T

he Energy and Mineral Resources Ministry has revealed that it aims to produce 500 million standard cubic feet per day (mmscfd) of coal bed methane (CBM) by 2015 in a bid to diversify the country’s energy utilization.

Currently, CBM production in Indonesia is still very low and cannot be calculated accurately because most of the projects are still in the exploration phase or dewatering process (pumping out water from CBM wells), said the ministry’s director general for oil and gas, Evita Herawati Legowo.

“Today, we’re going to award contracts to eight CBM working areas, which we hope will pave the way for us to achieve the target of our CBM development roadmap to produce 500 mmscfd in 2015,” she told reporters on the sidelines of the Indo CBM 2012 Conference and Exhibition in Jakarta on Wednesday.

She said that Indonesia started developing CBM in 2008 when the first contracts for CBM working areas were awarded to developers.

As a result, state power company PT PLN signed an agreement with Virginia Indonesia Company (Vico) to deliver electricity from the country’s first CBM production facility — in Sangatta, East Kalimantan, in July this year. The price of gas is pegged at US$7.5 per mmbtu, a bit higher than conventional natural gas, whose price typically fluctuates between $3 and $6 per mmbtu.

“The price of CBM is a bit high because production is still very limited,” Evita said. She said that during the dewatering process a CBM well could still produce gas. Every 0.3 mmscfd of gas produced is capable of producing up to 1 megawatt (MW) of power, she said.

The eight blocks that have been auctioned off are Bangkanai I, which was awarded to PR Bangkanai CBM Energi, Bangkanai II to Borneo Metana Energi, Kuala Kapuas II to PT Bina Mandiri Energi and West Sanga-Sanga I to PT Sanga-Sanga Energi Prima. Those blocks were offered directly to the companies in 2011.

The other four blocks are Air Komering, which was won by a consortium of PT Batu Raja Energi and PT Anugrah Persada Energi, Air Benakat I by a consortium of PT Pertamina Hulu Energi Metana Sumatera 3 (PHE Metra 3) and PT Petrobara Sentosa, Air Benakat II by a consortium of PT PHE Metra 6 and PT Prima Gas Sejahtera, and Air Benakat III, won by a consortium of PT PHE Metra 7 and PT Unigas Geosinklikal Makmur.

The total investment commitment for the eight blocks was $39.4 million, with a signing bonus of $8 million for the government.