Several development strategies are currently being evaluated and applied by VICO, in order to increase the near term production rate and maximize recovery from the existing fields, within the Sanga-Sanga PSC, East-Kalimantan, Indonesia. This paper will focus on the "Cluster" drilling concept; that has been successfully applied within the Nilam field, which is the second largest field within the PSC. A combination of a complex fluvial-deltaic depositional environment, along with increasing development costs and reservoir uncertainty due to advancing field maturity, has driven the VICO development Team to re-evaluate the drilling and completion techniques being utilised in order to access the remaining hydrocarbon resources within the field. This re-consideration has allowed a number of novel and alternative solutions to the problems to be proposed, one of these solutions has been the "Cluster" well approach. The principal objectives of the "Cluster" approach are, to reduce the unit gas development costs, increase the short-term production rate and maximize the cumulative recoverable gas volumes from the field. Well cost reductions are being achieved through improved rig utilization and by the drilling of multiple wells from a single pad location. A dramatic increase in the short-term rates is being achieved through drilling dedicated wells to produce the shallow, higher permeability reservoirs. Finally, the recoverable reserves from the deeper, lower permeability reservoirs, which typically produce at lower rates but have a longer effective production life; are also being maximized through the application of dedicated completions (via the Dual Monobore concept). This paper will discuss the "Cluster" concept in detail, in brief a "Cluster" consists of the drilling of a "Mother" well which is then used as a reference well to acquire a full suite of open-hole data, this data is then processed in order to assess and define the opportunities within the immediate ‘local’ area of interest. The "Mother" well is then followed by the drilling 1, 2 or more "Daughter" wells from the same pad; the exact number of these "Daughter" wells being determined by the quality, quantity and type of information that is made available from the "Mother" well logs and tests. These additional wells were initially being drilled on twenty-foot centres, and the "Daughter" wells are typically constructed with some form of slim-hole approach, with minimal associated data acquisition in order to reduce the overall costs. This paper will present the results from the two sets of complete "Cluster" wells competed to date, within the Nilam field; and will provide a brief description of a third "Cluster" group that is currently being finished. The application of this technique has resulted in an average reduction in the well costs of more than 20% and a much improved set of well economics in both the short- and long- term; compared to drilling a single conventional well from a pad. The paper will also discuss the current candidate selection process, "Cluster" well design and header configuration, the drilling operations themselves and the subsequent post well evaluation.

VICO Indonesia is the operator of the Sanga-Sanga Production Sharing Contract; located onshore of the Mahakam delta, in East Kalimantan, Indonesia. Since inception the PSC has produced over 70% of the estimated original gas in place. The fields are relatively mature with most of the remaining gas resources locked up within the lower permeability reservoirs, where conventional tight-gas completion approaches have not been very effective in ensuring depletion of the resource. A valuable prize of at least 0.5 TCF would be readily achievable, if these lower permeability resources could successfully be developed and recovered. The lower permeability formations being referred to; are typically sub milli-darcy, and the ability to achieve any kind of sustainable economic production rate has been extremely problematic. Previous attempts at hydraulic fracturing within VICO, over nearly three decades, have been dramatically ineffective and have rarely enjoyed any sustained production improvement at all. Geologically the reservoirs are best described as distributary river channels, in a lower deltaic plain environment and therefore these individual sands can vary in size and connectivity quite substantially. Alternative technologies, such as horizontal drilling are being applied, but only within those sand bodies which are larger and which can therefore readily support the economics associated with horizontal well drilling. In 2006 a detailed technical review of the previous 30 Years of hydraulic fracturing operations was commissioned, this review noted that there were five basic ‘skins’, which were causing problems for hydraulic fracturing. These ‘skins’ were: wellbore integrity, execution QA/QC, relative-permeability, regional tectonics and poro-elasticity. The data was extremely convincing and based upon the review a decision was made to implement a five well pilot in order to confirm the findings and present solutions. This paper will describe the long and difficult journey of VICO hydraulic fracturing, from the original treatments through the recent review, the fracturing pilot from 2007 - 2009 and into the early stages of the new fracturing campaign planned for 2010 - 2012, The paper will present the results of the detailed study, the implementation phase of the pilot and the forward plan for the VICO low permeability zone(s) based upon the significant progress, successes and deliverables of the fracturing pilot in the Nilam G-Sands.

VICO Indonesia is the operator of the Sanga-Sanga Production Sharing Contract located onshore of the Mahakam delta, East Kalimantan, Indonesia. The PSC has produced over 70% of the OGIP (original gas in place). The fields are relatively mature with the remaining gas resources locked up in either pressure depleted reservoirs or in low permeability reservoirs where conventional techniques have not been very effective in depleting these resources. During 2006, VICO decided to perform a pilot development of the larger/tighter reservoir tanks, utilising the horizontal completion technique as the preferred completion approach.To date VICO has successfully drilled and completed 5 horizontal wells, one in the Semberah field (S77H) and four in the Nilam field (N228H, N230H, N238H & N240H). The Semberah S77H well was drilled and completed in 2006 at a relatively shallow depth (~ 8000 ft.TVD.SS), in order to demonstrate the applicability of horizontal drilling technology within VICO. The four subsequent wells were drilled in the Nilam field, to depths of ca. 12,500 ft.TVD.SS. The N228H & N238H wells were drilled to test the productivity of horizontal wells at higher reservoir pressures; where condensate banking was thought to be a contributory factor to the dramatic transient and low deliverability seen from conventional vertical wells. Whereas the N230H and N240H wells, were drilled to test the productivity of horizontal completions in the depleted tanks where condensate banking may not be such a significant factor. All five of the wells are currently producing at relatively stable rates with significantly less decline, when compared to conventional offset wells. The initial gas production rates, that were achieved, were significantly higher than conventional wells producing from the same reservoirs and the total reserves recoverable per well are estimated to be 2 -3 times higher than a conventional well.The paper will describe in detail the candidate selection criteria, well design, well placement, drilling risks, tool reliability and the challenges steering a horizontal well in a geologically complex environment with high degree of reservoir uncertainty.