In an effort to prolong the life of the country's hydrocarbon reserves, estimated at 1.1bn barrels, the government carefully regulates oil production levels. In 2006, Brunei produced an estimated 200,000 barrels per day of oil, of which 198,000 barrels were crude oil and the balance was natural gas liquids.
Total is planning to drill for 140 days at an estimated cost of $450,000 a day and has forecast to spend between $65m and $95m on the project. The commencement of drilling on the new Maharaja Lela Jamalulalam (MLJ2-06) marks a new step for Brunei as it looks towards maximising its depleting oil reserves.
The new oil well will be located 50 km off Brunei's coast. Total is working with Danish rig contractor Maersk to prepare the equipment that will be used.
Minister of Energy Pehin Awang Hj Yahya told the press that this could be "one of the most challenging" drilling projects in Southeast Asia because of high temperatures, high pressure and environmental controls reservoir conditions approach 170 degrees Celsius and 17,000 psi. In comparison to Total's other wells, MLJ2-06 is deeper, posing greater challenges for the company once they begin drilling. The exploration at the well will reach a depth of 6700 meters.
Total's drilling manager, Yannick Marcillat, said, "This particular well has extremely high pressure [...] and we have to be careful when the pressure comes to the surface. It is a bit complicated when we run electronic equipment as the temperature is very high for the equipment."
The rig, which was made in Singapore and towed by two ships to Brunei, is under a one-year contract allowing for 170 days of drilling at the new well. Total may use the rig at other sites in the region as the company has signalled an interest in further exploration. Since 1999, Total has developed eight wells that are currently mainly producing gas. Geologists expect the new well to also predominantly produce gas.
The new project comes as a boost to Total as their operations on the high-potential Block J were suspended in 2003 in a boundary dispute with Malaysia. Block J covers an area of approximately 500 sq km off the coast of Brunei.
Heuze told OBG, "The start of operations on Block J will have significant impacts not only on the oil and gas industry but also on the global national economy as a whole. The interrelation between Block J and economic diversification for Brunei is unquestionable."
As Brunei moves towards an era of economic diversification within and beyond oil and gas revenues, there is still an air of confidence that the sector will continue to develop into the future.
Yahya told OBG, "We're trying to work on enhanced recovery through new technologies. What we mean by this is we're trying to squeeze more from the existing wells. There is a lot of technology available now to enhance oil recovery through tertiary or secondary recovery technologies and we're looking into that."
According to the International Monetary Fund, Brunei's economy still relies on oil and gas, which account for nearly 90% of its total export earnings. The country's oil reserves are predicted to last another 25 years while its gas reserves are estimated to last for 40 years.