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Giant gas discovery wipes out doubts on exploration

The gas find, called the Kaliberau Dalam Well 2X (KBD2x), is located in the Sakakemang Block, South Sumatra, and has at least 2 trillion cubic feet of recoverable resources, according to preliminary estimates.

Stefanno Reinard Sulaiman (The Jakarta Post)
Jakarta
Thu, February 21, 2019

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Giant gas discovery wipes out doubts on exploration Upstream Oil and Gas Regulatory Special Task Force (SKKMigas) head Dwi Soetjipto (center) announced the discovery of new gas reserves in the Sakakemang Block, South Sumatra. (Antara/Special)

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he government has yet to announce the official volume of what is possibly Indonesia’s biggest gas discovery in almost two decades, which was found by Spanish energy giant Repsol along with its joint venture partners Malaysia’s Petronas and Japan’s Mitsui Oil Exploration.

The gas find, called the Kaliberau Dalam Well 2X (KBD2x), is located in the Sakakemang Block, South Sumatra, and has at least 2 trillion cubic feet of recoverable resources, according to preliminary estimates.

The government will assess the gas find until the end of the year, said Energy and Mineral Resources Deputy Minister Arcandra Tahar.

“We need to drill in four to six spots to measure the reserves,” he said recently. “Well [drilling] can take three to four months. Once the appraisal is completed, we will know what the possible, probable and proven reserves are.”

“But I can tell you that in terms of a fractured basement reservoir, the KBD2X is the second biggest discovery after the Corridor Block [Indonesia’s third largest gas block located in South Sumatra],” he added.

Fractured basement reservoirs are an accumulation of hydrocarbons under metamorphic and magmatic rocks, upon which a sedimentary sequence lies in an unconformable manner.

Separately, Andrew Harwood, research director at global energy think tank Wood Mackenzie, estimated that there was 1.5 trillion to 2 trillion cubic feet (tcf) of natural gas at the site. If the estimate is correct, it would put the KBD2X in the top five discoveries globally over the last 12 months. 

“At 2 tcf, the KBD2X discovery is the largest in Indonesia since ExxonMobil discovered the Cepu oil field [in Central Java] in 2001,” he wrote in an e-mail. “It would also surpass the largest discovery in the Asia-Pacific in 2018, the Dorado oil discovery in Australia.”

A report from the Upstream Oil and Gas Regulatory Task Force (SKKMigas) shows that Repsol discovered the reservoir in early February. Since Feb. 10, the company has been carrying out a production test with an initial result of 45 million standard cubic feet per day (mmscfd). 

"The discovery will pave the way for other explorations by targeting fractured basements spanning from South Sumatra to Central Sumatra," said SKKMigas head Dwi Soetjipto.

Meanwhile, deputy minister Arcandra said the ministry hoped production could begin within five years.

“If we [the government] can help them [Repsol] in the early production phase, such as infrastructure and other things, we expect that production could begin faster,” he said. 

Arcandra was confident that if the gas discovery lived up to its expectation, it would prolong domestic gas supplies beyond 2025. 

"If it [the KBD2X] succeeds, our gas balance will change. It will extend the gas supply. But for how long, we will need to wait for the appraisal," he said.

Wood Mackenzie calculates that the KBD2X can produce natural gas of 300 mmcfd for 15 years. It also said Indonesia could capitalize on the discovery to attract investment and stimulate more exploration.

The think tank believes that in near to medium term, the gas discovery will partially offset declining output from other domestic fields and reduce Indonesia’s reliance on liquefied natural gas. 

"In the long term, Indonesia needs to continue to attract explorers, particularly in the more difficult but potentially more prospective eastern Indonesia basins,” Harwood said.

In its latest report for 2018’s fiscal year, Wood Mackenzie underlined that there was limited interest among oil and gas giants in the latest oil and gas block offerings.

Some experts have said 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 require massive investment, and instead implement efficiency measures.

On the same day the gas find was made public, Repsol inked a production sharing contract with the government to operate new exploration block South Sakakemang, near the Sakakemang block where it found the giant reservoir.

Repsol Indonesia general manager Greg Holman said the company was committed to replicating its achievement in the Sakakemang block.

As of now, Repsol operates five exploration blocks in Indonesia, namely East Jabung, Sakakemang, South East Jabung, Andaman 3 and South Sakakemang.

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