PT Pertamina Hulu Energi (PHE) Siak reported an oil discovery from exploration well Kumis 2 in the Siak PSC, located in onshore Central Sumatra Basin, in mid-August 2018. The well, spudded on 1 March 2018, reached a final TD of approximately 274 m on 20 March 2018. The well has been suspended, pending installation of production facilities. Drilling was carried out using a land rig operated by PDSI.  PHE reported contingent (2C) resources of 1.9 MMbo from the discovery, likely in shallow sandstone reservoirs of the Lower Miocene Bangko Formation within the Sihapas Group.   Kumis 2 was the first exploration well drilled by PHE Siak since the block award in May 2014. The well had a PTD of 299 m, targeting reserves of 2.1 MMbo. Operations at the well were expected to take 27 days.  The Siak PSC produced 1,803 bo/d in 1H 2018, slightly above the annual target of 1,797 bo/d. Production came from the Lindai, Batang and Menggala South fields.  Prior to drilling, the Kumis 2 well was expected to add between 200 and 300 bo/d to the total production from the block. Heavy oil is typically found in this area and the company is applying cyclic steam stimulation method to facilitate oil flow from the wells.  PHE Siak was in the final stage of preparation for drilling of Kumis 2 in mid-October 2017. The company was planning to drill the well around November 2017, deferred from the previous schedule of 2H 2016 due to delays with land use permits from the local administration.  In early September 2017, the company carried out a local social community meeting, to share the information and the need for support of exploration activities as the countryâs reserves are declining. As of August 2017, average production from the block was approximately 2,000 bo/d, exceeding the target set in the 2017 work program and budget by approximately 8%. The block average production was 1,883 bo/d in 2016.  Earlier reports indicated that local drilling permit was granted in February 2016. PHE applied for land use permit for Kumis 2 in July 2015 and spud date was initially expected in Q4 2015.  It is understood that Kumis 2 was part of the firm commitments for the contract since it was awarded to new operator PHE.  Kumis 2 re-investigated shallow oil potential in the Kumis structure located within the southern portion of Siak PSC Area III. The first well drilled in the structure, Kumis 1 (Chevron, 1996), encountered oil shows.  The Siak PSC is officially operated by Pertamina Hulu Energi (PHE) Siak since May 2014, after the previous PSC with Chevron expired in November 2013. On 7 August 2018, PHE and PT Riau Petroleum signed the Transfer Agreement and Management of 10% Participating Interest, in compliance with Ministerial Regulation No. 37/ 2016, leaving PHE with 90% interest.  Background Information  The 12,328 sq km C&T "A, B & C Blocks" COW was awarded to Caltex, a joint-venture of Chevron subsidiary California Asiatic Oil Co (or Calasiatic) and Texaco subsidiary Texaco Overseas Petroleum Co (or Topco), on 28 November 1963 and covered areas previously lightly explored by Stanvac and Caltex under earlier concessions. Caltex paid signature bonus of USD 5 million and committed to work programmes amounting to USD 14 million. On 28 March 1991, the COW was converted to PSC terms and re-named as the Siak PSC under newly established subsidiaries Chevron Siak Inc and Texaco Siak Inc. Signature bonus paid was USD 5.2million and the work commitment was USD 38 million for 10 years.   Exploration under the COW/PSC has led to the discovery of several oil and gas fields. The first of these was Menggala South, discovered in July 1968 and brought onstream in May 1973. Other oil discoveries which have subsequently been brought onstream followed at Lindai (1971), Batang (1975), Ujung Tanjung (1975), Tanjung Medan (1976), Buaya (1978), Jingga (1984) and Rintis (1984). These eight fields contained initial in place reserves estimated at 197 MMbo with 48 MMbo recoverable. Cumulative production up to the end of 1998 totaled 39 MMbo, by which time the Buaya and Ujung Tanjung fields were depleted and the Tanjung Medan field was shut-in. Average production for the five remaining producing fields in 1998 was 2,540 bo/d. The production during December 1999 averaged 2,383 b/d of oil. In May 2002, production stood at 2,436 b/d of oil and in mid-2003 production was 2,300 b/d of oil. By mid-2004, production had recovered to about 2,500 b/d of oil.   