of whom duly deserves credit. The 9th LNG Train is expected to begin operations this year.
DRILLING
neWs brieFs
5 P E T R O N A S U p s t r e a m M a g a z i n e
“SAYANG BAKAU”
PETRONAS STRENGThENS PRESENcE iN iRAq
Central Diyarbekir First oil
First Successful Underbalanced Drilling Project
The “Sayang Bakau” programme was launched on 3 October 2015, signifying the first phase of Sabah
PETRONAS Carigali Iraq Holding BV (PCIHBV) inked a Joint Operating Agreement (JOA) between Contractor Parties JAPEX Garraf Ltd (JAPEX) and North Oil Company (NOC) on 25 October 2015 in Sulaimanya, the Republic of Iraq.
The Contractor Parties had agreed with the terms and conditions of the JOA, in which NOC had given their
On 29 October 2015, PETRONAS Carigali (Turkmenistan) Sdn Bhd (PC(T)SB) witnessed a breakthrough when first oil was achieved at Central Diyarbekir Drilling Platform (CDDP-A).
CDDP-A is the last phase of the Diyarbekir field development, which started production since 2006. Central Diyarbekir extends the Diyarbekir field
Gas Terminal’s (SBGAST) mangrove rehabilitation efforts. The programme is part of SBGAST’s commitment towards the sustainability of Corporate Social Investment (CSI) initiatives.
The programme was introduced by SBGAST with Sabah Forestry Department (SFD)’s partnership and support from Upstream Strategic Communications (USC), Sabah Labuan Regional Office (SLRO) and Sabah Operations (SBO). Nearly 100 volunteers from various departments had participated in planting 1000
approval on 18 January 2015 and subsequently, JAPEX on 26 January 2015.
life, adding value to the company and Turkmenistan respectively.
As evidence to the AIM ZeR0 commitment, CDDP-A recorded zero fatalities and less than 0.2 Total Recordable Cases Frequency (TRCF) with nearly 10 million man hours. PT(T)SB had invested USD 1 billion within the last three years, representing the
The Anding Utara 3 (AU3) well, located in Block PM6/12, offshore Peninsular Malaysia was the first successfully
mangrove samplings at Kampung Penampang Baru, Tuaran, Sabah.
An exhibition showcasing different local mangrove species, SFD’s mangrove conservation efforts, and an ‘Adopt A Sapling’ donation drive was also held to raise environmental awareness.
Besides the “Sayang Bakau” programme, PETRONAS has plans to develop the activity and introduce other initiatives in phase two of its CSI programme activation in Tuaran.
biggest upstream offshore investment in a highly complex and challenging environment in Turkmenistan.
executed Underbalanced Drilling (UBD) project for PETRONAS Carigali Sdn Bhd.
The well’s objective was to prove the true production rate of Anding fracture basement using Underbalanced Drilling (UBD) technology to determine the undamaged production capability and the productivity index while drilling, in order to characterise the reservoir inflow performance versus depth.
The JOA signing re-affirms the commitment of Contractor Parties’ respective rights and obligations regarding the operations and related activities under the Garraf Development & Production Service Contract (DPSC), which includes the joint exploration, appraisal, development, production and disposition of petroleum from the Garraf Contract Area.
Among the main challenges faced were high temperature environment risk and well location with high risk of punch-through and rapid leg penetration.
The AU3 plan was successfully implemented due to extensive shallow gas analysis and meticulous risk assessment. It saved USD 22.8 million (30.9% lower than planned), was ranked “Best-In-Class” in both WCPF and DDPTF, and scored a World Record for Deepest 20’’ Casing While Drilling (1002m).
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7 P E T R O N A S U p s t r e a m M a g a z i n e
FEATURE FOCUS
Today, it is a very different future for the children of Kertih, Terengganu. The once floundering village now has an airport, a port, a mall, housing developments, and many more amenities. The children grow up knowing they can gain employment in several different industries, including oil and gas.
The quaint village is now a bustling hub, offering opportunities for business and employment, thanks to the entry of PETRONAS.
Mazri Mohd Ali, General Manager of Petroleum Operations Management
it used to be a small fishing village. the livelihood of the Kertih population mainly came from the fishing industry. on leaving school, youngsters could either follow in their fathers’ footsteps by becoming fishermen, or they would have to leave Kertih and head for the bigger towns … or even Kuala lumpur to earn an income.
(POM), explains that when PETRONAS was established in 1974, it started with the initial Production Sharing Contract (PSC) with Esso Production Malaysia Inc. (now ExxonMobil Exploration and Production Malaysia Inc.), one of several PSCs given out by PETRONAS.
“Initially, we started with oil for export, then in 1983, we constructed the crude oil refinery for domestic usage.
“We started out with oil as our core business, but later, we diversified because with oil and gas, we knew we could maximise the end-to-end value if we nurtured the product.
“That’s when we incorporated PETRONAS Gas Berhad, and later built gas processing plants, supplying natural gas to the power sector, the non-power sector and also for export, mainly to Singapore,” explains Mazri.
The PETRONAS Kertih Refinery was the first oil refinery owned, constructed and operated by the company’s wholly-owned subsidiary PETRONAS Penapisan (Terengganu) Sdn Bhd, which started operations in 1983.
To develop oil and gas fields or facilities offshore and onshore, PETRONAS is well aware that it needs to comply with the authority’s requirements. These authorities include the Department of Occupational Safety and Health (DOSH), Department of Environment (DOE), and local authorities.
“We work hand in hand with the authorities to make sure they know exactly what we are doing and share our progress with them. Everywhere we go, we believe in engaging the authorities early to smoothen and
FEATURE FOCUS
8 mar 2016
accelerate any approval process,” says Mazri.
Since its inception, PETRONAS has invested a substantial sum into Kertih for both its Upstream and Downstream operations. Collaborating with PACs and other international oil companies has proven fruitful as PETRONAS has since ventured into managing its own offshore operations. Kertih is the hub that channels and adds value to oil and gas from the Malay Basin off the East Coast, a vital link in Malaysia’s integrated oil and gas value chain.
Thanks to the development of Kertih, PETRONAS’ production profile has expanded in the past 32 years. Initially, the refinery processed about 40,000 barrels of light, sweet crude oil per day. Now, it is about 100,000 barrels capacity.
PETRONAS’ operations in Kertih now include the Kertih Integrated Petrochemical Complex (KIPC), located within the PETRONAS Petroleum Industry Complex (PPIC). It is an important link in the company’s gas value chain. This is where the gas feedstock from the fields offshore Terengganu is turned into natural gas to support the power demands
in Peninsular Malaysia as well as petrochemical plants.
The petrochemical plants are integrated with the shared infrastructure facilities, including PETRONAS’ Gas Processing Plants, which processes over 2,000 million standard cubic feet per day (mmscfd) of raw gas. KIPC is supported by a storage and distribution terminal with a throughput of approximately 2.7 million tonnes per annum (tpa).
The gas supports the overall PETRONAS Chemicals Group (PCG) plants downstream. The plants within KIPC produce ammonia, benzene, butanol, butyl acetate, carbon monoxide, ethanolamines, ethoxylates, ethylene, ethylene glycols, glycol ethers, oxogas, paraxylene, polyethylene, propylene, and acetic acid.
Mazri’s face lights up as he relates how Kertih has turned into a “city of lights” from its humble beginnings, referring to the mesmerising lights emitted from PETRONAS’ complex. Being a Kuala Terengganu boy, he used to see the flares from the gas processing plants when he travelled by bus or car through Kertih during his school days.
He used to wonder what the flares were and why the fires danced and flickered 24 hours a day.
Little did he know he would one day be in-charge of taking care of the PMO Terminal operations there.
The growth of the oil and gas sector in Kertih has been symbiotic with that of the manufacturers and suppliers who support the oil and gas industry.
“In addition, the development of oil and gas becomes a nucleus or catalyst to other sectors’ development. For example, the Kertih airport and housing developments, schools, amenities, supply base and even a port to export the crude and chemical products.
“This is the secondary and tertiary effect of oil and gas development. That is how Kertih was transformed,” he says.
Being a responsible corporation, PETRONAS naturally believes in community development, knowledge sharing and talent development.
“We normally don’t shy away from community development, knowledge sharing and social responsibility. It
Kertih before and after PETRONAS
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FEATURE FOCUS
9 P E T R O N A S U p s t r e a m M a g a z i n e
is the same in Kertih as it is in Bintulu and Miri because this is PETRONAS’ philosophy of giving back to the people and community, helping school children, and extending ourselves to those in need. These are the concepts we promote as far as corporate social responsibility (CSR) is concerned,” shares Mazri.
The corporation’s staff have also rolled up their sleeves and helped clean up homes, buildings and mosques when floods have hit Terengganu and Kelantan in the past. Not surprisingly, PETRONAS is also involved in environmental conservation projects there.
The ecoCare Environment Education Centre launched in 2013 is a prime example, which helps in knowledge and information sharing among the community. Established in collaboration with the Malaysian Nature Society (MNS), this centre is the first-of-its-kind in the East Coast of Peninsular Malaysia which educates the public on mangrove protection and conservation.
PETRONAS has also been involved in turtle conservation and beach clean-up efforts. Last year, the company contributed to setting the
record and entering the Malaysia Book of Records for the longest beach clean-up, along a 11.3km stretch from Kemasek to Kertih.
With its propitious history in Kertih, PETRONAS is very much a respected and valued member of the community. Likewise, the corporation sees a bright future in this Terengganu town.
“If there is no gas, there is no power. In Peninsular, we cannot afford to be without power as it supplies not just to the residential areas but also
to key industrial areas. Because of that, the supply of gas coming from offshore Terengganu will continue to come in because we need to sustain the requirements and growth of the nation’s power supply, especially in Peninsular Malaysia.
