Unocal Corp. is seeking to boost its dominant role in Thailand's natural gas industry still further by bidding for five blocks in the gas prone Khorat Plateau of Northeast Thailand.
The tracts are being offered under Thailand's 13th oil and gas concession licensing round, that country's biggest and first in 5 years (see map, OGJ, Oct. 29, p. 20).
Unocal's bid for onshore concessions, made through new subsidiary Unocal Bangkok, came as a surprise to Thai industry observers. The company is the dominant foreign player in Thailand's upstream sector, providing most of Thailand's gas production from fields in the Gulf of Thailand.
Industry sources said the move suggests Unocal's diminished interest in the future hydrocarbon potential of Offshore Thailand.
UNOCAL STRATEGY
If endorsed by the Thai government, exploration on the new concessions will call for substantial investment in addition to the $2 billion Unocal has earmarked for the next 10 years to boost gas production from Gulf of Thailand fields, said Unocal International Oil & Gas Pres. Harry Lee.
Thailand represents the Los Angeles company's largest single foreign investment. Unocal's capital investment in Thailand to last September, largely for Gulf of Thailand gas projects, reached $1.96 billion, Lee said.
Lee noted the onshore concessionary rights are an important part of his company's current strategy to obtain new petroleum exploration rights in areas outside its traditional exploration and production areas.
Unocal is producing hydrocarbons in seven countries and conducts exploration in six other countries.
Unocal's bid for the Thai onshore tracts came as a surprise to other oil companies, which expected it to seek more acreage in the gulf.
Unocal has discovered 11 commercial gas fields in the gulf.
The onshore blocks cover areas where Unocal explored unsuccessfully about 20 years ago. Later exploration by Exxon Corp. unit Esso Exploration & Production Khorat yielded success there in the early 1980s.
Esso is to begin gas production from its Nam Phong field in the northeastern province of Khon Kaen next month. In 1971, Unocal drilled only the 1 Kuchinarai wildcat in Kalasin Province on part of a petroleum concession granted the company in 1962. The permit was the first exploration license issued in Thailand.
Lee, explaining Unocal's return to the Khorat Plateau, said, "The well we drilled a long time ago never got to the objective horizons. We went back to review the (geological) data, and we are convinced that there is a lot of potential there we did not see in the first well."
"I think we know enough about the offshore (Gulf of Thailand) part," noted John Imle, Unocal senior vice-president, indicating there may be less hydrocarbon potential in new offshore areas opened for concessionary rights than in the onshore areas.
THAI GAS OUTLOOK
Imle said Unocal will continue its high level of gas development activities in Thailand for as long as there is a strong gas market.
"A market already exists for increased gas production," Lee said.
Unocal estimates Thai gas demand, mainly for power generation and industrial use, will exceed 1.7 bcfd by 1997.
Even with increased natural gas supplies from Unocal's other gulf fields, as well as from Bongkot-formerly the B structure gas field, under proposed development by a European-Thai group led by Total Cie. Francaise des Petroles-Thai supply will continue to lag domestic demand in the years ahead, Lee said.
Current gas production from Unocal Thailand's five fields in the gulf stands at about 620 MMcfd. That fuels more than 50% of Thailand's power generation. In addition, Unocal's Gulf of Thailand fields produce 21,000 b/d of condensate. Cumulative gas production from Unocal gulf fields to last September totaled 1.132 tcf.
With additional gas fields under the so called Unocal III area being put on stream, Unocal plans to increase gas production to about 750 MMcfd beginning in 1992.
The company's current development plans should sustain production at or above present levels Well into the next century, Lee said.
Meanwhile, Unocal Thailand has discovered natural gas in Block B-12/27 in the Gulf of Thailand.
As operator for a group, it holds a 35% interest in the block. Unocal has not yet been able to establish commerciality of the discovery, Imle said.
DOWNSTREAM AVOIDED
In the meantime, Unocal has no plans to get involved in Thailand's rapidly burgeoning petrochemical industry (OGJ, Nov. 5, p. 22) to secure other markets for its Thai gas production.
"I'm not sure we need that support because the market for gas is power generation," Imle said. "What we know best is producing gas and sending it to the PTT (state owned Petroleum Authority of Thailand) distribution system."
Except for sales of lube oil, which Unocal recently began in Thailand, the company has no plans to expand in the Thai refining/marketing sector, imle said.
"The market is very competitive, there are a lot of players there who know it a lot better than we do, and my feeling is that it is not a business in which we should become involved."
Copyright 1990 Oil & Gas Journal. All Rights Reserved.
