The Kutubu Oil Project, which was Papua New Guinea's first commercial oilfield development, is located in the southern highlands of Papua New Guinea and takes its name from nearby Lake Kutubu. Oil was first discovered at Kutubu in the Iagifu sandstone structure in 1986 and commercial production commenced in June 1992.
The Kutubu development comprises a network of wells that produce oil from the Iagifu-Hedinia, Usano and Agogo fields, a gathering system and on-site processing facilities (the Agogo and Central Processing Facilities) and supporting infrastructure, as well as a 265 kilometre export pipeline to the coast and a marine loading terminal in the Gulf of Papua. The pipeline operates under Pipeline Licence 2 (PL-2), while the oilfield operates under Petroleum Development Licence 2 (PDL-2). Both licences were issued in December 1990 for a term of 25 years and were extended in December 2009 until December 2035.
Production from the Kutubu field peaked in 1993 at 130,000 bopd. Although still a strong contributor to Oil Search's profitability, the Kutubu Oil Project is well into its decline phase due to natural field depletion. However, efforts over the past several years to arrest the production decline have been highly successful with additional production resulting from the drilling of development wells at Kutubu, Agogo and Usano. Towards the end of 2009, an Agogo development well was deepened to test an exploration target and discovered oil in a previously untested footwall forelimb compartment. Intervals within the footwall forelimb were flow tested in early 2010 and produced oil from the Digimu interval. The well was placed on production in 2010 and has since produced at sustained rates. The Agogo forelimb was successfully appraised by the Agogo 6 well in 2011/2012, while the Hedinia 10 well in 2011, targeting a forelimb structure analagous to that at Agogo, proved the forelimb exists in the Hedinia area. Both wells are in production. The recovery of oil from the footwall forelimb has opened up a new play fairway in the Fold Belt and has upgraded the potential of similar footwall structures that are mapped on trend and in adjacent acreage.
As at 31 December 2012, Oil Search’s share of remaining recoverable 2P reserves at Kutubu was 22.1 million barrels. The main reserves are contained within high permeability oil rims in the Toro and Digimu sandstones with smaller volumes in the Iagifu and Hedinia reservoirs.
The Kutubu crude oil is a light, sweet 45 degree API oil and is sold as part of the "Kutubu Blend" together with Moran and Gobe crudes.
During the first quarter 2013, production net to Oil Search was 0.78 million barrels, 19% lower than the previous quarter. Gross production rates averaged 14,441 barrels of oil per day (bopd) during the period, down from 17,328 bopd in the fourth quarter of 2012.
Two unplanned downtime events, both of which have been safely resolved, took place during the quarter. At the Central Processing Facility (CPF) in Kutubu, an emergency shut-down of the plant was undertaken after there was a power failure, while a number of wells were shut-in following the identification of a pinhole leak in the Hedinia Digimu gas lift line to allow repairs to be undertaken. These wells have been successfully and safely brought back on-line.
During the quarter, workovers at IHT 3 and IHT 1A were completed, with IHT 3 brought on-line in March. At Usano, the UDT 14 well was spudded, targeting the Toro reservoir in the Usano East field. Following encouraging results from the pilot well, a horizontal side-track is now being drilled to optimise production and reserves recovery from the reservoir.
The ADT 4 well, targeting the Toro reservoir in the north-west part of the Agogo field, was brought on-stream from the Toro A reservoir.