“There are big volumes coming from Kertih to also support the overall PCG plants. So, it will continue, not just to support the oil and gas industry, but also to grow and develop. I would say Kertih will continue being one of our key hubs in Malaysia,” sums up Mazri.
The Mesra Mall in Kertih
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FEATURE FOCUS
This collaboration was the culmination
of a detailed study and negotiations to
develop Malaysia’s gas resources for
export to Japan, and led to the birth
of Malaysia LNG Sdn Bhd (MLNG), with
three trains. The project marked the
beginning of a fruitful “relationship”
with Bintulu.
Malaysia’s first liquefaction plant in
Bintulu was completed on 7 August
1982, and the first consignment
departed on 29 January 1983, for the
Japanese market.
The first plant was a demonstration
of Malaysia’s national and integrated
approach to the development of the
natural gas industry. It represented a
huge investment and was an important
project for national development, with
the Government of Malaysia declaring
it a national project.
Demand has been tremendous
since then, resulting in the birth of
joint venture companies MLNG Dua,
with another three trains, in 1992,
and MLNG Tiga in 1995, with two
additional trains.
The PETRONAS LNG Complex
in Bintulu comprises the three
LNG plants. The world-class LNG
production complex is spread over
276 hectares of land, receiving gas
supply from Upstream facilities
offshore Sarawak.
With eight production trains, the
complex is one of the world’s
largest LNG production facilities in
a single location, and delivered a
record-breaking 25.7 million tonnes
per annum (mtpa) in 2013, with a
world class standard of 99.1% plant
reliability.
PETRONAS first set foot in Bintulu more than 37 years ago. There have been many changes to the seaside town since June 14, 1978, when the company, alongside Shell BV and Mitsubishi, struck a partnership to undertake Malaysia’s first LNG (liquefied natural gas) project, a project that was at that time the most costly and ambitious undertaking in Malaysia.
FEATURE FOCUS
12 MAR 2016
(POM), who has seen the growth of
Bintulu, shares his thoughts on the
opportunities there:
“Sarawak had already started producing
oil before PETRONAS existed. When
PETRONAS was established in 1974,
the government vested PETRONAS
with the authority to exploit oil and
gas. When the company came to
Bintulu, we could see it offered a big
gas opportunity. However, unlike
Peninsular Malaysia and despite the
abundance of opportunity and supply,
Sarawak state did not have much
requirement for gas.
So, we thought about what we could
do with the opportunity. That’s when
we had the idea of converting the gas
to LNG. Our main objective was to
liquefy and export to countries like
Japan and Korea. While Kertih was
mainly for power supply, Bintulu was
meant for the LNG business.
Since MLNG’s first shipment, we have
always maintained a 100% successful
delivery rate to our customers. With
Train 9 is being developed and is
expected to be ready early this year.
Meanwhile, the PETRONAS Floating
LNG (PFLNG) 1, followed by PFLNG
2 are set to be operational by Q1 of
2016 and 2018 respectively. Once
on-stream, these projects will add an
additional 6.3 million tonne capacity
to the Group’s LNG production in
Malaysia.
Malaysia is now the second largest
LNG exporter in the world, after
Qatar. PETRONAS has reliably
delivered over 8,400 LNG cargoes
over 30 years, supplying to our
long term buyers in Asia as well as
meeting demand across the world.
Bintulu has grown by leaps and
bounds since Malaysia’s oil and gas
custodian forayed into that part of
Sarawak. PETRONAS’ large presence
has brought a lot of development
and changes, along with many
opportunities for the townsfolk.
Mazri Mohd Ali, General Manager of
Petroleum Operations Management
one of the best-managed and
operated LNG plants in the world, we
provide world class LNG liquefaction
facilities.
In this case, we are talking about a
two-pronged approach to world
class facilities. Firstly, there is the
development and construction
of the plant. At PETRONAS we
have our own technical standards
and these are further supported
by international standards or
specifications. We know that if we
use PETRONAS standards plus all
these international levels, our plant
will be “world class”.
The second prong is the way we
operate – it must also translate
to world class standards. As far
as operations are concerned, we
have our own standard operating
procedures, such as our Health,
Safety & Environment (HSE)
management system. These help
us greatly in ensuring the plants are
operating safely at an international
standard.
PETRONAS LNG Complex at nightBintulu before PETRONAS’ entry
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FEATURE FOCUS
13 P E T R O N A S U p s t r e a m M a g a z i n e
Aerial view of PETRONAS LNG Complex
had significantly magnified the plant
operation dimensions.
The other was PCSB taking control of
Sarawak Shell Berhad’s 50% stake in
MLNG Dua, giving the company 90%
equity in the LNG plant, which Shell
had operated since 1993.
But, we are not just concerned
with the business of LNG in Bintulu.
We also want to give back to the
community.
At PETRONAS, the concept is
the same, no matter where we
go. We would like to add value
to resources for the wellbeing of
society. Environmental conservation,
economic contribution, education,
human capital development – these
are all important corporate social
responsibility (CSR) projects to us.
In fact, in Bintulu, PETRONAS has
worked with the Sarawak Forestry
Corporation (SFC) to drop thousands
of artificial reef balls off the coast
of Similajau National Park, in the
hope that it will allow the marine
life there to flourish. Since 2013,
some 1,500 artificial reef balls have
been deployed at a cost of RM4.6
million (USD 1.1 million). A haven
for sea life, these reef balls create
a rich fishing ground for the local
fishing community whilst providing
protection for the shoreline.
My first trip to Bintulu was in 1998. It
has changed a lot since then. It used
to be a very small town with a few
shops and buildings. You could count
the number of buildings! Bintulu has
transformed since then because of
the LNG industry. There are now big
housing developments, a port and
support industries.
Bintulu is very important to Sarawak
and PETRONAS. In fact, it is going
to continue being important to
PETRONAS because MLNG, MLNG
Dua, MLNG Tiga, and Train 9 are
all located in Bintulu. The town
will continue to be our LNG hub,
supporting our position as the second
largest LNG exporter in the world.”
Being world class is not just about
having the highest production
numbers; you also need to have the
best safety standards.
Safety is very important in
PETRONAS. We make sure we meet
the safety requirements as per the
company’s performance standard. As
much as possible, we don’t want to
see any incidents happening in our
backyard.
In addition to that, last year we had
two big milestones. For Upstream,
it was the handover of the Bintulu
Integrated Facility (BIF) from Shell to
PETRONAS Carigali Sdn Bhd (PCSB-
SKO), making PCSB the new Sarawak
Integrated Network Operator for
Sarawak’s gas supply and demand.
BIF’s journey started back in 1979
as a crude oil terminal with only
three crude tanks in operations,
and over the years, the facilities
expanded to cater for the integrated
gas supply and demand network,
accommodating both LNG and
non-LNG customers. As a result, this
FEATURE FOCUS
Transforming CommuniTiES
Since venturing into iraq in 2010,
PETRonAS has put into practice the
same values that define our operations
in malaysia and abroad. Ensuring that
the communities around our areas of
operations are able to develop through
sustainable opportunities and
investment is an integral part of
responsible resource management. As
part of this business practice, PETRonAS
has embarked on several sustainable
long-term projects with a core focus on
education, capability building and skills
development, working towards a brighter
future for both the business and the
community in iraq.
14 mAR 2016
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FEATURE FOCUS
PETroNAs is engaged
in the entire spectrum
of upstream exploration
and production activities
in four oil fields in Iraq
through PETroNAs
Carigali Iraq Holding B.V.
(PCIHBV), its wholly-
owned subsidiary.
PCIHBV is responsible for
managing the company’s
investments in the Garraf,
majnoon, Badra and
Halfaya oil fields.
FEATURE FOCUS
Transforming CommuniTiES
15 P E T r o N A s U p s t r e a m m a g a z i n e
FEATURE FOCUS
16 mAR 2016
Road Construction and
Reconstruction in Garraf
will provide the local
community with more
than 100km of asphalt
roads. As of 2015, 20
new roads have been
completed.
The new Bridge Project
involved constructing a
110m alternative bridge
and 3km asphalt road to
ease travelling between
rifa’i and Qalat sikar.
School Refurbishment
and Painting Projects
benefitted 4,400 students
and teachers by providing
a more conducive
learning environment.
Established Garraf mobile
Basic Health Care Services,
enabling more than 1000
people to receive free
medical check-ups.
Established the Garraf
Vocational Training
Centre (GVTC). The centre
provides systematic and
up-to-date vocational
training for more than
150 locals per year in
various trades to increase
their employability and
increasing skilled workers
for the local industry.
Training courses include
the Electrical Wiring &
maintenance Technology
Programme, refrigeration
& Air-conditioning
maintenance Technology
Programme, sewing, and
Basic English.
Contributed seven
cabins for lecture rooms
to sumer University to
support and encourage
the adoption of higher
education within the
community.
Water Distribution Projects
Provided two reverse
osmosis water stations
for the long-term supply
of clean and consumable
water for the 4,000 people
living in the al-Dela and al-
Ibrahim villages. Provided
drinkable water via three
water tankers across 30
villages, benefitting more
than 31,000 individuals.
Contributed 300 new desks
to the Al-sahza secondary
Girls school, rifa’I,
benefitting 900 children.
Contributed cabins
to be used as a clinic,
providing permanent
healthcare infrastructure
for the sada Al sawafi
community.
InFRASTRuCTuRE EDuCATIOn HEALTH CAPABILITY
PETROnAS’ initiatives
DR G
FEATURE FOCUS
17 P E T r o N A s U p s t r e a m m a g a z i n e
SABAH JAWAD A FARmER FROm ALBu
HAmzA VILLAGE.
since PETroNAs started its
operations, I have noticed a
considerable improvement
in the wellbeing of the
area. most of the villages
surrounding the oil facilities
have at least one person
working in the operations,
which is lifting the average
income per household.
New houses are being built
everywhere and the roads
have many more vehicles
than before. All this is
thanks to PETroNAs and its
investments.
