(Adds total Sabah gas reserves in paragraph 15)
By Mark Bendeich
KUALA LUMPUR Feb 2 U.S. oil firm Murphy Oil
Corp (MUR.N) has found around 1 trillion cubic feet (Tcf) of gas
in deep water off Malaysia, its largest such discovery in the
area but not enough yet to develop, a Murphy executive said on
Murphy announced the discovery on Monday, calling it
significant without indicating its size, but the firm's
president for exploration and production, David Wood, told
Reuters by telephone it was consistent with pre-drilling
estimates of 1 Tcf.
"I'm really comfortable with that," he said.
"The discovery is not big enough by itself to be able to
develop," he added, but pointed out that the find, at the Rotan
well in deepwater Block H off eastern Sabah state, was just one
of a number of leads in the area.
"Rotan was the first one we have drilled and may well be the
biggest one. We don't know yet. We think we have got some pretty
good running room to find more gas in and around Rotan."
Murphy, as operator, has an 80 percent interest in Block H.
Petronas holds the rest. Rotan was drilled in about 4,000 ft
(1.1 km) of water, with the gas lying another km below the sea
Wood portrayed the discovery as a step toward the overall
goal of its partner -- Malaysian state oil firm Petronas -- to
prove up enough gas reserves off Sabah to build a pipeline to
its Bintulu liquefied natural gas (LNG) plant in adjoining
Sarawak state. Both states are on the island of Borneo.
"The importance of Rotan is that it is a new play," he said,
adding that it added to gas discoveries by other explorers off
Sabah. "You have to start looking at the aggregate picture here.
I think it's pretty positive for getting over that resource
threshold for Sabah gas, justifying the infrastructure."
"I am pretty bullish and encouraged by what I see so far."
THE DEEP UNKNOWN
Petronas plans to build a 480-km (300-mile) gas pipeline to
take Sabah gas to Bintulu, site of the world's largest LNG
complex, from a gas terminal at Kimanis, near Kota Kinabalu, the
Sabah state capital, but it has not revealed the cost.
Petronas Gas Bhd (PGAS.KL), a listed subsidiary of Petronas,
will operate the pipeline, the Edge newspaper reported last
year. Petronas hopes the pipeline and terminal will be ready by
Petronas is expected to award the construction contract for
the pipeline by the third quarter of 2007, Malaysia's Business
Times said last October, quoting an executive of builder NACAP
Asia Pacific, a unit of Dutch firm Koop Group.
Sabah state's chief minister told state news agency Bernama
in 2005 that the Kimanis terminal would receive and transfer up
to 1.25 billion standard cubic feet of gas per day.
Murphy's Wood estimated that about 7-10 Tcf of gas would
need to be found off Sabah to justify development, given the
high cost of exploring and developing gas in deep water, and
that he believed the pipeline could cost at least $1 billion to
A Petronas spokesman said on Friday that total Sabah gas
reserves stood at about 10.9 Tcf as of January 2006.
Murphy had also not given up hope of finding oil in Block H,
he said. Block H lies next to Block K, where Murphy struck oil
in 2002, leading to development later this year of the Kikeh
"Going into this play (in Block H), we thought that there
was a chance of finding some oil here -- and there still maybe."