Sammy Hamzah, the president director of CBM contractor PT Ephindo, argued that working with coal producers was beneficial for CBM contractors since they should no longer deal with problems related to land acquisition.

“At our block in Kutai [East Kalimantan], we cooperate with a coal mining company. They have acquired the land so we only need to build roads to access our site,”
he said.

Sammy said the coal mining company also had ownership shares in the block, but he did not disclose the amount.

He said CBM mining would make underground coal mining safer since toxic gases had been extracted. He cited several fatal coal mining accidents in China due to explosions of gas in underground mines.

“Since we still have abundant coal reserves on the surface, we don’t need to mine underground. But when we do, we will have extracted the gas so there will be no explosions as occurred recently in China,” Sammy, who is also the vice president of the Indonesian Petroleum Association (IPA), said.

CBM is more expensive than conventional gas since the drilling technologies were still experimental and more sophisticated, he said, adding that he expected that with technological advances CBM producers could exploit the gas in much cheaper ways.

“The new technology means CBM is more expensive than conventional gas. Apart from the technology, the price of CBM also depends on the location of the mining site,” Sammy said.

CBM from sites located in remote areas with no transportation infrastructure would be even more expensive, he said.

Under those conditions, CBM contractors would need to set up pipeline networks and compressors to channel the gas to their customers, he added.

Sammy said that the price of CBM was more than US$6 per million British thermal unit (mmbtu).

Indonesia has estimated reserves of 450 trillion cubic feet (TFC) of CBM, around three times the size of its natural gas reserves.

Priyono said that VICO Indonesia had begun producing 1.2 million standard cubic feet per day (mmscfd) of CBM. He estimated that the company’s production in three years could reach 40 mmscfd.

To boost the development of CBM production in Indonesia, Sammy called on the government to provide incentives to investors. He argued that investments in CBM were very large, therefore incentives were necessary.

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