The Search for Petroleum in Thailand

In 1921, the search for petroleum in Thailand began at Fang Basin, Fang District, Chiang Mai Provice in northern Thailand. Prince Kamphaengphet Akara Yothin, Royal State Railways Department Chief employed an American geologist to search for oil and coal to substitute firewood for steam engines in trains. However, it was concluded that the area was not a major oil deposit. In 1954, the first oil discovery was made at Chai Prakarn in the Fang Basin by the Department of Mines (currently Department of Mineral Resources). The small quantities extracted were used for making asphalt. In 1968 the government invited foreign oil companies to explore for petroleum. Union Oil (which later became Unocal Thailand) was the first to discover a natural gas field in the Gulf of Thailand, Erawan, in 1973. In 1971, with the intention to attract major international oil companies investment in exploration under a proper system of benefits sharing, the government promulgated Thailands first Petroleum Act and Petroleum Income Tax Act. In 1981, Sirikit Oilfield, Thailands first commercial oilfield, was discovered by Thai Shell, in Lan Krabue sub-district, Kamphaengphet Provice. In 1985, Petroleum Authority of Thailand (currently PTT Plc.) established PTT Exploration and Production Public Company Limited or PTTEP on 20th June 1985 . PTTEPs goals are to explore, develop, and produce Thailands petroleum reserves to maximize the benefits from indigeneous energy resources in accordance with the Thai governments resolution to strengthen Thailands energy stability as well as to minimize petroleum imports.

Sirikit Oilfield Thailands Prestigious Oilfield

Sirikit Oilfield was discovered in 1981 by the then concession owner, Thai Shell Exploration and Production Co., Ltd. or Thai Shell. Exploration activities started in April 1981, and in December of the same year oil was discovered in commercial volumes in exploration well Lan Krabue A01 (LKU-A01) in Lan Krabue subdistrict, Kamphaengphet province. Production from the oilfield started in December 1982. It was the first time in Thailands history that oil was produced for commercial purpose. To date, Sirikit Oilfield remains the countrys largest onshore oilfield. On 12th January 1983, Her Majesty Queen Sirikit graciously presided over the opening ceremony of the oilfield, upon which the name Sirikit Oilfield has been bestowed by Her Majesty In October 1985, PTT Exploration and Production Public Co., Ltd. or PTTEP entered into a joint venture with Thai Shell in this onshore concession block with 25% share holding while Thai Shell held the remaining75%. In January 2004, PTTEP acquired all of Thai Shells shares, and become the S1 concession owner as well as the operator of Sirikit Oilfield, Thailands prestigious oilfield. Today, the S1 onshore concession block covers an area of 1,138 square kilometers in Kamphaengphet, Phitsanulok and Sukhothai province. The discovery of Sirikit Oilfield spurred additional exploration in the concession area that led to discoveries of more but smaller oilfields. Up to the first quarter of 2006, approved production areas in the S1 concession covers an area of 289 square kilometers, with Sirikit Oilfield being the largest. Products from Sirikit oilfield include Phet crude oil, which is named after Kamphaengphet province, natural gas and liquefied petroleum gas (LPG or cooking gas).