‘‘
‘‘
‘‘‘‘
‘‘SHEIKH THAmER FLEYEHFROm ALBu ALI VILLAGE
These roads have become the backbone of the village and links us to the
main road and neighbouring villages. Before PETroNAs paved it, the road
was not useable in the rainy season, but now it can be used all year.
‘‘ ‘‘
sheikh Thamir (right) with a PETroNAs representative.
AHmED mIKHELIF
FROm ALBu nAzzAL VILLAGE
(IBn HAYAn TEACHER)
PETroNAs has constantly
supported our school and other
schools in the area. our school was
constructed from mud and did not
have a waterproof roof. since then,
PETroNAs has donated four cabin
classrooms and constructed two
brick classrooms and toilets. The
yard has also been backfilled and
can be used when it rains.
since the classroom additions,
the percentage of absences has
reduced and the pupils are scoring
higher results in the end of year
exams. We can also continue our
studies during rainy days.
sabah Jawad (middle) with his son, Ali, speaking to a PETroNAs representative.
interviews
Ahmed mikhelif (right) speaking to a PETroNAs employee.
Nazeeh Hameed (far left) with staff from Al-Ghadeer clinic.
nAzEEH HAmEED FROm AL-JADO’A
VILLAGE (HEALTH PRACTITIOnER In AL-GHADEER CLInIC)
People used to drink river water
or buy water from the city before
PETroNAs’ water distribution
project started. Thanks to the
reverse osmosis water project, we
have observed a decrease in water
related illnesses such as diarrhea
from 15 cases per day to only one
or two cases.
‘‘
18 MAR 2016
FEATURE FOCUS
Consisting of the Refinery and Petrochemical Integrated Development (RAPID) project, along with its associated facilities i.e. the Pengerang Co-generation Plant (PCP), Re-gasification Terminal 2 (RGT2), Air Separation Unit (ASU), the Raw Water Supply Project (PAMER), the Pengerang Deepwater Terminal 2 (PDT2) as well as Central and Shared Utilities and Facilities, the mammoth Pengerang Integrated Complex (PIC) sits in an area approximately 6,242 acres huge in Pengerang, Johor.
These developments are evolving parallel as they not only complement
each other but each are a necessary part of the whole. RAPID as the heart of PIC needs its facilities as aortas with its many bloodlines to provide the necessary nourishing blood for it to function at optimum, pumping out life to the surrounding areas and its communities. So in a sense, PIC is integrating not only among its projects but also to its circumambient people. Blending to a unified whole; as per PIC’s motto, Together, We Deliver.
PIC is more than just another PETRONAS project. It is a game changer for PETRONAS, and the nation as a whole.
The Merriam-Webster Dictionary defines ‘Integrated’ as ‘to form, coordinate, or blend into a functioning or unified whole’, from the Latin word integrat which means ‘made whole’. And that is what PETRONAS’ Pengerang Integrated Complex, its biggest investment to date in Southeast Asia; aims to do.
INTEGRATING INTO ONE-A RECIPE
FOR THE FUTURE
On April 3 2014, PETRONAS gave PIC its Final Investment Decision (FID), citing the project met “PETRONAS’ criteria for long-term profitable and sustainable growth”. In October of last year, PIC was listed by PETRONAS President and Group CEO, Datuk Wan Zulkiflee Wan Ariffin as one of the three long-term investments PETRONAS will be focusing on in moving forward and cementing its position as a fully-integrated multinational oil and gas corporation.
PIC is the catalyst to further strengthen PETRONAS’ position as a key player in the Asian chemicals
19 P E T R O N A S U p s t r e a m M a g a z i n e
FEATURE FOCUS
PETRONAS’ Largest Downstream Investment in Malaysia
RAPID
UF
ASU
PCP
SPV2RGT2
PIC
LPG &Naphta
PETROCHEMICALS
STEAM CRACKERREFINERY
Commodities
Euro 4M Mogas & Diesel)
300,000 bpd Crude Oil
Euro 5 (Diesel)
Differentiated
Special Chemicals
RAPIDCONFIGURATION
PENGERANG INTEGRATED
COMPLEX (PIC)
FEATURE FOCUS
JOHOR
SINGAPORE
KOTA TINGGI
PENGERANG
DESARU
PASIRGUDANG
Johor Bahru
FEATURE FOCUS
PengerangCogeneration Plant (PCP) PCP will ensure PIC’s requirement for reliable supply and competitively priced steam and power is met, as well as supply to the national grid.
PengerangDeepwaterTerminal (PDT2) PDT2 will handle the storage for import of feedstock (crude oil) and export of products (petrochemical & petroleum products).
UF will provide central and shared utilities and facilities services.
Raw Water Supply Project (PAMER) PAMER will supply reliable and sustainable raw water forPIC and publicconsumption.
Regasification Terminal (RGT2) RGT2 provides reliable natural gas supply to both PIC and the Peninsular Gas Utilisation(PGU) system.
Air Separation Unit (ASU) ASU separates atmospheric air into its primary components, typically nitrogen and oxygen, to deliver industrial gases.
PCP PDT2 UF PAMER RGT2 ASU
UUttiilliittiieess aanndd FFaacciilliittiieess ((UUFF))
LNG
market, focusing on differentiated and specialty chemicals and capturing the growing demand from automotive, pharmaceutical and consumer products sectors. Domestically, PIC will contribute towards meeting the growing demands for petroleum products, meeting international standards for the Malaysian market, i.e. Euro 4M (Mogas) and Euro 5 (Diesel) specifications.
Launched by the Prime Minister in May 2011, PIC is also a key project under Malaysia’s Economic Transformation Programme (ETP) which aims to establish new engines of growth for Malaysia to meet future energy requirements and catapulting Malaysia into a high-income nation by 2020. Given the stamp of approval by Johor’s beloved monarch, His Royal Highness Sultan Ibrahim Ismail ibni al-Marhum Sultan Mahmud Iskandar who graced RAPID’s ground-breaking ceremony in May 2012, this project is one for the people and a must-succeed for both PETRONAS and Malaysia.
Before PETRONAS first mooted Pengerang as a viable project site, few outside of Johor had heard of it. Located at the most southern tip of Johor and literally at the very end of Peninsular Malaysia, it is here, that PETRONAS is laying the foundation for Malaysia to leapfrog into a new morrow.
20 MAR 2016
The project is currently in full construction mode. Massive structures are literally stamping their mark on Pengerang’s red soil, slowly but surely reaching up to the blue clear skies. The workforce is many and varied; different nationalities working side-by-side in the relentless hot sun to bring PETRONAS’ vision and Malaysia’s hope into reality. Realising the potential social impacts a large international workforce might bring to the surrounding community, PIC commissioned a Social Impact Assessment (SIA) study to look into mitigating potential social problems. Through the findings and recommendations of the SIA, several measures were put in place at Pengerang for the local community.
These included bringing the community leaders together in a weekly meeting; the Community Leaders Committee (CLC) which PIC chairs and where all manners of community issues and problems are discussed along with participation from relevant state authorities. CLC functions as the focal platform for the leaders of the different segments in the community, e.g. women leaders, village heads, youth representatives, to sit down together and prioritise programs and developments that are sustainable, long-term and beneficial to the community.
For the community at large, PIC has set up a Grievance Mechanism process; where Pengerang locals can ask questions, raise issues, and bring up community matters related to the project through emails, a local line, as well as easily-available drop boxes within their area.
By benchmarking against the International Finance Corporation (IFC) standards as outlined in the SIA, all developments within Pengerang is inclusive of the community within and surrounding it, and that the locals have an informed say in ensuring all sustainable developments brought about by the project is shared for the benefit of all.
PIC is expected to bring massive multiplier and spin-off effects to its surrounding communities, all of which spell substantial employment and entrepreneurship opportunities for the people of Pengerang. With the project progressing well on schedule towards the first Refinery start-up in Q1 2019, the change ‘tsunami’ is building now, with jobs currently available for skilled technical workers and will eventually open for professional positions.
Working hand-in-hand with the State government, #ForPengerang was established in February of 2015
ASSOCIATEd FACIlITIES
FEATURE FOCUS
21 P E T R O N A S U p s t r e a m M a g a z i n e
REfINERy AND PETROcHEmIcAl INTEGRATED cOmPlEx (RAPID)Has a capacity of 300,000 barrels per day
(bpd) while the Steam Cracker will have
a combined annual production capacity
of more than 3 million tonnes per annum
(MTPA) of Ethylene, Propylene and C4-
C6 olefin products. The Refinery and
Steam Cracker provides feedstock for the
Petrochemical Plants.
PENGERANG cO-GENERATION PlANT (PcP)Designed to generate 1,220 megawatt
(MW) of electricity and 1,480 tonnes per
hour of steam, PCP will provide reliable
steam and power to meet requirements
of plants within PIC and supplement the
Peninsular Power Grid. (400 MW June
2017-December 2018, 600 MW from
January 2019 onwards).
AIR SEPARATION UNIT (ASU)The ASU plant separates atmospheric
air into its primary components (Oxygen
and Nitrogen) and supplies gaseous
oxygen and nitrogen to PIC. It will have a
capacity of 1,600 tonnes-per-day (TPD)
of oxygen and 1,800 TPD of nitrogen.
PENGERANG DEEPwATER TERmINAl 2 (PDT2) PDT2 will offer LNG unloading and
reloading, storage, handling and
regasification; with a capacity of 3.5
MTPA and connected to the Pengerang
Gas Pipeline. RGT-2 will provide primary
gas supply to RAPID, PCP and the
Peninsular Gas Utilisation grid to augment
the availability of gas in the country.
lIqUID BUlK TERmINAl (SPV-2)SPV-2 will undertake the development,
construction and operation of the
facilities required for the handling,
storage and distribution of crude oil,
petroleum, chemical and petrochemical
feedstock, products and by-products
to and from the RAPID complex. The
storage facilities will have a capacity of
approximately 1.7 million cubic metres
(m3) and a deepwater jetty with eleven
berths.
