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Pertamina uses new technologies to cut production costs at Mahakam block
The new technologies can reduce exploration and production costs by up to 40 percent for onshore wells and 50 percent for offshore wells.
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Environment and Forestry Minister Siti Nurbaya Abubakar gives the Proper Award to PT Pertamina Hulu Mahakam general manager John Anis in Balikpapan, East Kalimantan in December, 2018. (JP/N. Adri)
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il and gas company Pertamina Hulu Mahakam (PHM), a subsidiary of state-owned energy company Pertamina is developing new technologies in reducing exploration and production costs to maintain its production at the Mahakam block in East Kalimantan.
PHM general manager John Anis said the company, which operates the Mahakam block in East Kalimantan province, was experimenting with two technologies that, combined with other innovations, were expected to reduce next year's well-related costs by up to 40 percent for onshore exploitation and 50 percent for offshore exploitation.
“By lowering operating costs, we ensure small oil wells will remain economical, so we can boost profits and [production] volume,” he told reporters in Jakarta on Monday.
Exploration and production costs at the Mahakam block are generally higher than other oil and gas wells as oil and reserves in the block are confined in thousands of small, isolated, underground pockets. This means that PHM has to continually drill new wells to maintain its production.
To cope with the rising costs, PHM has been testing since January a hydraulic working unit (HWU) to replace a conventional oil rig in small oil wells in the Mahakam block. Using the hydraulic working unit costs the company US$340,000, or 37 percent of the cost of making an oil rig.
John added that the reduction in drilling costs accounted for between 7 and 13 percent of total exploration and exploitation costs. Going forward, the company plans to use HWUs on more oil wells and on drilling operations.
PHM is also slated later this year to begin using a locally produced drilling mud, named Smooth Fluid 05 (SF-05), instead of its previous imported drilling mud. The replacement is expected to save the company Rp 200 billion ($14.2 million) each year.
