Progressing CBM Development in Indonesia - An Industry Perspective -

Transcription

1 Progressing CBM Development in Indonesia - An Industry Perspective - Mohd. Radzif Mohamad VICO CBM Commercial Manager IndoGAS Conference 27 th 29 th January

2 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

3 VICO CBM Achievements PSC signed Coring (Using Conventional Wells First LRP Resource Appraisal Mut 205 Well Head Compressor Trial CBM to Power Re-completed Mut 78 (old oil well)- first CBM well Micro-seismic on MWP#2 fracs First CBM horizontals in Indonesia Drilling MWP#1, first purpose drilled CBM wells 3 First Hydraulic rig on MWP#3

4 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)

5 Energy Demand/Supply 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 5

6 Can CBM fill Indonesia s Supply Gap? 3,000 West Java Supply/Demand 2,500 2,000 mmcfd 1,500 1, Source: Wood Mackenzie Diesel & Fuel Oil (Grid and Captive) LNG YTF Commercial and Technical Total Demand West Java Commerical Piped Gas If no CBM, Indonesia will have to fill the gap with LNG or high priced fuel oil. 6

7 CBM In Indonesia Has CBM been successful in Indonesia? Initial GoI CBM Roadmap? MMSCFD Many have left BP, Exxon, Total, Santos, etc Current investor sentiments at a low No 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 7

8 Indonesian CBM industry is still in its infancy Maturity 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 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$ Thousand 252 BCF/ Year 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 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 Annual Production Exploration time to commercialisation 8

9 Government & Industry Initiative ESDM LITBANG ADVISORY BOARD LEMIGAS EXECUTIVE DIRECTOR Work Group Fiscal Work Group Technology INDUSTRY Work Group Regulations Ministerial Policy Brief & Model Agreement Government of Indonesia 3Q Q Q

10 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

11 11 ~ Terima Kasih ~