Blaze Rages on Oil Rig West Atlas 1 November 2009

1. Blaze Rages on Oil Rig West Atlas 1 November 2009

2. PTTEP has successfully killed the leaking H1 well at the Montara development in the Timor Sea, extinguishing the main fire which engulfed the development's wellhead platform and jack-up rig West Atlas. The company said some material on the West Atlas' topsides still appears to be on fire, but this should burn down as the fuel source burns out. The fire erupted on Sunday as PTTEP battled to plug the leaking wellbore. The company said a team of well control experts from Alert Well Control pumped about 3400 barrels of heavy mud into the relief well, capping the fire. The operation began at 1440 CST (0510 GMT) and the main fire was reported to be out at 1548 CST (0618 GMT). PTTEP drilling experts who are monitoring online well data in Perth said the situation was stable and well pressure was being maintained. The company declared the well kill completed at about 1715 CST (0745 GMT) today. The well continues to be monitored and a mixture of light mud and brine is being pumped into the relief well. It is understood the well will be monitored closely for 24 to 48 hours.

3. PTTEP will now present a safety case revision to the National Offshore Petroleum Safety Authority and reboard the wellhead platform to assess the damage and to plan for the next phases of the operation. Once the platform is secure, specialists from Alert Well Control will reboard the facility as work on determining the best strategy to plug the well gets under way. However, PTTEP said this work will be difficult as the cantilever deck of the West Atlas buckled in the fire before collapsing on to the wellhead paltform deck. Norwegian drilling contractor Seadrill is preparing to send a team to the site to assess the damage to the jack-up. Seadrill's Hilde Waaler said: "We do not have a specific time for when it will be possible to reboard the unit. "However, from photos we can see the damage to the unit is severe. It may be that the rig will have to be written off." She added that as well as the damage to the cantilever deck, it appears that the jack-up's derrick has collapsed, which effectively cripples the unit. Waaler confirmed that the West Atlas, which was fully insured for $200 million, was contracted to PTTEP until October at a dayrate of $225,000. The jack-up had no further assignments on its books.

4. Meanwhile, PTTEP's chief financial officer Jose Martins said: “We are relieved and thankful that we have killed the well and stopped the main fire. We still have a lot more work to do and our priority is now to determine the best method of plugging the H1 wellbore. “He pledged that PTTEP would co-operate fully with a public inquiry into the incident foreshadowed by Energy Minister Martin Ferguson yesterday. Ferguson has said the inquiry into the accident - the first on such a scale in 25 years - will be "full and independent". He added the incident "clearly had an impact on the standing of the oil and gas industry in Australia" PTTEP's Martins said: “We will continue to work closely with the Australian Maritime Safety Authority to clean up the spill and the Department of the Environment, Water, Heritage & the Arts as it rolls out what is likely to be the largest industry environmental monitoring programme ever seen in Australia. “PTTEP remains committed to fully funding the spill clean up and environmental monitoring programs being undertaken by the lead federal government agencies. “Peak industry body the Australian Petroleum Production & Exploration Association (APPEA) issued a statement voicing strong support for the upcoming inquiry and plans for a long-term environmental monitoring programme.

5. The H1 well blew out on 21 August PTTEP has estimated the leak from the damaged wellbore at between 300 to 400 barrels of oil per day, but the Department of Resources, Energy & Tourism told a Senate committee last week it believed up to 2000 bpd was leaking into the sea. Based on the Thai operator's figures, between 21,300 and 28,400 barrels have leached into the Timor Sea since the blowout. The area surrounding the Montara development is home to a wide variety of marine wildlife, including several species of dolphin, sea turtles, sea snakes and humpback whales, as well as migratory sea birds. Last week, the federal government released a report saying birds and marine species were at risk from the spill. The report said that while the total effects of the spill were yet to be determined, scientists had found dead and dying birds, as well as sea snakes in the spill zone. Over five days of observation, 462 whales and dolphins, 2801 birds, 62 sea snakes and 25 turtles were logged in the affected area.

6. Montara was originally due to come on stream at the end of the year at a rate of 35,000 barrels per day, but the blowout and spill forced PTTEP to delay start-up until the second quarter of next year. At present it is not known when the field will be brought into production. PTTEP said its insurance will cover up to US$270 million of losses from the incident. In the third quarter of this year, it booked US$155 million in expenditures related to the leak. PTTEP acquired Montara late last year after it took over Australian junior Coogee Resources. The Montara project covers the Montara, Swift and Skua fields in blocks AC/L7 and AC/L8, which lie in 80 metres of water. The field was to be brought on stream via a floating production, storage and offloading vessel. PTTEP said previously that Coogee's proven and probable oil reserves were 45 million barrels plus significant contingent resources from its interests in blocks AC/L7, AC/RL7, AC/P32, AC/P34 and AC/P40.