A recent headline in The Jakarta Post read: “Giant gas discovery wipes out doubts on exploration”.

This was based on a joint venture gas discovery by the Spanish company Repsol and its partners Petronas from Malaysia and Japan’s Mitsui Oil, which claim they have found the largest gas reserve in almost two decades, which is located in the Sakakemang Block, South Sumatra.

The discovery is a mature block with a fractured basement reservoir, where the fractured basement reservoirs are an accumulation of hydrocarbons under metamorphic and magmatic rocks, upon which a sedimentary sequence lies in an unconformable manner.

It has also been stated that according to the preliminary estimates there are at least two trillion cubic feet of recoverable resources.

The government will assess the gas find until the end of the year, where drilling will be required in four to six locations to measure the reserves.

They also said that drilling could take three to four months for each location. Once the appraisal is completed, they will know what the possible, probable and proven reserves are.

I was told that this discovery should be of no real surprise as it is in a mature block and has been looked at by several international companies in the past, hats off to the partners for continuing with the exploration, although one wonders what the cost has been so far to get to this stage as well as the cost for the appraisal drilling, which is the partnership’s responsibility.

This type of headline makes one wonder as it is hard to see how one discovery changes the situation of the Indonesian upstream oil and gas sector as well as the geothermal and mineral exploration industries, and how this will decrease the amount of oil that is being imported into the country on a daily basis.

Are other companies willing to do the same as the partnership has done, at their own risk and expense? Will the local banks and entrepreneurs rush to invest in the natural resource industry? It does not appear to be the case.

If the joint venture, which by the way consists of international companies, had not discovered any gas, they would have been out of pocket to the tune of many millions of dollars. The risk of exploration has not changed just because a new discovery has been found, in fact, nothing has changed in the exploration world of Indonesia because of this find. The giant fields that the government keeps talking about are no closer to discovery; the Geology Agency’s minuscule budget for exploration in 2019 will not wipe out the doubts on exploration in any of the natural resource sectors in the country.

A recent article caught my eye where it was stated that exploration, especially in the frontier areas, “is the business of being mostly wrong as there are numerous factors beyond the explorers’ visibility and control”. It does not have to be like this.

The risk assessment of any prospect is based on data interpretation, statistical, geologic models, etc., based on conventional survey data. The petroleum systems that are identified in the prospect area usually refer to source rock, reservoirs, seals and migration (simplified). Each parameter actually has many unknowns and is more complicated than its assumption. Subsurface geology is not as simple as a layer cake model, it is complex. Very often another parameter is added, this is called “luck”, which really means there is uncertainty with the planned drilling location. With an average success rate of 20 percent there is a lot of luck required.

Usually, the lessons are only learned from the postmortem evaluation, why did we drill a dry or wet well, or it was uneconomical or if luck was involved why was it better than predicted. Luck should not be a part of exploration, neither should risk, it has to be minimized as well as the cost and time of exploration.

If the success rate on average is 20 percent, this means that the business of being mostly wrong is correct, although the decision to drill was not wrong (normally), it’s just that the outcome was not as expected based on the industry’s standard methods of exploration and the inherent conditions in any given area.

Very few people try to be wrong, but other people will think that this is detrimental to the country if it is a state-owned enterprise that has erred, this is another added problem for decision-makers in Indonesia.

If the success rate could be as high as 80 percent there are still other very real challenges for exploration in Indonesia, and that is how to make people listen, understand and be convinced that they should be doing things differently from how they did them in the 1960s and basically still do today and have not been taught any different.

There are also other factors such as self-interest, where consultants or consulting companies providing services utilizing conventional technology see anything that will stop them being paid a huge amount of money as the enemy and do not look at the wider picture or the good of the country.

There are large basins that have still not been explored and indeed other areas that may contain potential but in a geological sense do not add up. Exploration also needs to be carried out in the “mature” blocks, many of which could be like new blocks if only the petroleum system was understood.

Some experts have said that globally, policy uncertainty along with a slump in the global oil price has forced giant oil and gas companies to put the brakes on exploration, which requires massive investment, and instead implement efficiency measures. I think this will still apply to international companies looking at Indonesia for investment in the oil and gas sector, where the recent discovery will not wipe out doubts for exploration in the country.

Of course, we should all wish the partnership well and that the gas comes in as predicted, although this will not wipe out the inherent risk of exploration in the country.

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The writer is country manager and consultant for Terra Energy and Resource Technologies (TERT).

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