IndoGAS 2015 Presentation - Progressing CBM Development in Indonesia - An Industry Perspective by...
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Transcript of IndoGAS 2015 Presentation - Progressing CBM Development in Indonesia - An Industry Perspective by...
Progressing CBM
Development in Indonesia
- An Industry Perspective -
Mohd. Radzif Mohamed VICO CBM Commercial Manager
IndoGAS Conference
27th – 29th January 2015
1
VICO Overview
• VICO is a 50:50 JV between BP and ENI
• VICO has operated the Sanga Sanga conventional oil
and gas PSC since 1968 with first LNG in 1977
• CBM PSC awarded November 2009 for 30 years
• Sanga Sanga CBM PSC has met all PSC
commitments & spent $250m to date
• Exploration complete, appraisal in progress
• First CBM rig & horizontal wells in Indonesia
• First CBM gas delivery to Bontang in 2011
• First CBM Gas Sales delivery to PLN in 2013
• Conventional & CBM PSC share infrastructure
SEM 201
MWP #1
Exploration Wells
Appraisal Programme
2
Coring (Using Conventional Wells
2010 2011 2012 2013 2014
Resource Appraisal
PSC signed
Re-completed Mut 78 (old oil well)- first CBM well
Drilling MWP#1, first purpose drilled CBM
wells
Micro-seismic on MWP#2 fracs
First LRP
First Hydraulic rig on MWP#3
CBM to Power
Mut 205 Well Head Compressor Trial
First CBM horizontals in Indonesia
VICO CBM Achievements
3
Indonesia CBM Resources
4
• Resource potential in Indonesia estimated at over 450TCF
• 54 CBM PSC’s awarded since 2008 with 22 in Sumatra and 34 in
Kalimantan
• SKKMigas estimate and using latest data from operators, resource base of
130 to 140 TCF for CBM in Indonesia in licensed PSCs (more in unlicensed
areas)
NOTE – Conventional Proved Reserves for Indonesia approximately 100 TCF
(2014 BP statistical review)
Energy Demand/Supply
5
• Strong GDP growth is driving increased domestic demand in
Indonesia but domestic production is falling - decline in
conventional oil & gas production
• Likely that Indonesia will become a net importer of gas - CBM
production could help fill the demand gap or imports will increase
CBM In Indonesia
• Has CBM been successful in Indonesia?
– Initial GoI CBM Roadmap? 500 100 8.9 MMSCFD
– Many have left – BP, Exxon, Total, Santos, etc
– Current investor sentiments at a low – No recent CBM PSC
awards
– Well behind on Exploration Commitment – less than 20%
– Regulatory and fiscal environment unsuited for CBM
– Good CBM potential but still needs to prove produceability
and commerciality
How do we make CBM a SUCCESS
6
Indonesian CBM industry is still in its infancy M
atu
rity
Exploration time to commercialisation
UNITED STATES • Resources: 700 TCF
• Main Basin: San Juan,
Black Warrior
• Annual Production: 1.65
TCF (2012)
• Start exploration: 1950’s
• Commercialisation start:
1980’s
• Wells drilled: 30,000
• Cost per well: US$ 200-
300 Thousand
252
BCF/
Year
UNITED STATES • Fiscal incentives:
• Unregulated selling price
• Tax credits (initial stage)
• Land owner royalties
• Light handed regulation
AUSTRALIA • Resources: 250 TCF
• Main Basin: Bowen, Surat
• Start exploration: 1950’s
• Commercialisation start: 1990’s
• Wells drilled: 1,300 (2010)
• Cost per well: US$ 1.2 Million
• Fiscal incentives:
• Favorable fiscal regime
• Unregulated selling price
• Government mandates Power
Companies to utilize power
generated from gas
CHINA • Resources: 1300 TCF
• Produced basin: Qinshui
• Annual Production: 21 BCF (2012)
• Start exploration: 1990’s
• Commercialisation start: 2009
• Wells drilled: 2,000
• Fiscal incentives:
• Price reforms
• Preferential power tariff
• Tax reliefs
• Low government take
INDONESIA • Resources: 140 TCF
(based on active
working areas)
• Main basin: Kutai,
South Sumatera
• Annual Production: 450
MCF (2013)
• Start exploration: 2008
• No Commerc. yet
• Wells drilled: 84
Annual Production
8
ADVISORY BOARD
EXECUTIVE DIRECTOR
Work Group Fiscal
Work Group Technology
Work Group Policy &
Regulations
ESDM LITBANG
LEMIGAS
Ministerial
Policy Brief
& Model
Agreement
3Q 2014 1Q 2015 1Q 2015
Government & Industry
Initiative
INDUSTRY
Government
of Indonesia
9
Led by
Mohd Radzif
Mohamed
What Does Indonesia Need
• Consider aggressive short term incentives.
• Access to the high value gas market in Indonesia,
consistent with Domestic LNG Price
• A significant reduction in the overall regulatory regime
• Fiscal policy for the support of CBM.
• A “one stop shop” in the Government for all permitting
• Improved POD requirements for CBM
10