BANDAR SERI BEGAWAN – Brunei Shell Petroleum (BSP) and Shell Exploration and Production Brunei (SEPB) are making final preparations to drill deepwater exploration wells Merbah Deep-1 and Jagus Subthrust-1.

Maersk Drilling has been awarded the contract to carry out this year’s drilling commitment for BSP and SEPB, the Ministry of Energy said on Monday.

“Both exploration wells will form a key test in proving new hydrocarbon volumes and opening up the deepwater, further in alignment to the ministry’s strong emphasis to the operators to develop existing deepwater fields in the near to mid term,” the ministry said in a statement to media.

The Maersk Viking drillship arrived in Brunei waters on March 13 and began drilling on Merbah Deep-1 well on March 26. It will start work on Jagus Subthrust-1 in early May.

The vessel is equipped with dual-derrick technology which has a maximum drilling depth of 12,000 metres and can operate at a maximum water depth of 3,657 metres.

BSP and SEPB will start exploratory drilling on two deepwater wells in 2021. Photo: Courtesy of Ministry of Energy

Areas that might contain hydrocarbons are first identified using seismic data before exploratory wells are used to locate and roughly define the volume of recoverable oil and gas. If oil and gas is discovered, a development well will be drilled to extract it.

Deepwater exploration is one of the government’s strategies to increase oil and gas production to 350,000 barrels of oil equivalent per day by 2025.

The COVID-19 pandemic has had a huge impact on oil demand, with domestic production declining to 105,100 barrels per day in the fourth quarter of 2020.

The hydrocarbon sector reported negative growth in all four quarters of last year, with revenue plunging 69.9 percent as oil and gas output declined due to the pandemic.

Brunei’s crude oil production has been on a declining trend since 2006, according to the Centre for Strategic and Policy Studies, but the government is hoping to boost production by developing marginal oil fields and venturing into deepwater exploration.

The sultanate’s energy sector remains the key driver of economic prosperity, contributing to 58 percent of the country’s GDP and about 90 percent of exports.