RAw wATER SUPPly PROJEcT (PAmER)“Projek Air Mentah RAPID” or PAMER will
supply 230 MLD of raw water to RAPID
and 30 MLD of raw water for public
consumption by May 2016. Comprises
of an intake and raw water pumping
station, flood detention pond, switch
station, transformer yard, pipelines, main
dam and saddle dam, Booster Pumping
Station and Terminal Reservoir.
cENTRAlISED AND SHARED UTIlITIES AND fAcIlITIES (Uf)PIC’s requirement for utilities, site
development and other infrastructure
facilities takes into consideration
the requirements of the whole
complex, which will be supported by
comprehensive utilities and facilities for
air system, fuel system, firewater, flare,
tankage and storage among others.
to increase participation of local content within the project through job creations, entrepreneurships, human capital development as well as development of auxiliary industries. Auxiliary businesses such as food and beverage outlets, laundry businesses, telecommunications and sundry shops are just a few of the businesses necessary for the booming Pengerang, which will go a long way towards improving their quality of lives.
The community programmes also focuses heavily on education and entrepreneurship. Believing firmly in the concept of growing your own
timber, for PETRONAS a sustainable future for energy starts with nurturing young minds with knowledge that inspires and empowers. Through their Signature as well as customised programmes e.g. The Young Scientists @ Pengerang, schoolchildren from ages 8 to 16 are exposed to learning programmes, motivational talks, stays at Universiti Teknologi PETRONAS where they learn how to program and experiment in state-of-art laboratories as well as financial aids for the needy. PETRONAS’ hope is that these will help to strengthen their interest in Science, Technology, Engineering and Mathematics (STEM), and create future cosmopolite of PETRONAS.
PIc IN A NUTSHEll
To blend into a unified whole. PIC is blending this once sleepy, at-the-end-of-the-world village into a new, modern catalyst for a transformed Malaysia. The locals are certainly eager for the metamorphosis as they look forward to new beginnings with hope and expectations. For PETRONAS, the project will certainly bring new exigencies and with them experiences, and PETRONAS is firmly committed to the successful delivery of the project. This is the perfect blending for a new future for all.
Together, PETRONAS and Pengerang will indeed, deliver.
6,242 acres
KlccKuala lumpurcity center
62x
Plot Area80,000,000 m3Earthwork
KlIA2.5x
50,000-60,000 workers
Construction Manpower
Pengerang6x population
Structure Steel
150,000 mt
PETRONASTwIN TOwERS4x
Plot Area
6,242 acres
fOOTBAllfIElDS
3,500x
DRILLING
MINI STORY
“Challenge project costs as if you were paying with your own money.”
Carl Hunter
23 P E T R O N A S U p s t r e a m M a g a z i n e
Hunter believes that a key factor
in successfully lowering costs is
creating a mindset of ownership
among partners and to “challenge
project costs as if you were paying
with your own money”.
KPOC’s role in the CORAL 2.0
capex cost driver benchmarking
initiative involves providing regional
and local data for the group’s
database, especially benchmarking
commercial bids early enough to
aid in contract negotiations. “If the
cost is too high, the benchmarking
will aid management to drive down
costs in a transparent way with
the contractor/vendor,” explained
Hunter who was seconded by
ConocoPhillips to KPOC for the
Kebabangan (KBB) gas project
off Sabah from 2008. The other
partners in KPOC are PETRONAS
and Shell.
Refusing to accept high costs
and cost recoverable has already
reaped substantial savings of
RM550 million (USD130 million)
for KPOC from non-market vendor
negotiations.
Implementation wasn’t always
smooth. A major challenge was
to bring transparency of detailed
information where it was not
previously practised. But doing so
and sharing a broader range of
experiences among the partners
has been key to executing the KBB
project on schedule and below
budget.
Hunter emphasised the need
to be “adaptive to change by
not accepting past practices as
the norm and instead challenge
ourselves to be more efficient in
innovative ways”. “PETRONAS
CORAL 2.0 is a great platform to
do this,” he added.
This resulted in savings of RM340
million (USD80 million) or 23%
- after detailed benchmarking
of yard upgrades, crane usage,
manpower and related items.
Separately, the cost of eight
procurement/service packages
was reduced by RM90 million
(USD21 million) or 33% from the
initial sole source bids after each
package was checked through
benchmarking despite initially
difficult contract negotiations.
Hunter highlighted another
initiative – lower manpower and
maintenance rates for long term
service agreements (LTSA) - which
could result in estimated annual
savings of RM250 million (USD59
million) if applied successfully to
other such contractors as well.
Having not seen similar levels
of transparency, teamwork and
avid participation in driving
down costs in other international
governments, Hunter described
working with PETRONAS as a
great experience.
Partners are contributing significantly to PETRONAS’ drive to cut costs amid subdued demand and lower prices. Flow caught up with Carl Hunter – team leader for the CAPEX initiative at Kebabangan Petroleum Operating Company (KPOC) - on the role production sharing contractors (PSC) are playing.
By Johannes Ridu
Powering
CommunityHow PetRonas Wired a Remote Penan Village In sarawak’s Hinterland
PENANTH
E
CORPORATE SOCIAL INVESTMENT
ALL his life, Penan headman Ajang Pen, 55, had been relying on kerosene lamps to light up his modest home at Long Kerangan. Never in his wildest dreams did he think that one day his 30-door longhouse would have 24-hour electricity.
Long Kerangan is located deep in
the hinterland of Baram district in
northern Sarawak and surrounded by
primary jungle. This Penan settlement
of about 120 people is accessible only
by a logging track from the nearest
rural township of Long Lama Bazaar
80km away. A journey from Miri to
Long Kerangan typically takes five
to six hours – three hours by road
from Miri to Long Lama Bazaar and
another three hours on a bumpy and
dangerous logging track.
Ajang said he had been resigned to
the fact that his village will never
get electricity supply – at least
not in his lifetime. “We understand
that it is too expensive and
uneconomical for conventional
means of bringing electricity to our
village, which is very remote,” he
admitted.
But despite its remoteness, Long
Kerangan is blessed with beautiful
streams and a cascading waterfall
known as Ong Layuh, which has a
perfect vertical drop, ideal for the
development of a micro-hydro
project.
That hydro potential might not
have been realised, had PETRONAS
not embarked on a 512km Sabah-
Sarawak Gas Pipeline project (SSGP)
in 2008 to transport dry gas from
the Sabah Oil and Gas Terminal
(SOGT) in Kimanis, Sabah to the
Malaysia LNG plant at Tanjung
Kidurong in Bintulu, Sarawak. Part
of the pipeline crosses the vast
“The local community must have ownership of the project. We want them to take care of the pipeline. They must also own it.”
Hamidi RamliStakeholder Relations Senior Manager
25 P E T R O N A S U p s t r e a m M a g a z i n e
26 MAR 2016
Tutoh-Apoh basin in Ulu Baram, and a
significant portion of it is laid less than
4km from Long Kerangan. The SSGP
project would entail the oil giant to
fulfil its corporate social responsibility
to the communities directly affected
by the project including Long
Kerangan.
So in June 2014, PETRONAS
collaborated with TONIBUNG,
an NGO with expertise in green
technology project development,
to conduct a feasibility study in the
Tutoh Apoh area for a pilot micro-
hydro CSR project in Sarawak. The
team discovered that the Ong Layuh
waterfall near Long Kerangan was
the most suitable as it provides a
constant water flow of 18 litres per
second, enough to power a 10kW
turbine. “There is sufficient volume
of water and good topography with
100m head (elevation),” said Tengku
Ahmad Zariman Tengku Zainal Abidin,
a PETRONAS manager who took part
in the feasibility study.
“A micro-hydro with a generation
capacity of 10 kW is more than
enough to power a longhouse
of 30 doors,” added Hamidi
Ramli, PETRONAS Stakeholder
Relations senior manager, who was
instrumental in the realisation of this
CSR project.
Civil work on the project started in
September 2014. The construction
was done through “gotong-royong”
teamwork between the Long
Kerangan community, PETRONAS
and TONIBUNG, involving 5km piping
work that runs from the longhouse to
Ong Layuh waterfall. The project was
successfully completed a year later
at a cost of RM230,000 (USD55,000)
and commissioned on 26 Oct 2015,
bringing round-the-clock electricity
to the longhouse for the first time.
“Even right now, I still cannot believe
that we have a 24-hour electricty….it
was never in my wildest dreams,” said
the beaming Ajang when met during
the official launching of the project
on Oct 27.
There were many grateful and happy
faces when the longhouse received
24-hour electricity for the first time
on Oct 26. On that day, the children
played, sang and danced under the
fluorescent lights of the longhouse
veranda. The older folks and youth
participated in karaoke sessions till
the wee hours of the morning. It was
the first time karaoke music broke the
silence of the jungle in Long Kerangan.
For the project team, there were
almost no words to describe their
satisfaction and sense of fulfilment in
bringing this project to reality. “Seeing
their happy faces is already a big bonus
for me,” Hamidi said.
The micro-hydro project is a potential
game changer in Sarawak’s rural
transformation programme. It is already
showing an impact to the community
of Long Kerangan. With 24-hours
electricity, their school-going children
who are studying at SK Kevok and SK
Long Bedian primary schools, located
a few miles away from their homes,
are now able to do their revision and
homework at night. The extra hours of
study they get will certainly increase
their chances of succeeding in school.
Let there be light!: A group of school-going Penan children studying under the bright light powered by the micro-hydro
Many hands make light work
CORPORATE SOCIAL INVESTMENT
27 P E T R O N A S U p s t r e a m M a g a z i n e
“With better education, these
children can change their lives for
the better and the future of their
community,” Hamidi stressed.
The community will also be
connected to the outside world
via televisions and radios powered
by the micro-hydro. As such, the
electricity supply can be a catalyst
for socio-economic transformation
in this Penan settlement.
