D

ependence on subsidies may cause uneconomical use of energy. Low energy prices lead to more profligacy. Saving energy will be effective and achieved by using coal and gas as important energy sources. The provision of subsidized energy prices for the people by the government is not an economical utilization of energy as a whole.

According to economic observers, simply being thrifty in energy use is not considered an important step in solving the problem.

Eventually, supplies of energy – including fossil energy – need diversification. In the last 10 years, the world has changed to conservation and intensification of energy in a consistent and a more purposeful way. The change is related to the attention and global effort to minimize climate change due to increasing green house gases. These efforts need heavy funding and technology which supports a skilful and qualified workforce. That’s what the
environmentalists claim.

The world’s five biggest natural gas producers are Russia, the US, Canada, Iran and Norway, while Indonesia produces 1,070 million cubic feet per day (2011).

In addition to LNG and LPG — which are mostly for export — coal bed methane (CBM) is another source of gas for fuels. Potential reserves of CBM in this country are around 453.3 trillion cubic feet spread over 11 areas called hydrocarbon basins. The basins are in different locations throughout Sumatra, Java, Kalimantan and Sulawesi. By 2015 Indonesia is predicted to produce up to 500 million cubic feet of CBM per day (MMSCFD) and more than 900 MMSCFD by 2020. By 2025 production of CBM of Indonesia will reach 1,500 MMSCFD, the Energy and Mineral Resources (ESDM) Ministry predicts. Up to November 2010, at least 23 work contracts for CBM had been signed. In December 2010 the government offered 13 CBM work areas, other reports stated.

Energy from gasified coal (conversion of coal into gas) is the other potential for economic development since Indonesia’s coal potential is huge. In 2008, coal reserves were identified at 104,8 billion tons, with total reserves of 20.98 billion tons and production at 254 million tons. In 2010, 1.88 billion tons were produced. At the beginning of 2010 a memorandum of understanding between the Indonesian government and South Africa’s Sasol was signed to start preliminary studies for a liquified coal refinery. If the project is successful the refinery will produce a clean and quality fuel at a level of approximately 80,000 barrels, or over 1.1 million barrel oil equivalent per day (BOEPD). If the project is realized as planned the construction will be finalized by end of 2014 and in production by 2015. Refining coal into synthetic gas provides better efficiency compared to direct combustion of synthetic gas.

In fact synthetic gas from coal gasification has been used in Indonesia since the middle of the 19th century for supplies of city gas originally by a Dutch private company I.J.N Eindhoven & Co established in 1859. This company was the first form of PT. Perusahaan Gas Negara (PGN), a state-owned firm, which utilizes natural gas.

One other possible gas is defined as shale gas, which is trapped in rock sediment located (in Indonesia) around 600 meters below the surface. Based on research there are four potential areas of shale gas. The government is also planning to develop shale gas to optimize total gas available in this country.

The government has come round to using gas as potential energy sources in view of the decrease in oil reserves, ample resources, lower costs and for the sake of the environment, and despite safety concerns and the need for new infrastructure as well as equipment for vehicle users. Indeed Transjakarta buses have been using gas and few problems have occurred so far.

Other resources of gas include biomass such as from city waste (China has been using it in electric power generation) and biogas from cattle dung which has been used in California in the past. Some villagers in West Java also use biogas under the supervision of the University of Padjadjaran. Are any investors interested in gas projects?

Variety is the spice of life and consumers can make the choice.

The writer, a former head of the division of bilateral cooperation at the Energy and Mineral Resources Ministry until 2000, is a lecturer at the Faculty of Economics, Atma Jaya Catholic University, Jakarta.