Business

CBM first, then shale gas,
Pertamina says

Indonesia’s state-owned energy firm PT Pertamina is likely to focus on coal bed methane (CBM) instead of shale gas as its choice of unconventional gas to develop in the near future, a company executive has said.

Pertamina would invest around US$1.5 billion to develop 200 CBM exploration wells in the next five years, the firm’s upstream subsidiary Pertamina Hulu Energi (PHE) operations director, Eddy Purnomo, said on Monday.

“[The $1.5 billion] is only the preliminary figure for explorations, development and initial production. We may boost the investment if the production target is elevated,” the executive said in Jakarta.

Pertamina, Eddy added, expected to see its CBM production reach 100 million metric standard cubic feet per day (mmscfd) as of 2017. The company expected to reach production levels of around 150 to 500 mmscfd beyond 2020.

Currently, PHE possesses around 23 CBM production-sharing contracts (PSCs), all of which the firm expected to start producing in 2017. Currently, all of the contracts are still in the exploration phase.

PHE’s working area to develop CBM includes Sumatra I and 4, Tanjung II and Subang I. In addition, the firm also collaborates with British giant BP to develop South Kalimantan’s Tanjung IV block, in which Pertamina owns 54 percent stake.

Last year, PHE and state utility firm PT Perusahaan Listrik Negara (PLN), announced a partnership to develop CBM for electricity production in Sangatta, East Kalimantan, and Muara Enim, South Sumatra.

PLN expects to produce 0.1 mmcsfd at Sangatta and 0.5 mmscfd at Muara Enim.

In total, according to Pertamina’s data, the firm has potential CBM reserves of 41.67 trillion cubic feet (tcf).

While the $8 million price tag for drilling one potential CBM well is around $14 million cheaper than drilling a potential shale gas well, PHE has struggled with land acquisition problems, according to Eddy.

“Pertamina may become the main leader in the CBM business in Indonesia in the next five years. There is only one key to that: we must have massive operations,” said Eddy.

The Energy and Mineral Resources Ministry announced that Indonesia had supposed shale gas resources of around 574 tcf throughout Sumatra, Kalimantan, Papua and Java. However, according to Eddy, most of the potential areas overlap with densely populated areas.

However, Eddy said Pertamina would likely to focus its attention on developing CBM’s potential first rather than shale gas, as PHE so far only had one potential PSC to develop shale gas in Rantau, North Sumatra.

“We really need to learn from the beginning about how to develop shale gas as we do not have any expertise on the operation of shale gas production. We are planning to send a team to the US to learn more about shale gas,” he added.

Separately, an energy expert with the Jakarta-based ReforMiner Institute, Pri Agung Rakhmanto, welcomed Pertamina’s steps toward developing CBM, noting that “their plan to drill 200 CBM exploration wells is very progressive”.

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