This pilot project also
complements the Federal
government’s programme to wire
up to 95% or 10,500 rural homes in
Sarawak in 2015.
InteRnatIonaL ReCoGnItIon
The micro-hydro pilot project has
won the CMO Asia’s 5th Asia Best
CSR Practices Award 2015 under the
category of Community Development,
presented in Singapore on 12 August
2015. According to CMO Asia’s
website, the award is “Asia’s highest
recognition of corporate organisations
that have a significant and positive
impact on the lives of the people
around them. CSR programmes
consider company’s commitment
to and respect for communities,
environment and people.”
GIVInG BaCK to soCIetY
The micro-hydro project at Long
Kerangan is one of the many
PETRONAS CSR projects implemented
since 2009 to benefit the local
community in Sarawak affected by the
SSGP project.
From 2009-2015, PETRONAS invested
more than RM15 million (USD 3.6
million) on CSR activities conducted
in Lawas, Limbang, Baram and Bintulu.
A large chunk of the money was
spent on improving public utilities and
amenities for affected communities.
The funds were spent on upgrading
roads, schools, community
halls, building new bridges, and
constructing water gravity feeds.
PETRONAS also donated machineries
such as generator sets, chainsaws,
water jets, rice grinding machines, as
well as building and piping materials
to the affected communities that
include the Penan, Kayan, Lun
Bawang, Kelabit, Berawan, Brunei,
Kedayan and Iban.
Apart from that, PETRONAS also
conducted education programmes
such as the PETRONAS Science
Educamp for pupils of SK Long
Bedian, SK Long Seridan, SK Long Teran
Kanan, SK Long Bemang, SK Ubong
Imang, Long Luping, Long Sukang, Long
Tuma and Ba’Kelalan. The company
also upgraded the school libraries of
SK Long Kevok, SK Long Bedian and SK
Long Seridan.
That’s not all. PETRONAS also
supports the preservation of Orang
Ulu traditional culture and sports by
sponsoring sports and community
cultural events such as the Lun
Bawang’s Pesta, the Kayan’s Pesta Air at
Long Lama Bazaar, and many more.
JoB oPPoRtUnItIes FoR LoCaLs
CSR contributions are not always
sustainable. Therefore, PETRONAS is
getting the local communities to be
involved in the maintenance, safety and
security of the 421km long pipeline that
sits on Sarawak soil. To date, at least 10
contracts are awarded to local vendors
which employ hundreds of local people
to maintain the pipeline’s Right Of Way
(ROW) and the 18 Block Valves located
in Sarawak.
By giving them jobs, PETRONAS hopes
the affected community will have
greater sense of ownership for the
project. “The local community must
have ownership of the project. We want
them to take care of the pipeline. They
must also own it,” says Hamidi.
PRELIMINARy dESIgN• Head=100m• Flow=18litres/sec• Poweroutput=10kw• Turbinetype=Pelton• Totalpenstock length=1500m• Penstocksize4” PN12• Totaldistribution cablelength= 1500m• Distributionsystem= Single Phase • Totalhousehold= 120 people, in 30 houses
ong Layuh Waterfall: The project involved a 5km piping work that runs from the longhouse all the way to the water source.
DRILLING
SPECIAL
29 P E T R O N A S U p s t r e a m M a g a z i n e
Asset integrity management is the cornerstone of PETRONAS’ operations, for it does not just affect the production capacity of the oil and gas operator, but also its people, asset, environment and reputation.
PETRONAS subscribes to the ethos
of ‘Design Right, Construct Right and
Operate Right’, and this has translated
to strong and robust asset integrity
management at the multinational oil
corporation.
Yong Sai Chung, who is Head of
Health, Safety & Environment (HSE)
at PETRONAS’ Upstream Business,
does not believe that there can be
any greater focus than this. “I don’t
think we can afford to just focus on
one aspect and forget the others,” he
says, reiterating that asset integrity is
the fruit of good design, construction,
operations and maintenance.
Asset integrity, he explains, is firstly
concerned with ensuring that facilities
and assets that are designed and built
by the oil and gas operator is able to
perform its business function. “And
secondly in the course of carrying
out its function, it must ensure
safety whereby no harm comes to
the people, asset, environment and
reputation of the company,” he adds.
Over the years, asset integrity
management has increased in
importance, in part due to increased
awareness of its impact. “The impact
of asset integrity failure can range
from minor, for example a gas leak
which is detected quickly and is
addressed, to catastrophic,” he says,
citing the Piper Alpha disaster in 1988
which killed 167 people and involved
billion of dollars in losses, and repair
cost, and is considered the deadliest
oil rig accident to date. Piper Alpha
was a North Sea oil production
platform operated by Occidental
Petroleum (Caledonia) Ltd.
Yong Sai Chung
“As the key to managing major
incident risks, asset integrity
management continually evolves
to incorporate international best
practices and standards. This is
vital in addressing the concerns of
various external stakeholders such
as NGOs, as well as conforming
to stricter regulatory requirements
especially on the health, safety and
environment (HSE) aspect of the
industry,” adds Yong.
To this end, the oil and gas
company boasts stringent and high
standards where asset integrity
management is concerned. “We
have the PETRONAS Technical
Standards, Project Management
Processes, as well as the
Operational Readiness Framework
to provide check and balance as
well as a robust inspection and
maintenance system to ensure
that on the day-to-day basis,
the asset’s integrity is taken care
of,” he says, adding that at every
stage of the asset or project, the
management of its integrity is a
priority.
SPECIAL
30 MAR 2016
“At the detailed design stage, the
engineering department will need
to refer to PETRONAS Technical
Standards, or any other industrial
standard which is applicable,
and these standards define how
asset integrity must be managed
throughout the lifecycle of the asset.
“Then along the way there are many
‘gates’ that are put in place, and
various reviews to ensure that all
the hazards are addressed. At the
construction stage, we ensure that
whatever has been in the design
documentation will be implemented
and this is where quality assurance
and quality control inspection
teams come in. Finally, during the
operation phase, we ensure that all
the inspection and maintenance
programmes are implemented,” he
explains.
LEAvE NO ROOm FOR ERROR
Although there are systems embedded
within the organisation to ensure
that asset integrity management is
robust, PETRONAS is not one to rest
on its laurels. Yong discloses that in
2012, the management realised that
because the company had inherited
many older assets, it undertook an
audit of its facilities. “A specialised
team went to all the Upstream assets
to ensure that the asset integrity is
intact as well as to identify if there was
anything else we could do.”
Based on the audit, the Upstream
Business rolled out the Technical
Integrity and Process Safety (or TIPS)
programme at the end of 2012.
The RM30 billion (USD 7 billion)
programme, which runs until 2018,
looks at the gaps and deficiencies
raised in the audit and ensures that
asset integrity is maintained at the
highest level.
“We will enhance, renew, rejuvenate
and do whatever is necessary to
ensure that all our assets are safe, and
more importantly, we know this for a
fact…our motto is our assets are
safe and we know it. The programme
also does not just address the physical
condition of the assets but also gaps
in the processes,” he says.
This ongoing TIPS programme
emphasises the continued assurance
that PETRONAS assets are safe, by
focusing on technical integrity and
enhancement of an existing Process
Safety Management Programme for
the Upstream business, in order to
strengthen Safety Critical Elements
management.
Yong, whose department is
responsible for the TIPS programme,
says HSE is integral to the
conversation about asset integrity.
“Every level of management has
meetings under HSE or TIPS to
monitor the effectiveness of our
processes and programmes on
managing process safety and asset
integrity.
“One of the things we learned from
the audit was that the profile (of asset
DRILLING
SPECIAL
31 P E T R O N A S U p s t r e a m M a g a z i n e
integrity management) was not
raised high enough…we know that
we have a process in place and the
assumption was that the process
can work without any attention or
pressure. But we need to tell our
people that it is important…the key
lesson is that there is no room for
error. We cannot assume or take
things for granted,” he adds.
Upholding asset integrity is however,
not without challenges, namely
balancing between profitability and
investment, as well as having the
necessary resources to undertake
asset integrity related activities
particularly in an environment
as dynamic as that of the oil and
gas industry. This is an area that
is especially pertinent for older or
aging assets.
“Managing asset integrity at different
phases of the asset’s life is not a
straightforward, mechanical process,”
he explains. The organisation, he
adds, must first decide if it wants to
keep the asset or retire it. If it is the
former, asset integrity assurance
activities need to be carried out,
including asset life study and
rejuvenation, as well as continuing
to implement inspection and
maintenance activities to prevent the
deterioration of the asset condition.
The current retreat in oil prices is
also posing a challenge, but Yong
prefers to see the situation as
presenting opportunities to think
outside the box. “We have to find
cost effective ways of doing things
without sacrificing the intent and
goals of asset integrity,” he adds.
PEOPLE PLAy A KEy ROLE
Following the rollout of the TIPS
programme, Yong says there has
been a visible reduction of major
fire and major Loss of Process
Containment compared to pre-
2012. “But this is not reflective of the
real changes that have happened,
because the statistics are the result
of changes in the causes, for
example in how the system works
and how people behave.
TIPS aims to cultivate a value
driven safety culture in PETRONAS.
This involves the willingness
to learn, adapt, and implement
reforms, operating by safety
guidelines, practicing a “no-blame”
culture, being ready to face the
unexpected, reporting own errors
and near misses, and managers
who are aware of critical issues.
“There is now more emphasis
on doing everything right
according to procedures, greater
transparency via management
meetings that focus on asset
integrity and process safety, and
people are more courageous
in intervening and stopping
production or work when
they have detected something
wrong,” he says, adding that the
organisation will continue on its
journey of improvement.
SPECIAL
The organisation’s robust asset
integrity management framework
and process safety aside, people, he
reiterates, play a paramount role.