Non-commercial discoveries were made at Kota Lama (oil, 1972), Putih (gas, 1979), Palem (oil, 1980) and Kutu (oil, 1990). Between 1991 and 1998, Caltex acquired over 2,800 km of new 2D and 3D seismic data over the Siak PSC. Caltex drilled eight exploration wells during the period. In 1991 Lintah 1 was abandoned as dry. Santang 1, also dry, was completed in 1993. Another dry well followed in 1995, this being Siarang 1. In 1996, Sijambu 1 was abandoned as an oil discovery after flowing 573 bo/d from one of seven DSTs, with the oil believed to be in a sandstone unit of the Sihapas Group. Also in 1996, Sisumut 1 and Kumis 1 were dry. In early 1997, Kota Lama 2 was abandoned presumably having been dry.   A 3D survey was completed in January 1999 over the block with a total of 1,045.6 km acquired.  In November 2004, Caltex completed the acquisition of about 14 sq km of 3D seismic data over the Batang field.    Prior to Kumis 2, the last exploration well drilled in the block was Sijambu West 1, in December 2009. The well was plugged and abandoned dry in late December 2009. The well, located around 4km east of the Sijambu 1 oil discovery (1996), was spudded on 21 December 2009 and was drilled to a TD of 610 m, slightly shallower than the PTD of 617 m. It targeted a faulted anticline structure with reservoir objective in the sandstones of the Lower Miocene Bekasap Formation. Prior to this well the last exploration drilling campaign in the block was in 1999 with Cemerlang 1 wildcat (oil shows).    In September 2010, Chevron submitted to BPMIGAS a letter expressing its intent to pursue an extension of the Siak PSC upon expiry on 27 November 2013. Chevron was then holding 100% interest in the block. BPMIGAS said in mid-January 2011 that the operator had until November 2011 to submit a formal proposal for the extension. According to the national upstream oil and gas regulator, the previous letter was not valid as it did not include specific plans about development plans and investment commitments for the block.  In early January 2011, local press reported that domestic companies PT Medco and Bakrie Group expressed interest in taking over operatorship in the block. The Riau provincial administration was also reported in mid-January 2013 to be seeking an opportunity to manage the block.  The initial evaluation process by the government of Indonesia was reported in early February 2013. Any aspect related with legal, technical and economic factors were in the scope of the evaluation. The government eventually decided not to extend Chevronâs contract. As the intention of the government of Indonesia was to prioritize national interest, it was decided to hand the block over to Pertamina. The national oil company temporarily managed the block until the official PSC signing on 26 May 2014, for a 20-year term.  The process to find new partner for Pertamina in the new Siak PSC commenced shortly after the contract award. According to local reports, Pertamina established cooperation with PT Riau Petroleum, a local government firm (BUMD), to develop the Siak PSC in November 2014. The establishment of the cooperation was based on SKK Migas decree SIP.0980/SKKO0000/2014/S0 on 27 October 2014. Details of the contract were not initially revealed and the allocation of the shares for each party had not yet been determined at the time. Reportedly, PT Riau Petroleum was expecting to earn more than 10% participation interest in the block but the final allocation would depend on the discussion between the two companies.  PHE was planning to drill one development well in Lindai field in 2015. According to local reports, the block produced 1,753 b/d of oil during Q1 2015. The production figure during the quarter was contributed by Lindai (607 b/d of oil), Menggala South (136 b/d of oil) and Batang (1,010 b/d of oil) fields.  The Siak block produces approximately 1,600 to 2,000 bo/d. Despite the comparatively small output, the block is considered of strategic relevance for operations in Sumatra, as its infrastructures support production from the larger fields in the adjacent Rokan PSC.
PT Pertamina Hulu Energi (PHE) Siak reported an oil discovery from exploration well Kumis 2 in the Siak PSC, located in onshore Central Sumatra Basin, in mid-August 2018. 