Focus on Myanmar
In this third column on emerging geographic frontiers, I want to focus on what may be the fastest developing country in the Eastern Hemisphere—politically, demographically, and certainly from the standpoint of upstream oil and gas. Myanmar, often referred to as Burma, has been largely isolated from the global economy for roughly 50 years due to oppressive military rule and extensive human rights violations. In 2012, under newly appointed president Thein Sein, Myanmar began to reform its foreign direct investment laws about the same time the US and the European Union began suspending sanctions. E&P industry players, large and small, have been watching and waiting for just such reformations and are now being attracted by the potential for huge growth in the existing gas production and the potential of the country’s 17 sedimentary basins, largely offshore and unexplored.
Myanmar is one of the world’s oldest producers of oil; it exported its first barrel of crude in 1853. Two oilfields discovered in 1887 and 1902 are still in production. Today, the country is a net importer of crude oil as 90% of production is gas, most of which is exported to Thailand. With a current production of 21,000 B/D, primarily from only two fields, the need and attraction of foreign investment is clear.
The sedimentary basins are extremely underexplored and much of the available geological data were acquired with outdated technology. Estimates of reserves therefore vary widely. In 2012, the Ministry of Energy estimated offshore Myanmar crude oil reserves at roughly 540 million bbl and natural gas reserves at 65 to 72 Tcf.
Myanmar Oil and Gas Enterprise (MOGE) was created in 1963, shortly after nationalization of the oil and gas industry, in an effort to consolidate the oversight and management of the various local and global efforts to increase reserves and production. However, foreign operators were not allowed to participate in the efforts until 1988, when generic foreign investment legislation was passed. The Ministry of Energy held its first formal licensing round for onshore blocks in 2011, but due to the existing sanctions, western companies were largely absent. More recently, 30 offshore blocks were offered for licensing in June 2013, including shallow- and deepwater blocks.
Participation was prolific, including most major international oil companies. In fact, according to an energy ministry source, foreign companies’ tenders will be given priority, as they have the technology and expertise required to bring the complex and costly deepwater resources to market. Significantly, the government waived the initial requirement that foreign companies partner with a Myanmar-owned firm for the deepwater blocks, which increased the participation greatly. Results of the bidding are expected in early 2014 but one thing is clear – interest in finding and developing deepwater resources is widespread and intense.
Local Talent Needed
Myanmar’s repressive military rule of the past 50 years has resulted in a seriously inadequate educational system. Some universities were closed for decades following student-led anti-government protests in 1988. Void of government support for advanced education, the scarcity of local engineering talent is obviously the biggest challenge facing the oil and gas industry. This is a recurring theme in all countries, emerging or mature, but nowhere is the problem more critical than in Myanmar.
Since 2011, new policies and new foreign investments have enabled Myanmar to triple its investment in education. Although the Yangon Technological University (YTU) is the only university currently offering petroleum engineering education, oil and gas companies and service companies are donating resources in the form of buildings and information-technology infrastructure, and providing for guest lecturers to bring essential global industry knowledge.
As a part of SPE’s newly adopted strategy, we have an obvious role to play in helping develop the resources. Efforts were initiated with the attendance of YTU’s newly appointed petroleum engineering department chair at the SPE Forum on Petroleum Engineering Education in August 2013. This Forum was designed to help petroleum engineering educators understand the issues and the resources required to fulfill future industry needs.
Given the lack of modern technology used to initially evaluate Myanmar’s hydrocarbon resources, foreign operators licensing blocks need to be technology savvy, bringing knowledge of global state-of-the-art techniques in exploration, drilling, and development. Operators winning offshore blocks, as in any emerging play, will initially focus on acquiring seismic data using advances proven elsewhere in sensors, multi-sensor cables, and cable design enabling high-resolution near-surface imaging as well as deep reservoir characterization. The integration of newly acquired seismic data with advances in basin modeling technologies should give the necessary confidence for early exploration drilling.
Exploratory drilling will also benefit from recent advances in logging while drilling. Measuring azimuthal resistivity, neutron porosity, elemental capture spectroscopy, and formation pressure in real-time as well as borehole imaging increases the likelihood of optimum well placement in basins that have little or no offset data.
Onshore, the existing production from mature fields will undoubtedly benefit from technology advances and best practices gleaned from elsewhere in the world, such as the ability to analyze formation properties behind casing to reveal additional pay and the application of newly developed EOR techniques to improve recovery of existing pay.
SPE in Myanmar
One of my goals as SPE president is to increase the internationalization of SPE, extending the reach of our programs and providing the benefits of SPE membership with more local relevance, and I can’t think of a better example than Myanmar of an underdeveloped country that can greatly benefit from SPE’s presence. Myanmar has huge potential for SPE programs and services to help existing and incoming industry professionals alike and I’m pleased to say that SPE has just finalized the formation of our 214th professional section in Myanmar. The inauguration will become official with the meeting of the SPE International Board of Directors this month in Yangon. The response by industry, academia, and government has been remarkable.
Myanmar is one of the world’s most geologically unexplored and talent-challenged countries, so the cooperation between SPE and the operators and service companies is a necessity; under the capable eye of Ron Morris, Northern Asia Regional Director, I have high expectations for progress. The organization of technical programs, the application of global best practices, the engagement with local governments, the collaboration with companies on university programs, and the educating of the public on our industry are but a few ways I expect to see valuable results.
Each month, I post my JPT column topic on the SPE LinkedIn group for comment and conversation. I invite you all to join in this discussion and look forward to hearing your viewpoints.
Focus on Myanmar
Jeff Spath, 2014 SPE President
01 February 2014
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