Vietnam rarely
makes headlines for petroleum development.
But consider:
Vietnam ranks third in
oil production among Association of South East Asian Nations countries, trailing
only Indonesia and Malaysia.
If its current rate of
development continues, Vietnam will become the world's 30th largest
oil-producing nation.
And perhaps the most
startling aspect about Vietnam -- most of its production comes from offshore
basement reservoirs.
Attractive
Reserves
To date, Vietnam has
produced almost a billion barrels of crude oil and 300 billion cubic feet of
natural gas, according to Viet Anh Nguyen, new ventures coordinator for national
oil company PetroVietnam.
Nguyen estimated 2004
total output at 130 million barrels of oil and 200 Bcf of gas.
The country's estimated
resources, both onshore and offshore, now stand at 6.5-8.5 billion barrels of
oil and 75-100 trillion cubic feet of gas, he said.
Current oil and gas
production comes from fields in the Cuu Long, Nam Con Son and Malay-Tho Chu
basins, with gas also produced in the Song Hong Basin.
PetroVietnam began 2005
in the middle of a licensing round for nine blocks in the Phu Khanh Basin,
offshore the south-central coast of Vietnam. The offered blocks average 7,000
square kilometers in size.
Water depths in Phu
Khanh range from 50 to 2,500 meters, and sediment thickness extends up to 8,000
meters, the company said.
Additional, frontier
exploration areas include parts of the Hoang Sa and Truong Sa group of
basins.
Because of challenging
conditions, exploration in those areas may be limited to small, prospective
acreages of interest, Nguyen said.
Geological
Setting
A system of Cenozoic
sedimentary basins defines the 1 million-square-kilometer Vietnamese continental
shelf area, according to descriptions from PetroVietnam.
These rift basins lie
within a transitional zone from the continental crust of the Indochina Craton to
the suboceanic crust of the eastern deepwater area.
Most of the main
structural elements occurred during a Late Eocene-Oligocene rifting phase, with
extension and transtensional deformation.
Local uplift, rotation
and erosion began in the mid-Oligocene, followed by regional subsidence.
Compression dominated the area, later subject to diverse, low- to
moderate-amplitude tectonic activity.
Oligocene-Early Miocene
lacustrine shales and deltaic coals and coaly claystones constitute the main
source rocks, showing potential for both oil and gas generation.
Clastics -- delta plain,
fluvial channel, submarine slope fan and turbidite sandstones -- make up the
most common reservoirs. However, exploration has found fractured granite
basement to be an important oil-bearing reservoir type.
PetroVietnam now has an
extensive history of working with foreign companies in exploration and
development ventures.
In October the company
signed a contract with Idemitsu Kosan Co., Nippon Oil Corp. and Teikoku Corp.
for exploration on two blocks in the Nam Con Son Basin.
According to
PetroVietnam, that was the 48th petroleum contract signed with foreign companies
since the Vietnam Foreign Investment Law took effect in 1987.
Roaring Young
Lions
Oilfields in the Cuu
Long Basin offshore southeastern Vietnam typify the country's fractured basement
reservoirs.
Bach Ho (White Tiger),
Vietnam's largest oilfield, produces almost 280,000 barrels of oil per day from
granitoid basement.
Recently, a
basement-reservoir play extension in the nearby Su Tu or "lion" fields generated
wide industry interest.
The Su Tu Den (Black
Lion) field currently produces about 80,000 barrels per day, but PetroVietnam
expects to increase output to 200,000 barrels per day within three
years.
In September,
PetroVietnam announced that up to $300 million dollars will be spent on
production enhancement in Cuu Long Block 15-1, where Su Tu Den is
located.
Neighboring fields Su Tu
Vang (Golden Lion) and Su Tu Trang (White Lion) also show promise for production
increases, it said.
Wallace G. Dow, an AAPG
member and consultant in The Woodlands, Texas, calls the Cuu Long oil
"paraffinic, classic lacustrine crude" expelled into fractured basement from
lower source rock.
"The oils in the
basement are virtually identical to the oils in the sandstone sitting around the
basement," Dow said.
"This is the key -- they
migrate updip through faults into the basement, in horst blocks," he
said.
Dow emphasized that the
oil's components indicate a lacustrine organic facies with lipid-rich,
land-plant debris and fresh-water algal material, refuting theories of abiogenic
origin in this area.
Exploration
Challenge
Discoveries on basement
highs in Cuu Long can encounter thousands of feet of oil column.
"When you open up a
1,000-foot section, you don't need more than 2 or 3 percent porosity. The oil
migrated recently, so it's still all there. You can produce a lot of oil," Dow
said.
