Santos to appraise East Java basin discovery

Santos plans to appraise an oil discovery in the Madura Strait that it said might be the company's largest oil field development.
The company began acquiring 3D seismic data in January over the Jeruk discovery, where Santos has drilled two deviated, high pressure-high temperature wells 1.6 km apart that defined an oil column at least 379 metre thick (true vertical thickness).

The Jeruk reservoir is in the Oligocene Kujung carbonate at 16,380 ft subsea in 44 metres of water on the Sampang production-sharing contract.
Santos Managing Director John Ellice-Flint said, "We have a large discovery that appears likely to contain more than the published, predrill contingent resource estimate of 170 mm barrel. If our initial view is confirmed during the appraisal program then the Jeruk discovery could significantly upgrade our current reserve base and it would be Santos's largest oil field development." Well data including cuttings, wireline logs, and test data indicate that the oil column could extend shallower and deeper than the current thickness, Ellice-Flint said.

The company is dealing with a wide range of uncertainty as to the recoverable volumes, he said. Existing 2D data on which the well trajectories were designed are imprecise at these depths.
A rig under contract to Santos was moving in January to drill the Agung-1 exploratory well on the North Bali 1 PSC in which Santos has 30 % interest. That prospect, "targeting a carbonate reservoir on a similar trend to the Jeruk discovery," has 550 mm barrel of unrisked upside resource potential, Ellice-Flint said.

A drillstem test at Jeruk-2 yielded good quality 33 degrees gravity oil at the rate of 7,488 bpd through a 1/2-inch choke with 2,762 psi of flowing tubing head pressure. Capacity of surface facilities limited the flow rate. It is possible but considered unlikely that a small volume of gas may be contained in the uppermost part of the structure, Ellice-Flint said.
Acquisition, processing, and interpretation of the 3D seismic data will be completed in the second half of 2005.

Santos and PT Medco Energi hold 50:50 interests in the two wells.
PSC partners to chose not to participate in the two wells could reclaim their interests by paying compensation, and that would reduce Santos's interest to 45 %. Participation by an Indonesian government nominated company could reduce that further to 40.5 %.