Petroleum Exploration & Production

GEOLOGICAL SURVEY Petroleum exploration normally begins with geological surveys which involve use of remote sensing techniques, such as aerial photography and satellite imaging, ground surveys by geologists and laboratory analyses of rock samples. Study of outcrops, which are underground rock layers pushed up above surface level by earthquakes, is a good source of information on the environments of sediment precipitation in pre-historic time and therefore a good indication of existence of petroleum reservoirs in the area. Any positive indication of petroleum existence from a geological survey will normally lead to a decision to carry out a seismic survey in the area. SEISMIC SURVEY A seismic survey is the most utilized method of Geophysical Surveys, which include magnetic survey and gravity survey, in the exploration for petroleum. Sharp seismic, or sound, waves are initiated at ground level and measurements of reflected sound waves from underground rocks are made. Differences in underground rock density will yield different shapes and sizes of the reflected waves. Thousands of these reflected waves are then stacked side by side to form a picture of the underground rock layers. These pictures provide a good evidence whether the structure of the underground rocks is conducive to forming a trap for petroleum. With the advancement of computer technology and power, 3-dimensional seismic surveys have become more commonly used for petroleum exploration than the old-style 2-dimensional surveys due to their superior quality and accuracy in identifying possible petroleum reservoir rock structures. EXPLORATION DRILLING Once a possible petroleum reservoir structure has been identified by a seismic survey, the only way to prove whether the underground rock layers contain any petroleum is to drill an exploration well. Selection of exploration drilling target based on 3-dimensional seismic data today provides a much improved chance of success in petroleum exploration. Exploration wells are usually drilled straight down from a surface location on the ground directly into the target rock structure below, in order to minimize costs and complication of the drilling. Underground information gathering using electronic equipments called logging tools lowered into the drilled well will provide firmed evidences of petroleum existence and location. Once the existence of petroleum is confirmed, tests of petroleum flow capacity from the reservoir, as well as drilling more wells in the vicinity to appraise the extent of the reservoir, will be undertaken to determine the commerciality of the new petroleum discovery.
Well path
1.5km

Target

2km

The Origin of Sirikit Oilfield

Paleontological evidences from geological surveys and exploration drilling in the S1 Concession area indicated that some 22 million years ago the area that is now known as Phitsanulok Basin, which spans the present-day provinces of Kamphaeng Phet, Phitsanulok and Sukhothai, used to be covered by a big fresh-water lake. This lake was fed by water from rivers and streams from the north and the west. During millions of years, the lake regressed and progressed in cycles. The progression and regression cycles of the lake during the period 22 15 million years ago were responsible for the formation of rock layers known as Lan Krabue formations today. When the lake covers the land, fine silt and clay particles slowly precipitated to the bottom of the lake together with the remains of algae that were abundant in the lake environment, forming a layer of fine sediments mixed with organic remains. When the lake regressed, the numerous rivers and tributary streams traversed the land. The high energy of the river flows and the cyclic flooding left layers of coarse-grained sand sediments covering the land. These cycles of lake-then-river domination of land created hundreds of thin, alternating layers of fine particles and coarse sediments throughout the time. Evidences indicated that there were two major periods, 22 million years ago and 17 million years ago, when the lake covered the land for a long time, leaving two thick layers of fine particles mixed with organic remains. The lake was believed to have regressed completely from the area some 15 million years ago. Millions of years had passed and the layers of fine and coarse sediments were buried deeper and deeper under the weight of thousands of meters of other sediment layers. Under tremendous pressure, the fine particle layers turned into very tight rocks called shale, and the course sediment layers turned into sandstones. Very thin sandstone and shale layers alternated in sequences forming the rock bodies of the Lan Krabue formations. Two thick layers of shale, formed 22 and 17 million years ago, served as caps that delimited the bottom and top of Lan Krabue formations. These two thick shale layers were named Chum Saeng shale. The great pressure and temperature imposed on bottom Chum Saeng shale caused the organic (algae) remains in the rock to transform into hydrocarbon substance and later to petroleum (i.e. crude oil). As Chum Saeng shale was very tight with virtually no porous space in it to contain anything, the crude oil was eventually squeezed out of the rock by the overburden pressure. The oil moved upwards into the more porous sandstone of Lan Krabue formations and continued to move upwards. Because the Chum Saeng shale in the north (present-day Sukhothai area) had been buried deeper through time compared to the south (Kampaeng Phet), the direction of crude oil migration

was then upwards to the south. The upper Chum Saeng shale served as a top cap to prevent further migration of oil above Lan Krabue formation, allowing only a migration path along the sandstone formations below it. Historic movements of the earth crust (e.g. earthquakes) caused the Lan Krabue rock formations to break up in pieces and slide against each other, creating the vast number of faults in the formations. These faults formed traps that stopped further movement upwards of the oil, creating petroleum reservoirs that are know as the Sirikit Oilfield today.

