Early First Oil from Gumusut-Kakap Deepwater Field (Malaysia)

Shell Malaysia today announced early first oil production from the deepwater Gumusut-Kakap (GK) field, located about 120km offshore Sabah, Malaysia.

This early production, achieved on November 18^th, 2012, is ahead of the completion of the GK’s Floating Production System (FPS). This is made possible by an innovative linking or tie-back of two of GK’s production wells to the Kikeh production facility, the country’s first deepwater development also offshore Sabah, operated by Murphy Sabah Oil.

The GK field, located in waters up to 1,200 metres deep in Blocks J and K, is being developed using 19 subsea wells with oil to be exported via a pipeline to the Sabah Oil and Gas Terminal in Kimanis. The project will eventually employ the FPS — the region’s first deepwater FPS — once it is fully on stream, currently expected end 2013. The GK Kikeh tie-back early production option is an interim measure that is expected to bring an additional 25,000 barrels of oil per day to Malaysia.

“We are delighted that we have started early production from this field. Gumusut-Kakap is a project of national importance, bringing significant foreign direct investment (FDI) and transfer of technology to Malaysia and is key to maintaining Malaysian self-sufficiency,” said Iain Lo, Chairman of Shell Malaysia.

“The tie-back is an innovative solution that will allow us to produce from the GK field ahead of the completion of the FPS, currently being fabricated by Malaysia Marine and Heavy Engineering (MMHE) in Johor. We thank Murphy for their partnership and cooperation that has enabled this opportunity. We look forward to ramping up the production once the FPS goes on stream in 2013.”

Projects such as GK are critical to the industry’s long term sustainability in Malaysia as the country develops its deepwater resources. Shell is playing an active role in developing a deepwater service industry in Malaysia by bringing its technology and expertise into the country. The company began deep water exploration and production research in the 1960s and has been a global leader in deepwater exploration and production for the last 30 years.

Lo added, “We continue to invest in Malaysia in projects that support the government’s Economic Transformation Programme. We look forward to deploying our global technology and expertise to contribute towards the creation of a deepwater centre of excellence in Malaysia to generate higher income, value-added economic activities and intensify human capital development in the country.”

In January last year, Shell announced an investment of RM5.1 billion to further develop oil and gas facilities across the country. The major part of which were three entry point projects that included a new diesel processing unit at Port Dickson refinery, a new solid wax plant at Shell Middle Distillate Synthesis (SMDS) in Bintulu, Sarawak and the G-K deepwater development offshore Sabah. The wax plant is now operational while the Port Dickson and G-K projects are ongoing.

The Gumusut and Kakap fields were combined into a single development under a Unitisation and Unit Operating Agreement signed by co-ventures Shell Malaysia, Murphy Sabah Oil, PETRONAS Carigali and ConocoPhillips Sabah Ltd in 2006.  Shell Malaysia and ConocoPhillips Sabah Ltd each hold 33% interests in the development, PETRONAS Carigali has 20% and Murphy Sabah Oil Company Ltd has 14%. Shell Malaysia upstream company, Sabah Shell Petroleum Company, is the operator of the development.

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Press Release, November 20, 2012