“What makes all these come alive is
the human touch,” says Yong, adding
that strong leadership is crucial. In
PETRONAS, asset integrity is one of
the key performance indicators of the
Executive Vice President.
He adds that PETRONAS’ record for
the past four decades show that its
management of its assets have been
commendable.
“We have reached the level of ‘well-
managed’—the question is to sustain
this and do better. We believe that
being really good in this area is
our licence to operate and we will
continue to give emphasis to this area.
We expect that after 2018, the new
standards and enhanced systems will
be business as usual. If we make it
work as per intent and design, then it
will work,” he says.
32 MAR 2016
QUICK FACTS ON ASSET INTEGRITY MANAGEMENT
• Assetintegritymanagementenableassetstoperformitsintendedfunctions for the business.
• Assetintegritydoesn’tjustaffectproductioncapacitybutalsopeople, asset, environment and reputation.
• Robustassetintegrityprogrammeslookattheasset’sentirelifecycle– from commissioning, operation, maintenance, repair to ultimately discontinuation or abandonment of the asset.
• Monitoringandreviewisakeyelementinassetintegritymanagement – enabling the organisation to know how it is doing and the intervention required.
• Theimpactofassetintegrityfailurecanrangefromminorissuestocatastrophic ones.
• Health,Safety&Environment(HSE)andassetintegrityareinterrelated – not paying attention to asset integrity will have a heightened impact on HSE.
• Peopleplayaparamountroleinassetintegritymanagement,beit their attitude or mindset, and whether they see it as a priority. Strong leadership is vital.
DRILLING
BEST IN CLASSBY SREEREmA BANOO
SPECIAL
Asset integrity is integral to Progress Energy Canada Ltd’s operating strategy as the company develops the necessary infrastructure to deliver on its mission of ‘Safe, Responsible, 100% Reliable, Lowest Cost Production’.
SPECIAL
34 MAR 2016
Asset integrity is a key element to
Progress Energy Canada Ltd’s (PECL)
operating strategy and plan to
achieve best in class North American
health, safety, regulatory and
environmental performance, says
Senior Vice President, Production &
Facilities Mark Fitzgerald.
A robust asset integrity programme
is also a key priority for PECL as the
organisation develops the systems,
processes and operating expertise
necessary to deliver on its mission
of ‘Safe, Responsible, 100% Reliable,
Lowest Cost Production’. “Incidents
and injuries are outcomes that can
be prevented by proper planning,
hazard identification and elimination
of critical unplanned maintenance.
A robust asset integrity programme
is a component in the Health, Safety,
Regulatory and Environmental
Management System (HSRE MS)
currently being developed at PECL,”
he adds.
Fitzgerald, who has more than
25 years of experience in field
operations, production, and
development business in the oil
and gas industry, says PECL’s Asset
Integrity Risk Management Process
is evolving to look at the entire
lifecycle of its assets whether they
are pipelines, pressure equipment
or tanks from design, construction,
commissioning, operation,
maintenance, repair, to ultimately
the discontinuation or abandonment
of the asset.
“PECL is currently in the
implementation stage of an
Enterprise Asset Management
programme to allow us to effectively
manage our assets and safeguard
our personnel, the community and
the environment. Risk is continually
changing with our assets due to the
nature of our operations, therefore it
is imperative that our Asset Integrity
Risk Management Process is robust
enough to meet these demands.
“We are exploring a web-based
risk management programme for
pipelines that will enable us to meet
regulatory compliance, reduction in
pipeline incidents, implementation
of the appropriate control programs,
and optimisation of costs while
ensuring the health and safety of our
employees and the environment,”
he says.
Fitzgerald points out that PECL has
multiple work sites and thousands
of contractors at peak times, spread
across a very large and diverse
geographic area. “It is difficult to
create a centralised control point
for all activity as can be done in
Mark Fitzgerald
DRILLING
SPECIAL
35 P E T R O N A S U p s t r e a m M a g a z i n e
large petrochemical, refining or
offshore operations,” he says. As such,
PECL’s systems and processes must
ensure that controls and competent
supervision are in place across all
sites, and that the application of these
controls and processes are consistent
and applied in a manner that aligns
with the operating strategy and
HSRE MS.
“In addition, PECL uses multiple
contracting companies, and as part
of our HSRE culture, we accept
ownership for their safety when on
our sites. Aggressive and sophisticated
contactor management processes are
key. Senior leadership is very visible
throughout the organisation and with
our contractors, to clearly deliver the
message that the health and safety of
personnel on our sites is paramount
and PECL will not reduce that focus,”
he adds.
PECL, which is owned by Malaysia’s
national oil corporation, PETRONAS,
produces more than 750 million cubic
feet equivalent of natural gas per day
in northeast British Columbia and
northwest Alberta. PETRONAS also
owns Pacific NorthWest LNG, which is
planning to build a world-scale LNG
export facility on Canada’s west coast,
near Prince Rupert, British Columbia.
The facility would liquefy and export
natural gas produced by PECL.
Fitzgerald says that PETRONAS
has been very clear and supportive
in the priority given to HSRE, and
actively supports PECL’s review and
improvement processes. “As PECL
is developing the longer term
operating strategy and HSRE MS,
each is being developed in close
cooperation with PETRONAS,” he
says, adding that both PETRONAS
and PECL leadership are committed
to HSRE.
“From that, a relentless commitment
to continuous improvement and
open and honest learning ensures
that performance consistently
improves. PETRONAS is clear and
supportive by recognising that we
must be willing to share and discuss
the bad news and not hide from
our mistakes but learn from them,”
he says.
He adds that both companies share
a strong partnership and continue to
work closely together to align and
learn from each other. “PETRONAS
provided PECL excellent insights
and an objective and honest analysis
of PECL performance which helps
ensure there are no ‘blind spots’. The
sharing of incidents, learnings, and
risks helps both organisations ensure
top tier performance,” he says.
“As PECL is developing the longer term operating strategy and HSRE MS, each is being developed in close cooperation with PETRONAS,”
mark Fitzgerald Senior Vice President, Production & Facilities
TECHNOLOGY
In 2013, Technology, Technical Global together with Production Malaysia delivered a new technology allowing the benefits of economical operations and maintenance by enabling pipelines to operate beyond its design life.
The new technology developed is called “InField Liner® (IFL)”. IFL is a reinforced composite liner, inserted into existing pipelines to rehabilitate and extend pipeline life. The technology also encompasses the method of installing the liner offshore. As of now, there has not been any technology or material per se that can
A PETRONAS OFFSHORE PIPELINE REHABILITATION TECHNOLOGY
THE INFIELd LINER®:
An integral part of PETRONAS Upstream’s infrastructure is its vast network of pipelines, totaling more than 3,300km in length. Pipelines play a vital part of the operations, allowing valuable products to be transported from one point to another. Implementation of new technologies will considerably move PETRONAS Upstream’s pipeline integrity management towards achieving a “Zero High Risk pipeline” by 2020.
36 MAR 2016
DRILLING
O
TECHNOLOGY
be used to rehabilitate existing offshore pipeline. This technology is niche and is a first of its kind in the world.
About the IFL technoLogy
IFL is a three-layer reinforced composite liner, where the inner layer of the liner, which is in direct contact with the product of the line, is made out of PVDF (polyvinylidene difluoride), known for its versatility and toughness. This allows the liner to be used in both sweet and sour hydrocarbon conditions, with temperatures up to 1200c. The liner core is made from high strength Kevlar® fabric. The Kevlar® fabric is specially weaved to allow for the liner to take a maximum load of 25 tons during pulling. The outer layer of the liner is made out of TPU (thermoplastic polyurethane). The technology kicked-off from an R&D project started in March 2011, in collaboration with Anticorrosion Protective Systems (APS L.L.C.). The project was executed in three phases, which encompass Material Research and Development in Phase I, Onshore Demonstration in Phase II and Offshore Demonstration in Phase III. It is during the R&D course that the liner was tested to meet stringent oil and gas environment conditions, in accordance with the API Recommended Practice 15S “Qualification of Spoolable Reinforced Plastic Line Pipe”, and API 17J “Specification for Unbonded Flexible Pipe”, with further reference to the applicable ASTM test standards and NACE standards.
37 P E T R O N A S U p s t r e a m M a g a z i n e
TECHNOLOGY
38 MAR 2016
Phase I started with the testing and qualification of reinforced plastic liner
product in accordance with the API Recommended Practice 15S “Qualification of
Spoolable Reinforced Plastic Line Pipe”, with further reference to the applicable
ASTM test standards, API 17 series, and NACE standards. The testing and
qualification procedures were undertaken, and during the course of the project,
various configurations of the liner have been tested including:
• Alterationoftheconfigurationofplastic,compositelayersandjacketing,
so as to provide improved performance capabilities (permeability, chemical
resistance, temperature resistance etc.)
• Alterationofthefiberreinforcement,soastoprovideimprovedtensile
capabilities
• Theproductionofanon-standarddiameterinsert,soastoprovidealinerthat
will provide a close fit to the host carbon steel pipeline
A predictive installation software was also developed during the initial phase that
enabled accurate calculations of the pulling loads required for the installation
of the IFL, and hence determine viability for any given pipeline length and
configuration. This software model has been extensively tested and calibrated
during the onshore demonstration conducted in Phase II. The IFL liner is modeled
to be feasible over distances of up to 10km.
Subsequent to the achievement in Phase I, an onshore demonstration was
conducted successfully on a full scale eight-inch pipeline in September 2012. The
Phase II Onshore Prototype testing sequence included full 24 hour hydro-testing
of the liner under in-pipe and extracted conditions.
IFL oFFshore DemonstrAtIon AnD LIner InstALLAtIon
The concept of lining pipelines are known and practiced onshore. However,
installation of the liner to an existing offshore pipeline is a major challenge. Sabah
Operations embarked together on this technology and was committed to being
the first asset to demonstrate this technology.
