Oil and Gas Industry in

Brunei Darussalam.
 Introduction

• Brunei Darussalam is the third largest oil producer in Southeast Asia and it
produces 60 000 barrels of oil per day (b/p). About 90% of Brunei
Darussalam’s revenue comes from the oil and gas industry and 95% of the Oil
production are exported to other countries. Brunei Darussalam’s main exports
consist of three major commodities – crude oil, petroleum products and
liquefied natural gas – which are sold largely to Japan, the United States and
ASEAN countries. The current gas production is approximately 27 million
cubic meters per day and 90% of it is exported to Japan.
• Currently, Brunei Shell Petroleum Senderian Berhad (BSP) has seven offshore
fields and two onshore oil fields. The offshore fields are South West Ampa,
Fairley, Fairley Baram (which is shared with Malaysia), Magpie, Gannet, Iron
Duke and Champion. One of the onshore oil fields is located in Seria. The
Brunei Government is a partner with the Royal Dutch Shell Company and
Jasra-Elf.
Distribution of Brunei Oil and natural gas field.
 formation of Oil and Gas

• What is crude oil?

 It is kind of liquid fossil fuel. It is the original stage of oil petroleum which
has not been processed or refined yet.
Millions of years ago countless tiny plants and animals died and their remain
sank to the bottom of the sea and were covered with layers of silt and mud.
Over millions of years, these layers turned into sedimentary rocks by
downward pressure. The decomposed bodies changed to petroleum (rock oil)
because of pressure and heat.
Sedimentary rocks are made up of layers of permeable and impermeable
rocks. Oil formed under these layers of rocks flows up through the permeable
rocks until a layer of impermeable rock is reached. This oil is then trapped
within two layers of impermeable rocks. The oil then accumulates in an oil
trap
• Geological structures where oil and gas are found:
 Petroleum is found in pores in sedimentary rocks (layers of porous
sedimentary rocks). Accumulations of oil and gas are called oil and gas traps
or reservoirs. In a trap, there will be layers of gas, oil and water. Above and
below the reservoirs are layers of non porous (impervious) rocks.
 types of oil traps.

• There are 4 types of oil traps.

 1) Anticlinal trap.
Folding usually causes layers of rock to form anticlines and synclines. Oil and
Gas being lighter tend to float to anticline while water remains below them.
 2) Fault trap
Faulting may cause layers of porous and impervious rocks to lie next to each
other. The oil in porous rock is trapped because impervious rock prevents it
from moving further upwards while the pressure from below does not allow it
to sink downwards.
 3) Stratigraphic trap
Occurs when a layer of porous rocks is trapped between two layers of
impervious rocks. Due to forces and movement in the earth, non porous rocks
are pressed together, trapping the oil in porous rocks between them.
 4) Salt Plug/ Salt Dome trap
Formed when huge of molten salts moves up and solidifies in the crack of an
oil bearing porous rocks.
 factors encourage the growth of Oil and Gas
industry in Brunei.

a) Availability of oil and natural gas.

Brunei has rich oil and natural gas reserves. Onshore oil field are Seria and
Rasau. Major offshore oilfield are S.W Ampa, Fairley, Fairely Baram (which
is shared with Malaysia), Magpie, Gannet, Iron Duke and Champion.

b) Availability of markets/demand.
Large overseas market for the crude oil. The markets of the exported crude
oil in 1994 are: Japan-26.8%, Korea-24.2%, Thailand-21.6%, Singapore-
17.2%, Taiwan-5.3%, Phillipines-3%, Malaysia-1.9%. About 43.7% of crude
oil was sold to ASEAN markets.
The natural gas is liquefied and sold to Japan and Korea as Liquefied gas
(LNG). About 7.5% of the gas piped to Lumut is used as fuel in household.
c) Availability of Capital
Apart from funding of Brunei Government, foreign capital has been enlisted
to finance huge costs involved in oil exploration, production and transport.
The BSP Co. is owned jointly by Brunei Government and Royal Dutch
Shell.

d) Labour
60% of the management, specialist supervisory and technical administration
staff are made up of local people. The rest are expatriate from Europe, USA
and neighboring countries in Asia. Contractors with their own employees
from Philippines, Thailand and Malaysia.
e) Technology
Oil exploitation requires the use of advanced equipment of technology.
Brunei has invested heavily on the latest technology and has introduced
modern seismic surveying in their search for new oil reserves.

