me 04 Volu - PETRONAS Brand Channel PETRONAS Upstream Magazine 3 We’re Safe and We Know It Asset...

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

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

ure

Fo

cus

Feat

ure

Fo

cus

Co

ver

Min

i Sto

ry

No

te a

nd

New

s

Co

rpo

rate

So

cial

Inve

stm

ent


Vo

lum

e 0

4


COMMUNITIES




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


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

[email protected]

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


“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).

FEATURE FOCUS

From Fishing Village to

BUSTling HUB

By Brigitte Rozario

6 mar 2016

DRILLING


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

DRILLING

FEATURE FOCUS


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

FEATURE FOCUS

ThE hEART OFLng

By Brigitte Rozario

10 MAR 2016

DRILLING

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

DRILLING

FEATURE FOCUS


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

DRILLING

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


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


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

MINI STORY

Contractors play their part

CUTTINGCOSTS

By Abdul Hadhi

22 MAR 2016

DRILLING

MINI STORY

“Challenge project costs as if you were paying with your own money.”

Carl Hunter


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


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


“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.

SPECIAL

28 MAR 2016

WE’RESAFEAND WE KNOW IT

By Sreerema Banoo

DRILLING

SPECIAL


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


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


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.


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


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


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


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


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


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


Vo

lum

e 0

4


COMMUNITIES




me 04 Volu - PETRONAS Brand Channel PETRONAS Upstream Magazine 3 We’re Safe and We Know It Asset...

Documents

Transcript of me 04 Volu - PETRONAS Brand Channel PETRONAS Upstream Magazine 3 We’re Safe and We Know It Asset...