Based on extensive studies and planning, the State Government of Sabah are now investing the equivalent of 1 billion US Dollars in a gas utilisation project which will stop the venting of associated gas produced offshore Sabah and broaden the state's economy base.
The project involves the installation of new platform facilities adjacent to existing oil production platforms in the Samarang and Erb West fields for collection, processing and transmission of up to 90 mmscfd of gas to the island of Labuan where gas will be utilized by a 47MW combined cycle power plant, a 2000 ton/day hot briquetted iron plant and a 2000 ton/day methanol plant, presently under construction.
The project is targeted to come on stream second quarter of 1984.
Economic utilisation of medium volume flows of associated gas produced offshore Sabah, otherwise vented at most locations, poses extraordinary challenges, especially in the absence of domestic markets of adequate size. After very careful study and extensive planning, the State Government of Sabah, Malaysia (Government) is investing the equivalent of US dollars one billion in a gas utilisation scheme which will not only enable venting of gas to cease at the Samarang and Erb West fields from mid 1984 onwards but also diversify the timber-based economy of the State of Sabah by manufacture of hot-briquetted iron and methanol for sale mainly in export markets.
Sabah Shell Petroleum Company (SSPC) and Pecten Malaysia, acting as Contractor to Petroliam Nasional Berhad (PETRONAS), have cooperated in plans to utilize associated gas produced in oil fields offshore Sabah since the late Seventies when Government began considering establishment of energy based industries on Labuan Island.
Government's efforts culminated in the award of turnkey construction contracts in 1981 to build a Power Plant, a Hot-Briquetted Iron Plant and Methanol Plant on Labuan Island.