Key Characteristics of a Petroleum Resevoir

Three key characteristics of underground rock formations that can serve as a Petroleum Reservoir are 1. Porosity 2. Permeability 3. A Trap structure

POROSITY Rocks formed from solidification of sediments usually have tiny empty spaces between grains of rocks, called Pores, analogous to tiny spaces in sponge. The sizes of these pores vary with different type of rock, and are mainly determined by the sizes and the sorting of the sediments that formed the rock. Rocks with large sediment grains will tend to have larger pore spaces and vice versa. These pore spaces in underground rocks are the place where fluids (water, oil or gas) in the rock reside. The more pore space, the more fluids are contained within. Porosity is the measurement of the volume of pore space in the rock compared to the total volume of the rock, and is expressed in percentage. Reservoir sandstones in the Sirikit Oilfield have a porosity range from 10% - 30%. PERMEABILITY Permeability of a rock is a measurement of how easily fluids can flow through the rock. To a large extent, this represents how well the pore spaces in the rock are interconnected, as well as the size and shape of the pore spaces. The better the interconnection of pore spaces, the easier fluids can flow through the rock. The unit of Permeability is Darcy which is essentially a measurement of time it takes for a standard volume of a standard fluid to pass through a piece of rock sample of a standard size when a fixed pressure is applied to it. Sirikits reservoir rocks have permeability in a range of 1 2,000 milliDarcy. .

Production Processes Crude Oil Process

The first stage of the production processes begins when the mixture of oil, gas and water arrives at the production station via the bulk line systems. The mixture is routed into separators to separate the gas from the liquids. Liquids from the separators are injected with a chemical called demulsifier to help accelerate the separation of water from oil. The liquid mixture is then routed into heated storage tanks where water will be allowed time to precipitate to the bottom of the tanks. The separated water will be drained and sent to the disposal water treatment system before being re-injected into the deep underground rock formations via dedicated water disposal wells. The remaining crude oil in the tanks is checked for quality before being loaded into road tankers to be transported to the customer.

Gas Process
The separated gas from the separators is compressed to increase its pressure before being used for 3 main purposes. The first part of the compressed gas is compressed to even a higher pressure and sent back to oil producing wells to help lift the oil out of the well in a process called Gas Lift. A small second portion of gas is used for generating electricity to be used in the production plants. The majority of the gas is fed into the gas separation plant to separate LPG out and the remaining gas from the gas plant is then sent to an EGAT power plant nearby to produce electricity for the power grid. Excessive gas that cannot be handled by the system will be flared at the flare stack.

LPG Process
At the LPG separation plant, the gas will be compresses further and dried before being refrigerated at the Cryogenic plant to a temperature of minus 72 degree Celsius. At this temperature all heavier molecules of gas from Propane upwards will condense into liquid form, leaving only Methane and Ethane in gaseous form. Methane and Ethane will be extracted at the Absorber Column and sent to EGAT Power Plant for electricity generation. Any remaining Ethan in the liquefied gas will be stripped off at the De-ethaniser Column. Propane and Butane (LPG) will be separated out of the liquefied gas at the LPG Splitter Column then sent to the storage spheres awaiting further transportation. The remaining liquid (Pentane upwards) is routed to be blended with the crude oil.

Refining Process
Different types of crude oil will be blended before refining in order to obtain the required product characteristics and proportions. The main process of crude oil refining is called Fractional Distillation where the crude oil is heated to a very high temperature until vaporized and then the crude vapour is allowed to cool down in stages in the Distilling Column. The lightest liquid product from the top of the Distilling column (low temperature) is Gasoline and the heaviest product from the bottom of the column is Asphalt. In modern refineries, the heavier product such as Fuel Oil can be further processed through Cracking in order to gain more light products like gasoline.