The final phase of the technology development and the “proof of the pudding”
was the offshore demonstration conducted at SBO Samarang pipeline in
2013. The pulling and inflating of the liner into an existing pipeline which has
never been done anywhere in the
world under offshore conditions
is a testament to the creativity and
hard work of our engineers and
technology managers.
It all started at the production facility
whereby the produced IFL is verified
in compliance with the requirements
set in the defined Quality Assurance
Processes, witnessed and verified
by a third party inspector (TPI). Liner
verification is done again during the
liner folding and banding process
whereby the transported liner is
transferred onto the installation drum,
being folded and secured by banding.
This process was done at the Labuan
onshore yard where most of the
preparations were made.
The offshore activities were
scheduled from mobilisation through
demobilisation. In comparative to the
schedule, a primary loss of seven
days was incurred due to poor
conditions and inability to transfer
and set up equipment, considering
platform access and logistics
limitations.
Before inserting the liner into the
host pipeline, the inside of the
pipeline was first cleaned to remove
deposits, wax, scales, water and
oil. A gauge plate was then pulled
through the pipeline to ensure the ID
of the host pipe was suitable for liner
insertion. Typical areas of concern are
significant changes in pipeline wall
thickness, ovality, fittings, solids in
the line, excessive weld penetration,
or anything else that reduces the
ID. Finally, a section of the liner was
pulled through the pipeline acting
as a test piece, and on its exit, was
visually examined for damage.
Full insertion of the liner was then
initiated. The liner was pulled through
the pipeline using the liner insertion
winch positioned on SMJT-E, the end
section of the pipeline being lined.
The liner was fed from a vessel to
the riser flange of the insertion point,
which was at SMP-A.
Liner folding and banding
DRILLING
TECHNOLOGY
39 P E T R O N A S U p s t r e a m M a g a z i n e
Once the insertion was completed, expansion heads were attached to both ends
of the liner and pressure was applied to expand the liner to a tight fit within the
host pipeline. The liner was then allowed to rest for a period of 12 hours before
being cut for assembly of the end connectors. End connectors were fitted to both
ends of the liner to seal the liner and connect to the existing pipe work. After the
end connectors were connected, the lined host pipeline was hydrotested before
resumption of services.
The successful demonstration and deployment of IFL in Samarang with Zero HSE
incident, has proven and achieved the R&D project’s primary mission: having
delivered a technically and economically viable alternative to the “like-for-like”
replacement of deteriorated offshore pipelines. This has resulted in cost savings
of RM14.2 million (USD3.4 million), offsetting the expenditure for new carbon
steel pipeline replacement with the R&D cost.
technoLogy AcceptAnce - sKo-bDo-southern cLuster experIence
SKO Pipeline Rehabilitation Team identified PETRONAS-owned InField Liner® (IFL)
technology as the best solution to provide production assurance for West Lutong
field over its production life, offering a Pipe-In-Pipe corrosion-resistant, non-
metallic plastic liner into an existing aging carbon steel pipeline. Rehabilitating the
pipelines by inserting the IFL in an existing carbon steel pipeline was exceptionally
faster and cheaper, providing corrosion resistant and pressure containing layer,
even to a pipeline with more than 80% wall loss.
The project kicked off in January 2014 with Front End Engineering Design (FEED),
taking merely 11 months until commissioning of the IFL on 3 December 2014,
with zero HSE incidents and within planned shutdown window duration. This
unfathomable exploit did not come easy – working with a tight deadline, poised
to strictly follow PETRONAS Project Management Guidelines (PPMS), Technical
Authority requirements and standards, and to obtain budget for this ‘innovative
endeavour’ – all whilst gaining the adequate competency for the new technology,
establishing team chemistry, expediting delivery and managing all technical and
business stakeholders altogether.
Rehabilitation involved modification on six platforms and four pipelines, all
successfully completed within 22 days of shutdown. The team had to work with
platforms whose age surpasses 40
years, requiring careful planning and
coordination in terms of equipment
layout and installation decisions, and
delicate design considerations to
work around brown field challenges.
The replacement was completed
just in time prior to reaching the
predicted pipeline integrity end of life,
successfully extending the life of the
four pipelines for another 20 years,
amounting to approximately RM200
million (USD48 million) CAPEX cost
saving, with predicted RM3.3 million
(USD780,000) in annual OPEX savings
in comparison to conventional
carbon steel, delivering a novel EPCIC
solution in 11 months what would
normally take the conventional
replacement a minimum of 13 months
to complete.
technoLogy Future
From the demonstration in SBO and
deployment in SKO, the product’s
worthiness and installation efficiency
has been proven. This technology
has gained much interest by oil
and gas operators after PETRONAS
Technology Ventures Sdn Bhd
(PTVSB) and Anticorrosion Protective
Systems (Malaysia) Sdn Bhd
entered into the commercialisation
agreement October last year.
This value creating technology will be
leveraged for another eight pipelines
of sizes 6”, 8” and 10“ in the 2016
work program. On the R&D front,
Technology is busy working on the
IFL 2.0 to extend the application
envelope to longer lengths (>4km)
and severely corroded pipes, with
improved system components and
overall systems costs.
For any queries on IFL technology,
please contact en. Ahmad ridhuan b Abdullah ([email protected]), head, technology Deployment and Delivery, operational technology and Deployment, technology, technical global.
IFL Installation in West Lutong
18 MAR 2016
INTERNATIONAL
PETRONAS ACHIEVES FIRST OIL AND FIRST GAS IN INDONESIA
First Fruits of a Long Labour:
40 MAR 2016
DRILLING
19 P E T R O N A S U p s t r e a m M a g a z i n e
INTERNATIONAL
PETRONAS recently marked a major milestone in its Indonesia operations with the achievement of first oil and gas from two of its largest operated upstream projects: the Bukit Tua and Kepodang fields.
Located in the Ketapang Work Area,
35 km north off the coast of Madura
Island, East Java, the Bukit Tua field is
an integrated oil and gas project and is
expected to produce 20,000 barrels of
oil per day (bopd) and up to 50 million
standard cubic feet per day (mmscfd)
of gas. Oil from the field will be
exported from a Floating Production
and Storage Offloading (FPSO) facility
while gas will be transported through
a 110 km export pipeline to the ORF
in Gresik.
The Kepodang field at Muriah Work
Area is located 180 km northeast
of Semarang in Central Java and
is expected to deliver 116 million
standard cubic feet per day (mmscfd)
of gas.
Both fields are expected to contribute
towards fulfilling the energy demand
of the country, particularly in East
Java and Central Java.
“Achieving first oil and first gas in
Indonesia is a significant milestone
for PETRONAS as it demonstrates our
commitment to contribute towards
Indonesia’s energy demand and
potential growth of the country’s
energy sector,” said Hazli Sham
Kassim, Country Chairman of
PETRONAS Indonesia and President
of PC Muriah Ltd and PC Ketapang
II Ltd, during the ceremony held to
mark this milestone.
PETRONAS ACHIEVES FIRST OIL AND FIRST GAS IN INDONESIA
INTERNATIONAL
41P E T R O N A S U p s t r e a m M a g a z i n e
INTERNATIONAL
42 MAR 2016
“With the first production from these two fields, PETRONAS’ contributions to state revenue next year is estimated at USD45 million dollars and is expected to further increase as they continue to develop and explore new wells.”
IG Nyoman Wiratmaja Puja Director General of Oil and Gas from the Ministry of Energy and Mineral Resources of Indonesia
“We are pleased to be part of this
journey, which was only possible
with the continuous support from
the Indonesian government and SKK
Migas,” he added.
The ceremony was held at the
Onshore Receiving Facility (ORF)
in Gresik, East Java, Indonesia.
Director General of Oil and Gas from
the Ministry of Energy and Mineral
Resources of Indonesia, IG Nyoman
Wiratmaja Puja presided over the
ceremony. Also present at the event
were PETRONAS Vice-President of
Production International, Chen Kah
Seong, and Chairman of SKK Migas,
Amien Sunaryadi.
“With the first production from these
two fields, PETRONAS’ contributions
to state revenue next year is estimated
at USD45 million dollars and is
expected to further increase as they
continue to develop and explore new
wells,” said Wiratmaja, expressing his
pride on how PETRONAS has achieved
first production despite the pressure
of world oil prices.Wiratmaja (centre) officiating the first oil first gas ceremony while other guests of honour look on
Wiratmaja (far right) in the control room at the Onshore Receiving Facility (ORF)
DRILLING
INTERNATIONAL
43 P E T R O N A S U p s t r e a m M a g a z i n e
WESTNATUNANORTH
SUMATRA
SOUTHSUMATRA
NORTHWEST JAVA
EASTJAVA
PETRONAS : 60%Signed date : November 2009Phase : Exploration
West Galagah Kambuna (COB)PETRONAS : 15%Signed date : January 1999Farm in date : October 2002Phase : Production
Natuna SEA “A” (OBO) PETRONAS : 20%Signed date : September 2006
Phase : ExplorationFarm in Date : March 2009
Surumana (OBO)
PETRONAS : 40%Award date : May 2015 Phase : Exploration
Kuala Kurun (OBO)
PETRONAS : 30%Signed date : August 2007Phase : Exploration
Randugunting (OBO)
PETRONAS : 42.85%Signed date : February 1993Farm in date : June 2002Phase : Production
Jabung (OBO)
PETRONAS : 100%Award date : May 2015Phase : Exploration
NorthMadura II (COB)PETRONAS : 22.5%Signed date : December 1997Farm in date : January 2004Phase : Production
NEW
NEW
COB (Carigali Operated Block)
OBO (Operated by Others)
20,000BARRELS OF OILper day
50STANDARD CUBIC FEET
MILLION
per dayOF GAS
110km export pipelineto an onshore receivingfacility (ORF) in Gresik
Exploration began in 2001 withthe drilling of Bukit Tua-1 well todepth of approximately 11,400-14,200 ft
5 DEVELOPMENTWELLS
9 DRILLINGSLOTS
1,500TOPSIDES WEIGHT
tonnes
1 of the integrated development
1 project in Indonesiaby PETRONAS Carigali on stream
on 17 May 2015
st
piping, in Indonesia
2001
T
KETAPANG - BUKIT TUA FIELD (COB)PETRONAS : 80% Signed date : June 1998 Farm in date : December 2000 Phase : Development and Production
116STANDARD CUBIC FEET
MILLION
OF GAS per day 6PRODUCTIONWELLS
9WELLSSLOTS
installation carried out byPETRONAS Carigali -Float over installation
method for CPP Topside
1 st
on 22 August 2015
gas production by PETRONAS1 st
200km (14” OD) export gas pipeline to Tambak Lorok power plant in Semarang, Central Java, Indonesia
Farmed-in 2004 with the drilling of Kepodang Sandstonereservoir depth in between 4,400 - 5,700 ft
20042001
MURIAH - KEPODANG FIELD (COB)PETRONAS : 80% Signed date : May 1991 Farm in date : January 2004 Phase : Production
INDONESIA’S UPSTREAM OPERATIONS
PETRONAS first ventured into Indonesia’s oil and gas industry in 2000. The company is now involved in ten Production Sharing Contracts (PSC) and operates four of the oil and gas blocks at various stages of development across Indonesia.
