KKA 4410

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KKA 4410
Petroleum Gas Engineering
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What is petroleum?

• Brown to black liquid or solid containing
  primarily carbon, hydrogen and oxygen and produce
  energy when burn
• Organic Theory
• Formation associated with development of
  fine-grained sedimentary rocks deposited in a
  marine or near-marine environment
• product of plant and animal debris incorporated
  in this sediment

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What is Natural Gas?

• colorless, shapeless, and odorless gas that can
  be burnt to produce energy
• Composition of Natural gas
• Methane (70-90), Ethane/Propane/Butane (0-20),
  CO2 (0-8), O2 (0.-0.2), N2 (0-5), H2S (0-5)
• Occurance
• In reservoirs of petroleum (gas cap)
• Without reservoirs of petroleum
• Coal seams
• Decay of organic materials

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History of Petroleum in Malaysia

• Begins in Miri, Sarawak in 1882 found British
  Resident of Baram District
• Earth Oil for Domestic usage
• Waterproof boats and lighting
• Hocus Pocus! Cure for skin disease and possess
  evil spirit
• Anglo Saxon Petroleum Co. (1909)
• Awarded license to explore Sarawaks oil
• 10 August 1910 1st drilling work starts
• 22 December 1910 struck the oil
• ?The beginning of Malaysian Petroleum Industry
• Production
• 83 barrels per day ? 15,000 bbl/day in 1929
• Miri Oil first exported in April 1913
• Damaged during WW2
• Shut Down in October 1972
• The 1st and last onshore oil field

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• The shift offshore
• starts when no more oil found on land
• Marine seismic surveys 1954 (Sarawak) and btw
  1955-56 (Sabah)
• 1962 1st offshore oil discovery in Sarawak
• 1971 1st offshore oil found in Peninsular
  Malaysia
• - Significant quantity of natural gas discovered
  in Sarawak
• 1973 19 site was discovered and 4 already in
  production
• Production 90,000 barrels per day
• The turning point
• 1973 Production controlled by oil companies
  under concession system
• Government on get small royalty and taxes
• 1973 1st energy crisis during Israel war Arabs
  stop export to some countries
• Producing oil countries takes charge of their own
  oil production

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• Formation of Petronas
• Government-owned company - national petroleum
  corporation
• 17 August 1974 PETRONAS (Petroliam Nasional
  Berhad) founded under Companies Act 1965
• Parliament passed the exclusive ownership and
  control over all petroleum resources in the
  country
• Production-sharing Contract System
• Oil company to explore oil must sign
  production-sharing contract with PETRONAS
• Also includes companies before the Act was passed
• 1976 3 sign Sabah Shell, Sarawak Shell and
  Esso
• 1985 new terms on contract attract more
  companies
• The production-sharing formula
• Oil Royalty 10, Cost Recovery 50, Profit
  Split 40
• Gas Royalty 10, Cost Recovery 60, Profit Split
  30.

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Growth in the Supply for Oil in the World
(1996-2030)
Source http//www.iea.org/g8/world/oilsup.htm OPE
C (Organization of Petroleum Exporting Countries)
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Growth in the Demand for Oil in Regions of the
World (2000-2030)
  (Source IEA/World Energy Outlook 2002)mtoe
(Millions tones of oil equivalent) OECD
(Organization for Economic Cooperation and
Development)
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Growth in the Natural Gas Production
Source www.iea.org/g8/world/gassup.htm
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Growth in the Demand for Natural Gas in Regions
of the World (2000-2030)
Source IEA/World Energy Outlook 2002
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Asia-pacific energy production
Source Energy Information Administration,
International Energy Annual 2000 1
Petronas 2002 (Crude oil Top 25th Natural Gas
Top 14th) 2 Petronas 2001/02
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Asia-pacific energy consumption
Source Energy Information Administration,
International Energy Annual 2000.
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Policies on Petroleum and Gas

• Why do we need policies?
• Paradox of Plenty ? rich the rich, poor remains
  poor
• Government and economic policies benefits the
  exploitation by contributing to human, social and
  physical capital development
• Critical key policies
• Establishment of transparency and accountability
  with respect to revenues earned and their
  disposition
• Consultation with principle stakeholders in
  developing plans for the use of resource revenues
• Credible oversight and audit of the
  implementation of these plans
• Serious attention to building local institutional
  capacity

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BASIC PETROLEUM LAWS AND THEIR REGULATIONS

• Ownership of petroleum
• Universally Petroleum in situ (belongs to the
  state)
• Some countries either to land owner (within the
  land boundary) or no one at all
• International area Belongs to mankind who ever
  finds the petroleum and have license to drill
• Choice of Regime License or Contract and its
  type
• Either licenses (granted by governmental
  authority)
• entitle holder to obtain and win petroleum and
  constitutes a transfer of title to petroleum if
  or when produced
• Or contract work (approval from competent
  authority)
• No transfer title given to state oil enterprises

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• Delegation of Legislative Power to the Government
• Subjects left by basic petroleum law to be dealt
  with by the government
• By issuing regulations from time to time (i.e
  environmental, health, safety, etc.)
• Differ from country to country
• Opening up of Territory for the Conduct of
  Petroleum Operations
• When ownership is given to the State
• They have absolute discretion whether or not to
  explore, develop and produce the petroleum
• When State decided to open up petroleum operation
  
• No discrimination between applicants in
  allocating licenses and contracts

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• Rules for Making Application for Licenses or
  Contact
• Bidding rounds, auction or cash tender bids,
  special invitation, separate negotiation
• Geographical Division of the Territory Made
  Available for Petroleum Operations and the Issue
  of Licenses or Contract
• Regarding size and shape of license/contract
  areas (blocks)
• General Aspect of Legal Nature
• Matters such as
• Possibility of surrendering license or contract
  on voluntary basis
• Procurement of financial guarantees
• Securing performance by the right holder of
  certain obligation listed in the license or
  contract

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• State Participation of Licenses or Contracts
• To share in decision making process esp.
  development planning and investments in
  development
• Gain 1st hand experience with technical,
  administrative and commercial aspects of
  petroleum operations
• To supervise implementation
• To safeguard and protect national interest