Oil and Gas Transportation Operations in Sirikit Oilfield

Oil, gas and water from producing wells are transported to the central production station in Lan Krabue via pipeline system. LPG is transported by road tankers to the customers depots in the North while the remaining gas is sent to EGAT Power Plant in Lan Krabue via gas pipeline. Crude oil is transported by road tankers from Lan Krabue production station to Bung Phra railway station in Phitsanulok before being transported by rail wagons from Bung Phra to Bang Chak Refinery in Bangkok and Thai Oil Refinery in Sri Racha. Separated produced water will be routed via pipeline to be disposed of in dedicated deep disposal wells.

Key Properties of Phet Crude Oil

Density: 39.5 Degree API or equivalent to 0.827 gram/cc (Light Crude) Sulphur Content: Less than 0.05% by weight (Sweet Crude) Wax Content: 13% by weight (Waxy Crude) Pour-Point Temperature: 36 Degree Celcius (High Pour-point Crude)

Petroleum Development
Once a discovery of a petroleum reservoir is confirmed by exploration and further appraisal wells, the development planning will begin. This involves determining the optimum number and locations of development wells to be drilled, the required surface locations, the design of wells and production equipment, the oil and gas transportation methods, the impacts of such development to the environment and local communities and the economic returns of such project, etc. Development planning is always an on-going process, with the new information gathered from more drilled wells helping refine the plan for the future.

Technology and Petroleum Development

Today, technological advance, especially in the area of computing capability, is playing a major role in optimizing the petroleum development processes. Fast 3-D visualization technology has made it possible to construct and study subsurface models in the level of detail and accuracy not achievable before giving the petroleum engineers and geologists a much stronger tool to plan the development of petroleum reservoirs.

Development of the Sirikit and Nearby Oilfields

The Sirikit Oilfield was discovered via the exploration well Lan Krabu A-01 in December 1981. Major exploration efforts in the following 4 years had discovered a few more smaller oilfields nearby. The development of Sirikit Oilfield began in 1982 with major drilling campaigns during 1982 1985 and during 1988 1991. By the end of April,2006, 347 wells were drilled in the Sirikit and nearby oilfields. The information gathered from all these development wells has been used to update the volumes of oil reserves (i.e. volumes of oil that can still be produced further) every year. At 1st quarter of year 2006, over 160 million barrels of oil and about 6.0 billion standard cubic feet of gas from the Sirikit and nearby oilfields were produced. The volumes of oil and gas reserves at the same date were 60 million barrels of oil and 2.5 billion standard cubic feet of gas respectively.

Social Responsibility
Safety, Security, Health and Environment (SSHE) Management System
PTTEP regards good Safety, Security, Health and Environment (SSHE) Management as an integral part of a good business practice. The Company employs a strict SSHE Management System to ensure compliance with laws and regulations and to achieve continuous performance improvement. PTTEP is committed to maintain a healthy workforce and to provide safe working conditions. Safety consciousness is in the hearts and minds of our workforce in doing every activity. Environmental protection is always an integral part of all our work plans. PTTEP is certified with ISO 14001 for Environment Management System in the following assets and major projects, S1 Asset (Sirikit Oilfield), PTTEP1 in Supanburi Province, PTTEP Office Building in Bangkok, Bongkot Field in the Gulf of Thailand and Songkhla Logistics Base in Songkhla Province.

Social and Community Development: Towards Better Quality of Life

PTTEP takes pride to play a part in the sustainable development of the society and the rural community by promoting and supporting projects and activities that enhance the quality of life, education and occupation. This is a key to self-sufficiency and sustainable growth of the community. PTTEP is committed to supporting the development of the society and to promote better quality of life in the community in our operating areas. PTTEP is actively involved in many community development projects in three main areas. The first area is conservation of nature and environment; for example, preservation of the Songkhla Lake project in the south of Thailand and the 4Rs Shop Project in S1 concession area. The second area is improvement of quality of life for the less privileged youth through educational development programs such as scholarship presentation, provision of computers, books and sport equipment to schools in rural areas. And the final area is elevation of the levels of knowledge and capabilities of Thai people to further improve their quality of life; for example, Thai Rice College Project in Burirum Province, Mini Farm for School Lunch Project in S1 concession area and local employment in our operating areas.