Application of Due Diligence Audit for Value Creation: Case Study from Gas PSC of Malaysia

Abstract

As resource owner of all hydrocarbon assets of Malaysia, Petroliam Nasional Berhad (PETRONAS) through Malaysia Petroleum Management (MPM) is responsible for providing asset integrity assurance, maintaining producing assets in safe and operable conditions and ensuring compliance to data management by Petroleum Agreement Contractors (PACs). For mature fields nearing expiry of production sharing contracts (PSCs), it is even more critical to safeguard the integrity of petroleum facilities and to conduct an inventory check of acquired data during transition from existing to new PACs. A Due Diligence Audit (DDA) provides an important milestone to benchmark the health of existing assets (subsurface and surface) and outlining roadmap for future development opportunities for the PSC fields. This paper presents key technical results and value creation areas from the DDA conducted for one of the largest gas field PSC in Malaysia. This gas PSC consisted of multiple gas fields and production hubs catering to a majority of gas production in the region. Although the fields had been in production for more than 20 years, maintaining production plateau rate and optimizing operating cost were identified as key concerns for long term sustainability. New development opportunities were also needed to mitigate the same. For existing fields, incremental recovery projects focused on lowering the abandonment pressure are planned. To maximize the utilization of gas processing capacity in production hubs, nearby gas fields have also been identified for cluster development and evacuation. Assurance on long-term gas supply is targeted through fast pace exploration in the early years of new PSCs to discover new gas development areas and to further increase the operating life of these hubs. As ageing assets, each of the fields also faced unique challenges such as liquid handling, subsidence issues and increasing inventory of idle wells. Through successful application of the DDA framework, a detailed technical assessment of deliverables was conducted along with liability management to address these asset integrity risks. With the successful completion of DDA for these fields, the technical assessment deliverables have created significant PSC value by securing identified opportunities under minimum work commitments. In addition, it facilitated a roadmap for idle wells management plan and new technology in "Implement Replicate" phasing. This has helped PETRONAS to further monetize opportunities in ageing assets, and safeguard producing hubs for long-term gas supply. This paper presents an efficient Due Diligence Audit workflow for long term value creation in mature fields and assets.