f) Transport
Pipelines, both on land and Submarine have been constructed to convey oil
from oil refineries or directly to oil tankers.
 methods of exploration/to search for oil traps

• The task of Oil exploration is to locate sites where there are geological
structures in which oil might have trapped. The first step is to study all the
available geological data and to prepare detailed maps.
• Aerial photographic surveys are often undertaken especially on remote
locations. Satellite images and taking rock sample by the geologist are also
done. But the most widely used method is Seismic Surveys. Carried out by
geologist, a seismic survey can be carried out without disturbing people or
damaging the environment. It is an important tool for finding and mapping
potential oil fields. Geologist carry out seismic survey by sending down sound
or shock waves into the rocks and measure the signals.
• The use of the signals to build up an accurate 3D picture of the rock structure
under the ground. They look to find oil traps. When a reservoir (oil traps) is
found, test drill is carried out. This is to make sure the reserves (oil and gas)
are of sufficient quality and quantity to exploit commercially.
• Exploration is very expensive (costly). In 2001 Brunei Shell employed over
800 people in the exploration division. A test drill cost about $25 millions.
Exploration is important because oil and gas are non-renewable resources.
 methods of extraction/drilling for Oil and Gas

• If the test drill is successful then the reservoir is drilled properly. A drilling rig
(platform) is towed out to the reservoir. Oil well are drilled with rotary drilling
bit which work on the sane principle as an ordinary drill. The cutting tool is
the drilling bit which is made up of tough metal or sometimes it has diamond
teeth that can cut into the hardest rock beneath. The revolving drill is forced
down into the rocks. The drill head (bit) is lubricated by a mixture of mud and
water, the drill can be vertical or it can be a directional drill so that they don’t
have to move the platform to many times.
• Most of Brunei oilfield are offshore so two types of drilling rig are used. In
shallow water a jack up drilling rig are used. The legs of the jack up drill stand
on the seabed. If the water is deeper a semi submersible is used. Motors on
each of the legs help to keep the platform in place.
• When a well goes into production, the derrick is removed and an assembly of
pies and valves called Christmas trees is sealed into the well head to regulate
the flow of oil into the surface pipes which leads to the storage tanks.
• When a well is first drilled the pressure in the reservoir is high and oil and gas
comes up to the surface naturally. However, when some reserves have been
removed the pressure drops and oil and gas do not flow naturally to the
surface. Gas or water must be pumped into the reservoir to keep the pressure
high as to pump (extract) the oil up by means of nodding donkeys as seen in
the Seria oil fields.
• Oil and gas from the well is called crude. Crude oil and gas is a mixture of oil,
gas and water and is also known as complex hydrocarbons. Crude oil and gas
is impure and cannot be used directly. Therefore, it must be pumped to a
refinery (by pipeline) for refining.
Diagrams concerning methods of exploration and
extraction of Oil and Gas
 methods of processing Oil and Natural Gas

• Oil refining in Brunei takes place mostly in Seria, where a huge refining
complex exist.
• Seria was developed as an oil refinery because:
 Its coastal location made it easy to receive crude oil from the offshore fields
such as South West Ampa, Fairley, Magpie and Champion.
 The land is flat and ideal for building large complexes
 It is linked by roads to other important towns such as Bandar Seri Begawan,
the nation’s capital.
 There is large market for motor vehicle petroleum and aviation fuel.
 There is a large labour force to supply the needs of the oil and gas industry.
 how oil is refined?

• As crude oil from the major field are linked with pipeline to the oil refinery in
Seria, the crude oil is essentially a mixture of many different oils. It is refined
through a process known as fractional distillation. There are 3 process
involve: heating, purifying, and separating. First the crude oil is heated
until it reaches vapour form. As the vapour passes through a steel tower
known as fractionating column, it is cooled and condensed back to form
different liquids. The different liquids or kinds of Oil are collected in trays
before being drawn out by pipes. The lightest or highest fraction is petroleum
gas, the most valuable and important oil product. Others are petrol jet fuel,
diesel, lubricants and bitumen
diagram of fractional distillation
 methods of processing natural gas (LNG)

• Natural gas is refined in Lumut liquefication plant. Here the natural gas is
turned and process into liquid known as liquefied natural gas (LNG). There
are also three processes: heating, purifying and freezing. Gas is heated and
purified to removed unwanted hydrocarbons and impurities. The purified gas
is then cooled. Then the gas is liquefied (turned to liquid) by reducing the
temperature to -161 c̊. The gas shrinks to 1/600 (one six hundredth) of its
original volume. The gas remains liquefied in the storage tanks, in the
pipelines and on the tanker ships. When the gas reaches Japan, it is allowed to
warm up again to generate electricity.
 methods of transporting oil and gas.