UNCONVENTIONAL
44 MAR 2016
Seri Bakti
Every day, fleets of Liquefied Natural Gas (LNG) carrier
ships sail across the oceans, catering to an increasingly
growing global LNG market. On 28 September 2015,
one of these ships, MISC’s Seri Bakti, arrived at Gladstone
Harbour in Australia.
The arrival of Seri Bakti was of great importance, as
its sole purpose was to facilitate delivery of the first
cargo from the Gladstone LNG (GLNG) Project. There
is no doubt that the first cargo sailing from Gladstone
Harbour on the Seri Bakti was the highlight of the year
for the GLNG Project and PETRONAS Australia. This
achievement was the culmination of seven years, 18.5
billion dollars, 500 wells, three hubs, 420 kilometres of
pipeline, and two LNG trains.
FIrsT CArgOGladstone LNG Project and PETRONAS Australia Reaches Major Milestone
By Phoebe Wallman
SPRINGSURE
ROLLESTON
GLADSTONE
GLADSTONE
ROMA
GLNG PLANT & PORT
CURTIS ISLAND
WANDOAN
INJUNE
Fairview Hub 05
Fairview Hub 04Pipeline Compressor Station
BRISBANE
COMET RIDGE TO WALLUMBILLA PIPELINE LOOP
TOWN
Santos GLNG Interconnect
Meridian Interconnect
QGC Interconnect
ROMA
ROMA
GAS FIELD
SCOTIA
FAIRVIEW
NORTHERN COMET RIDGE
ARCADIA
SuratBasin
QLD
Bowen Basin
WALLUMBILLA
Roma Hub 02RUGS
GAS TRANSMISSION PIPELINE
A graphic showing the location of the gas fields, where the pipeline runs and the location of the LNG plant
45 P E T R O N A S U p s t r e a m M a g a z i n e
To date, the GLNG Project has developed gas fields in
Australia’s Surat and Bowen Basins, built a 420 kilometre
gas transmission pipeline, constructed an LNG plant on
Curtis Island, and shipped its first cargo. In 2015 alone,
commissioning cargos had to be sold, contracts signed
and wells and hubs had to be safely and efficiently
commissioned. GLNG also had to manage third party gas
contracts and field turndown, and in doing so was able to
avoid virtually all flaring and contract penalties.
the GLNG Project
The GLNG Project is a partnership between four energy
companies: PETRONAS (27.5%), Total (27.5%), KOGAS
(15%), and local Australian producer Santos (30%). It is an
unconventional resource project producing natural coal
seam gas (CSG) for conversion into liquefied natural gas
(LNG) and sale to the world markets. When fully operational,
the GLNG Project will have the capacity to produce 7.8
million tonnes of LNG each year.
Coal is formed from plant matter under pressure over millions
of years. As part of that process, natural gas binds to the
surface of coal particles and is trapped in place by water
and ground pressure. By drilling a well and pumping away
the water to reduce the pressure, CSG can be extracted.
Like conventional natural gas, CSG is primarily comprised
of methane, so it can be used for industrial processes and
electricity generation, as well as cooking and heating. CSG
has been safely produced in Australia since 1996, when
commercial production began in central Queensland.
PETRONAS entered the Australian market via the GLNG
Project as part of the pursuit to become a global exploration
500 420KM
2
cUrtiS iSLaND GaS traNSPortatioN PiPeLiNe
Wells Pipeline LNG trains
Aerial shot of Curtis Island LNG plant
UNCONVENTIONAL
UNCONVENTIONAL
46 MAR 2016
and production player. The GLNG Project was PETRONAS’
initial entry into unconventional energy. In 2008, industry
analysts were projecting a large increase in LNG demand
and large increase in natural gas production from
unconventional sources. Then in 2011, FID for the GLNG
Project was approved.
chaLLeNGeS
But the GLNG Project has not been without challenges;
only one of which has been falling oil prices. One significant
challenge for GLNG was the construction of the 420km
gas transportation pipeline. The pipeline was needed to
deliver gas to the LNG Plant on Curtis Island at Gladstone.
The construction of this pipeline was split into three areas:
mainland Australia, marine crossing, and Curtis Island. The
challenge arose in the marine crossing. After initial plans for
an open cut approach were rejected by the Government
due to environmental concerns, the approach needed
to be changed. Following evaluation of various methods,
horizontal directional boring was selected as the best
option to meet the strict environmental approval criteria
from the government. This involved around 120 segments
of pipeline measuring 36 metres each being welded
together and pushed through a tunnel bored by a 277-tonne
tunnel boring machine. Having an undersea tunnel allowed
the pipeline to cross the Gladstone Harbour with minimal
impact to the coastal environment and with no disruption to
the local marine life.
oPPortUNitieS iN NeW techNoLoGy
Fortunately the GLNG Project has brought opportunities
as well. Being an unconventional project, it is necessary to
use new technologies to drive costs down and maximise
production. One such technology recently implemented by
the GLNG Project is the utilisation of ball diversion methods
for multi-zone fracture stimulation. Typical multi-zone
fracture stimulation utilises packers or plugs to isolate the
different zones, which requires higher pump capacity and
a longer time. The ball diversion method sees fluid diverted
into multiple zones during hydraulic fracturing, reducing
the time needed to stimulate all the zones and the pumping
requirements. In this process, fracturing liquid is injected
into the well and initially enters the zone with the least
resistance through perforations in the casing. To redirect the
fracturing liquid to other zones in the well, balls are released
into the fracturing liquid that block the flow into the zone
ACCESS AGREEMENTSINDIVIDUALLYAGREED WITH 120 LANDHOLDERSFOR 142PROPERTIES
61ROADS
CROSSED
120EXCAVATORS
7STORAGE
AREAS
2000VEHICLES
36,000SEGMENTS OF PIPE
4.3 kmUNDER-SEA TUNNEL
FROM THE MAINLANDTO CURTIS ISLAND
45PIPELAYMACHINES
2.5MILLIONMEALS
2000JOBS
6MILLIONWORKHOURS
GLADSTONE
LNG PlantCURTIS ISLAND
GAS FIELDS
ROMA
50+SUBCONTRACTORS
PRIMARYCONTRACTOR1
4WORKERS’ CAMPS
A graphic showing what was involved with the construction of the LNG pipeline
GaS traNSMiSSioN PiPeLiNe
UNCONVENTIONAL
47 P E T R O N A S U p s t r e a m M a g a z i n e
of least resistance and initiate fracturing in another zone.
This process is repeated for subsequent zones and the balls
dissolve or are easily cleaned out at the end of the job,
greatly reducing time and costs.
Another new technology being implemented by GLNG
is Land Amendment Irrigation (LAI) in the area of water
treatment. LAI involves spraying untreated CSG water, up
to a salinity of 4000 micro siemens, across a salt resistant
crop and then treating the soil chemistry by directly
applying Gypsum and bentonite to the ground soil. Water
and soil chemistry are intensely monitored to ensure that
government standards are met and no contamination
occurs. This new technology offers an opportunity for CSG
water to be used to irrigate crops suitable for feeding cattle
on drought prone lands, while at the same time saving the
cost of the reverse osmosis process. GLNG currently has
190 hectares of crops that have been successfully sprayed
with 1.6GL of untreated CSG water using the LAI method in
the past twelve months. This same technique has also been
used to manage water produced during various appraisal
activities.
In addition to cost savings achieved through the use of
new technologies, as a partner, PETRONAS has influenced
significant reduction in project costs. An example of this
was the sanctioning of the Roma 2B project. Initially, GLNG
proposed to develop the full field of infrastructure and wells
at a cost of USD 1.7 billion for 416PJs of gas or a cost of
$4.12 per GJ. Through a series of consultations, PETRONAS
successfully influenced GLNG to change their contracting
strategy from EPCM to a self-management system similar
to what is utilised in North America. This change facilitated
improved cost visibility and control, as well as a move
towards smaller scope modular equipment. As a result, the
field was developed at a cost of USD 1 billion for 350PJs
of gas or a cost of $2.89 per GJ setting new levels of
performance at 30% less than previously budgeted levels.
2016 aND BeyoND
Looking forward through 2016, there are still a number
of key milestones for the GLNG project to achieve. These
include finishing construction and commissioning of
the second train at the LNG Plant on Curtis Island and
producing first commercial cargoes for both trains. Through
2016 and beyond, PETRONAS will continue to work with
GLNG to identify further cost optimisation opportunities
and more new technologies that can be utilised for a long
and successful future.
One of the GLNG compression hubs
Seri Bakti escorted by tug boats in Gladstone Harbour