Cuu Long's challenge is
predicting where to drill, according to Dow, and "a lot of companies have lost
their shirts trying to drill these darn things.
"The whole problem is,
how do you do these plays?" he asked. "Some companies want to believe there are
plays away from these horst blocks. I'm sure there are, but are they
economic?"
A joint venture, Cuu
Long Joint Operating Co., conducts oil and gas development on Cuu Long Block
15-1, including the Su Tu fields.
Partners are:
- PetroVietnam, 50 percent.
- ConocoPhillips,
23.25 percent.
- Korean National
Oil Corp., 14.25 percent.
- South Korean oil
refiner SK Corp., 9 percent.
- French company
Geopetrol, 3.5 percent.
Operating in Vietnam is
"like operating just about anywhere else," said Georg Storaker, ConocoPhillips
country manager of Vietnam in Ho Chi Minh City.
Storaker said the
venture's general manager is seconded in from PetroVietnam and the deputy
general manager from ConocoPhillips, with other companies providing
representation.
By agreement, partners
make operating decisions jointly, under voting rights specified in the working
contract.
"It works. It's
functional to do it this way," Storaker observed. "But it tends to become very
bureaucratic to operate in this fashion."
He said Vietnam may
return to the partner-operated approach used in earlier government-sponsored
ventures, providing more direct operator control.
Build-As-You-Go
Having no refining
capacity of its own, Vietnam exports all of its crude production and imports
processed fuels and petrochemical products.
"All oil markets are out
of the country," Storaker said. "All gas production is going into domestic
markets, primarily for power generation."
With minimal petroleum
infrastructure in place, development can be a build-as-you-go effort. Much of
the support manufacturing takes place in Vietnam, according to
Storaker.
"The simple wellhead
structures, the jackets and topsides, we build here in Vung Tau, the harbor city
just outside of Ho Chi Minh City," he said.
The Cuu Long venture had
no problem identifying prospects on Block 15-1, said Bill Schmidt,
ConocoPhillips general manager for Vietnam.
"The first well that was
drilled was a successful discovery," Schmidt said. "It was targeting the
basement. The block was picked up based upon the success of the Bach Ho
field."
Basement reservoirs at
Bach Ho and the Block 15-2 Rang Dong field, where ConocoPhillips has a 36
percent interest, indicated the play concept could be extended.
"For that reason, there
was a lot of interest in what was considered this 'golden block,' Block 15-1.
Basically, it came in as expected in Su Tu Den and Su Tu Vang," Schmidt
said.
"They were the two
nicest structures on the block," he added.
Riding a
Horst
The company's ongoing
development plan is typical of local operating style: Find a horse, or horst,
and ride it.
"Block 15-1 is the one
that has the longest life, that we're tying most of our future on," Storaker
said. "The Rang Dong field that got us started has a life expectancy of
2017.
"We are now moving into
the preliminary engineering phase of Su Tu Vang," he continued, "and if
everything goes the way we hope, we would like to sanction it in 2005 for first
production in 2007."
The third discovery, Su
Tu Trang, is in evaluation. It initially tested at 70 million cubic feet of gas
and 8,500 barrels of condensate production per day, Storaker said.
"We have been shooting a
lot of seismic work on that structure in the past year," he added, and an
appraisal well is slated for 2005.
"We are also likely to
go out and drill an exploratory well on another prospect we see out on the
block," Storaker said.
At Rang Dong, where
water injection began in 2004, ConocoPhillips plans to add one production
platform and one new liquids handling platform this year.
ConocoPhillips also
holds an equity interest in the 242-mile Nam Con Son pipeline system, linking
gas supplies from the offshore basin to gas markets in southern
Vietnam.
For the period 2005-10,
PetroVietnam plans to triple gas production and add 7-to-10 new oil and gas
fields, Nguyen said.
Vietnam also will focus
on infrastructure construction to develop its domestic natural gas market and
reduce dependence on imported oil products.
Things in
Motion
After a series of false
starts and delays, including the loss of a Russian venture partner, PetroVietnam
now plans to begin operating a $1.6 billion, in-country refining complex at Dung
Quat by 2007.
Vietnam continues to
develop rapidly, Storaker said, promising a stronger domestic market for
transportation fuels and power-generation gas in the future.
"It's growing quite fast
-- there is a growth rate of about 7 percent a year," he said. "There's a
focused effort here on getting more high-tech industry into this
area.
"There's tons of things
to be done to, for example, catch up with the speed of the neighbor to the
north," he added.
Continued exploration
success in Vietnam presents the industry with an increasingly attractive place
to work, to operate and to chase offshore plays.
"Things are in motion
down here," Storaker said.
Click to enlarge.
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