• Once extracted, the crude oil is not processed immediately. They will be
transported to processing areas called refineries. Where they will be
transformed into various oil product and lubricant.
• The most convenient way to move oil over land is to pump it through a
pipeline.
• With offshore drilling that is offshore oil field, underwater pipelines have to be
constructed. These are laid by special pipe-laying barges on which the lengths
of steel pipe are welded together before being laid on the sea bed.
• For export, sea route are used. Modern ship tankers are efficient and flexible,
capable of carrying crude oil or products such as fuel oil, gas oil, jet fuel or
lubricating oils.
• In Brunei, onshore and offshore crude oil is piped to the Seria terminal before
being exported out. From this terminal, the crude oil is piped eight kilometers
out to sea where tankers load the oil from two single buoy moorings. Natural
gas is piped to Lumut where it is liquefied and transported in LNG tankers to
Japan and Korea.
 markets

• Main markets is the foreign export, especially Japan. Brunei also sells oil and
gas to North Korea, Thailand, and Singapore. Only a small amount of oil and
natural gas (about less than 5%) are used domestically. It fuels the electricity
generating station at Gadong. It also provides cheap fuel for cars and trucks.
 importance of oil and gas industry to Brunei
Darussalam.

• Almost 90% of Brunei revenues comes from Oil and Gas industry. The
revenues from oil and gas industry can improve and increase the economy of
Brunei which allows many people in Brunei to have a good quality of life and
high standard of living. The oil and gas industry can provide jobs for the local
as well as the foreigners. It also can create work for companies who sell
related goods and services to oil industry. The Oil and Gas industry account
for 95% of Brunei’s export to keep the currency strong.
• With the revenues (high GNP per capita), the government of Brunei can
improve infrastructures and employ civil servant. The government has built
large infrastructure projects of Brunei people such as new schools, roads etc.
there are also many good facilities like sports stadium, swimming pool etc.
There is also cheap petrol and electricity, no taxes, a good pension scheme
provide by the government. Enables many local citizens to be employed by
the government as civil servant with high salaries and good benefits.
• Some 40% of the country’s oil reserves are found in the Champion field,
which is situated in 30 meters of water about 70 km northeast of Seria. This
field produces more than 50 000 b/d. The oldest field in Brunei is South West
Ampa, 13km off Kuala Belait. It holds more than half of Brunei’s total gas
reserves and the gas production accounts for 60% of the country’s total output.
The onshore oil field in Seria, which is the country’s first oil well drilled in
1929, still produces around 10 000 b/d which is used mainly for domestic
consumption. However, Seria still plays and important role in that it serves as
the base from which crude oil is exported to other countries.
• The oil and gas industry remains an important sector in Brunei’s economy and
it continues to play a dominant role even as the nation strives to diversify into
non oil industrialization. Brunei is the world’s fourth largest producer of
liquefied natural gas (LNG). 90% of it is exported to Japan namely the Tokyo
Electric, Tokyo Gas and Osaka Gas Companies, the domestic market, however
takes up only 2% of the LNG produced.
• The Brunei Liquefied Natural Gas plant at Lumut, one of the largest in the
world was upgraded and expanded at a cost of 100 millions. The LNG from
the plant is transported to Japan by a fleet of seven specially designed 100 000
tonne tankers with a capacity of 73 000 cubic meters of LNG each. The sale of
LNG has grown to be as important a revenue earner as oil exports.
• At the current rate of production, proven reserves of natural gas are estimated
to last for another 40 years. However, the discoveries of new gas fields and the
possibility of more finds will enable Brunei to benefit from the growing
demand for LNG in Asia which is needed primarily for power generation.

Done by : Izhharuddin Den Bungsu