Progressing CBM Development in Indonesia - An Industry Perspective - - - PowerPoint PPT Presentation

Progressing CBM Development in Indonesia

• An Industry Perspective -
• Mohd. Radzif Mohamad

VICO CBM Commercial Manager IndoGAS Conference 27th – 29th January 2015

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VICO Overview

• VICO is a 50:50 JV between BP and ENI
• VICO has operated the Sanga Sanga conventional oil

and gas PSC since 1968 with first LNG in 1977

• CBM PSC awarded November 2009 for 30 years
• Sanga Sanga CBM PSC has met all PSC

commitments & spent $250m to date

• Exploration complete, appraisal in progress
• First CBM rig & horizontal wells in Indonesia
• First CBM gas delivery to Bontang in 2011
• First CBM Gas Sales delivery to PLN in 2013
• Conventional & CBM PSC share infrastructure

SEM 201 MWP #1

Exploration Wells Appraisal Programme

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2010 2011 2012 2013 2014

Resource Appraisal

PSC signed Re-completed Mut 78 (old oil well)- first CBM well Coring (Using Conventional Wells Drilling MWP#1, first purpose drilled CBM wells Micro-seismic on MWP#2 fracs First LRP First Hydraulic rig

• n MWP#3

CBM to Power Mut 205 Well Head Compressor Trial First CBM horizontals in Indonesia

VICO CBM Achievements

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Indonesia CBM Resources

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• Resource potential in Indonesia estimated at over 450TCF
• 54 CBM PSC’s awarded since 2008 with 22 in Sumatra and 34 in

Kalimantan

• SKKMigas estimate and using latest data from operators, resource base of

130 to 140 TCF for CBM in Indonesia in licensed PSCs (more in unlicensed areas) NOTE – Conventional Proved Reserves for Indonesia approximately 100 TCF (2014 BP statistical review)

Energy Demand/Supply

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• Strong GDP growth is driving increased domestic demand in

Indonesia but domestic production is falling - decline in conventional oil & gas production

• Likely that Indonesia will become a net importer of gas - CBM

production could help fill the demand gap or imports will increase

Can CBM fill Indonesia’s Supply Gap?

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500 1,000 1,500 2,000 2,500 3,000 2013 2016 2019 2022 2025 2028 2031 2034 mmcfd

Diesel & Fuel Oil (Grid and Captive) LNG YTF Commercial and Technical Total Demand West Java Commerical Piped Gas

Source: Wood Mackenzie

If no CBM, Indonesia will have to fill the gap with LNG or high priced fuel oil. West Java Supply/Demand

CBM In Indonesia

• Has CBM been successful in Indonesia?

– Initial GoI CBM Roadmap? 500 100  8.9 MMSCFD – Many have left – BP, Exxon, Total, Santos, etc – Current investor sentiments at a low – No CBM PSC awards – Well behind on Exploration Commitment – less than 20% – Regulatory and fiscal environment unsuited for CBM – Good CBM potential but still needs to prove produceability and commerciality

 How do we make CBM a SUCCESS 

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Indonesian CBM industry is still in its infancy

Maturity Exploration time to commercialisation

UNITED STATES

• Resources: 700 TCF
• Main Basin: San Juan,

Black Warrior

• Annual Production: 1.65

TCF (2012)

• Start exploration: 1950’s
• Commercialisation start:

1980’s

• Wells drilled: 30,000
• Cost per well: US$ 200-

300 Thousand 252 BCF/ Year

UNITED STATES

• Fiscal incentives:
• Unregulated selling price
• Tax credits (initial stage)
• Land owner royalties
• Light handed regulation

AUSTRALIA

• Resources: 250 TCF
• Main Basin: Bowen, Surat
• Start exploration: 1950’s
• Commercialisation start: 1990’s
• Wells drilled: 1,300 (2010)
• Cost per well: US$ 1.2 Million
• Fiscal incentives:
• Favorable fiscal regime
• Unregulated selling price
• Government mandates Power

Companies to utilize power generated from gas

CHINA

• Resources: 1300 TCF
• Produced basin: Qinshui
• Annual Production: 21 BCF (2012)
• Start exploration: 1990’s
• Commercialisation start: 2009
• Wells drilled: 2,000
• Fiscal incentives:
• Price reforms
• Preferential power tariff
• Tax reliefs
• Low government take

INDONESIA

• Resources: 140 TCF

(based on active working areas)

• Main basin: Kutai,

South Sumatera

• Annual Production: 450

MCF (2013)

• Start exploration: 2008
• No Commerc. yet
• Wells drilled: 84

Annual Production

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ADVISORY BOARD

EXECUTIVE DIRECTOR

Work Group Fiscal Work Group Technology Work Group Regulations

ESDM LITBANG LEMIGAS

Ministerial Policy Brief & Model Agreement 3Q 2014 1Q 2015 1Q 2015

Government & Industry Initiative

INDUSTRY

Government

• f Indonesia

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What Does Indonesia Need

• Consider aggressive short term incentives.
• Access to the high value gas market in Indonesia,

consistent with Domestic LNG Price

• A significant reduction in the overall regulatory regime
• Fiscal policy for the support of CBM.
• A “one stop shop” in the Government for all permitting
• Improved POD requirements for CBM

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~ Terima Kasih ~

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