Brunei to Drill New Oil Well with France's Total

BANDAR SERI BEGAWAN, Brunei (AP) Jul 30, 2007 (Dow Jones Commodities News)

Brunei will begin drilling a new oil well this week in collaboration with France's Total SA (TOT), officials said, marking a fresh effort to bolster the tiny sultanate's oil and gas reserves.

The MLJ2-06 well, 50 kilometers off Brunei's coast on Borneo island, could be one of the most challenging wells ever drilled in Southeast Asia, with its exploration requiring advanced technology and high environmental controls, Energy Minister Awang Yahya said during an officiating ceremony Sunday.

Total's joint venture in Brunei, Total E&P Borneo BV, worked with rig contractor Maersk to prepare the equipment.

The drilling will start sometime this week after the crew positions the rig, which was built in Singapore and towed by two ships to Brunei, said Total's drilling manager, Yannick Marcillat. He added that the exploration would go as far as 22,000 feet deep.

"This particular well has a very high pressure... and we have to be very careful when the pressure comes to the surface," he said. "It is a bit complicated when we run electronic equipment as the temperature is very high for the equipment."

Officials didn't immediately estimate how much production can be expected, but local media have dubbed it "a world-class well."

The operation of the well is scheduled to run for 170 days, but Total - which has been active in petroleum exploration in Brunei since the 1980s - also wants to explore other areas in the field.

Brunei's economy relies on oil and gas, which account for nearly all its exports. Oil production has averaged about 200,000 barrels a day in recent years. Its oil reserves are expected to last another 25 years, while its gas reserves are estimated to be enough for 40 years.

Copyright (c) 2007 Dow Jones & Company, Inc.

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