From Kuala Lumpur: Shell’s Malikai tension leg platform (TLP) hit a key milestone this week with the facility being skidded onto Dockwise’s White Marlin heavy lift vessel in readiness for sailaway to the field at the end of April.

The operator also grasped the opportunity to speak out on behalf of the deepwater sector, saying the best projects remain strongly competitive with other sectors.

The TLP is destined for the Malikai oil field about 100 km off Sabah, Malaysia, at a water depth of around 500 m. The field consists of two main reservoirs with peak production forecast to hit 60,000 bbl/d. The TLP will pipe oil to the shallow-water Kebabangan platform 50 km away for processing.

The field is part of the Block G Production Sharing Contract awarded by Petronas in 1995. Shell, the operator, and ConocoPhillips each hold a 35% interest in the development while Petronas Carigali has 30%.

Malikai is an important part of Shell’s deepwater ambitions which have not been thwarted by the low oil price, according to Andy Brown, the company’s Upstream International Director.

He told delegates at the OTC Asia conference, “There is a significant amount of resource in deepwater and what is so important about deepwater is how prolific it is, not just the sheer amount of production you can get per well but also our ability to innovate and bring costs down.”

He said the recent tie up with BG had been made because of the “fantastic resources” it has in deepwater Brazil.

Brown said, “If you look at the production rate you get per well in Brazil, it is a couple of orders of magnitude more than you can get from shale resources in the U.S. Therefore it is not just about the cost and not going for expensive projects, it is looking at unit costs and the best deepwater projects will compete with projects in other parts of our industry. I think that is so important.

“Here in Malaysia we have got Gumusut that is running really well and Malikai, which we are skidding today. We have projects that will deliver and will deliver at competitive costs.”

Brown also stressed the importance of the local ties that Shell, which has been in Malaysia for 125 years, has built with the country.

He added, “It plays into local capabilities as well. We built the Gumusut project. It wasn’t an easy project, it took some time to come out of the yard and it took some time to rectify things offshore. It now produces well but it actually created this platform together with Technip and Malaysia Marine & Heavy Engineering and now we are building Malikai. It is being delivered on schedule. It is a great example of building local capabilities.

“Petronas were keen that we built it locally and together we were able to deliver the first TLP in Asia following on from the Gumusut FPS and Murphy’s Kikeh FPSO. Really now Malaysia is going up the technology curve and in Sabah is demonstrating it can deliver deepwater projects of all kinds and that is a lasting capability that can be deployed for the future.”

Asia slow to respond

On another note, the conference was told that Asia is lagging behind in confronting the oil price crisis. Dato Wee Yiaw Hin, executive vice president & CEO of upstream business for Petronas said not enough was being done in the face of the price downturn.

He said there were mixed messages about where the oil price was heading but added, “We don’t need crystal balls, we need balls to get through this downturn.

“In good times we have indulged ourselves in excess and we need to go deeper in cutting costs. In the U.S. they have responded with innovations to reduce costs and increase productivity. In Asia I feel we are lagging behind. Perhaps it is the market, perhaps it is the government. What have we learnt or not learnt from previous cycles?”