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SPE 80518 A Preliminary Study of Development of Coalbed Methane (CBM) in South Sumatra Kun Kurnely, Budi Tamtomo, Salis Aprilian, SPE, Pertamina DOH SBS, and Indria Doria, Pertamina Copyright 2003,

1 SPE A Preliminary Study of Development of Coalbed Methane (CBM) in South Sumatra Kun Kurnely, Budi Tamtomo, Salis Aprilian, SPE, Pertamina DOH SBS, and Indria Doria, Pertamina Copyright 2003, Society of Petroleum Engineers Inc. This paper was prepared for presentation at the SPE Asia Pacific Oil and Gas Conference and Exhibition held in Jakarta, Indonesia, April This paper was selected for presentation by an SPE Program Committee following review of information contained in an abstract submitted by the author(s). Contents of the paper, as presented, have not been reviewed by the Society of Petroleum Engineers and are subject to correction by the author(s). The material, as presented, does not necessarily reflect any position of the Society of Petroleum Engineers, its officers, or members. Papers presented at SPE meetings are subject to publication review by Editorial Committees of the Society of Petroleum Engineers. Electronic reproduction, distribution, or storage of any part of this paper for commercial purposes without the written consent of the Society of Petroleum Engineers is prohibited. Permission to reproduce in print is restricted to an abstract of not more than 300 words; illustrations may not be copied. The abstract must contain conspicuous acknowledgment of where and by whom the paper was presented. Write Librarian, SPE, P.O. Box , Richardson, TX , U.S.A., fax Abstract Increasing gas demand significantly in Indonesia and its surrounding regions in the last decade affects on exploration of gas resources. Moreover, when the Indonesia government gradually cut subsidizing of oil based fuel price, then the gas price becomes more competitive. However, the conventional gas reserves are decreased and more difficult to be found. The alternate gas sources, therefore, should be substituted to fulfill the gas demand in the near future. One of the most prospective gas sources is Coalbed Methane (CBM). This unconventional gas source has not been developed yet because of its exploitation technology limited. Based on the previous study done jointly by Pertamina and PT. CPI, CBM in Indonesia is the seventh biggest resource in the world. It is about 337 TCF of CBM resources located in several Indonesia Basins. Among them, the largest part is in South Sumatra onshore (it is around 120 TCF of CBM) where it is close to gas consumers. This paper presents a preliminary study of assessing detailed subsurface data (geologic, geophysics, geochemical and reservoir data) to look into the possibilities of CBM development including the evaluation of economics and environment aspects. This integrated feasibility study has been doing by analyzing shallow logging data, seismic, satellite images, laboratory data, topography, and environment data. The steps of study are discussed in details. A pilot project of exploitation/production of CBM is prepared by utilizing the existing gas facilities, and it is scheduled after a preliminary study finished. Many benefits could be drawn from this work especially for backing up the energy consumption needs not only in South Sumatra regions but also in Indonesia and its neighboring countries. Introduction In the previous study 1, stated that the CBM resource in Indonesia has been identified 337 tcf of coalbed methane. It will be potentially lower-cost alternative for fullfiling Indonesis s gas demand in the near future. The study also identified that a major part of CBM resources is located in South Sumatra (about 120 tcf or 35.6% of total Indonesia s CBM resource). These facts inspired the authors to conduct indepth study on the CBM development, especially in South Sumatra basins, and evaluate its commercial aspects. South Sumatra has existing oil and gas fields developed since 1850s. The fields are operated by Pertamina South Sumatra. Since 1975 the gas consumers has increased significantly related to the industry s grown up, such as: fertilizer industry, electricity company, mini LPG plant, petrochemical industry, etc. Currently, the gas demand in South Sumatra is 320 MMSCFD. The markets are supplied from Pertamina s gas fields and its company partners. Pertamina South Sumatra plans to deliver additional gas to West Java markets about 250 MMSCFD starting in A potential market also comes from the north, such as: PT. CPI (in Central Sumatra), Malaysia, and Singapore power plant. Moreover, when the dream of the Asean Gas Network comes true, it will be no wonder for developing gas fields and searching for additional gas reserves in this region. However, the success of hydrocarbon exploration in this area becomes hard and harder. As South Sumatra s crude oil declines, the natural gas must be developed and utilized intensively. The industries will replace the diesel fuel into gas fuel as long as the price of the gas is competitive. Since the demand of gas increases over the gas supply 2, and the finding gas becomes less, the unconventional gas resource, like coalbed methane (CBM), has a prospective role. The CBM has been established as a reliable and lowcost gas supply source in several countries, like in the US, Canada, Australia, Rusia, etc. In Indonesia, the study of CBM resource has been intensively done, and some of Indonesian basins are identified contain a higher-rank coal, thicker, and deeper compared to the CBM in Powder River basin (US) 1. In the study, amongst the 11 onshore coal basins in Indonesia, the South Sumatra basin has the highest potential of CBM. This paper presents a preliminary study on deep evaluatian of South Sumatra CBM resource and its development including the commercial aspects. The discussion will be focused on assessing data, evaluating based on integrated geologic and geodetic data, and development plan selecting the pilot project area.

2 2 KUN KURNELY, BUDI TAMTOMO, SALIS APRILIAN, INDRIA DORIA SPE South Sumatra Gas Supply-Demand Based on the Plan of Development (POD) of South Sumatra Gas Project 2, the gas reserves in South Sumatra can be able to fulfill the market with additional amount of gas up to 250 MMSCFD for the next fifteen years. The current gas production is 320 MMSCFD piped to South Sumatra gas consumers. The total gas demand until 2018 is about 4 TCF of gas. However, increasing demand due to local industry grown up requires more proven gas reserves. Gas Reserves. The selected proven gas reserves were certified by Lemigas and D&M consultant in The gas sources coming from associated and non-associated gas fields are dedicated to supply the domestic markets. About 70 new gas wells will be drilled, and 100 workovers were planed to recover gas for next 15 years. The total gas reserves are identified up to 5 TCF of gas. Gas Demand. The gas consumers in South Sumatra itself consist of committed and un-committed markets including fertilizer industry, electrical company, and petrochemical industry. There is 320 MMSCFD of gas dedicated for existing markets in South Sumatra and 250 MMSCFD of gas for West Java industries. Potential Gas Markets. Besides the markets in South Sumatra and Java, the gas has also the potential consumers in the central Sumatra (Duri Fields steamflood), Singapore or Malaysia Power Plant, and the Asean Gas Pipeline Network. These markets are highly prospective and it will absorb no matter how much the gas produced. Coalbed Methane as an alternate energy Considering the Gas Balance and the facts that the gas production naturally declines, the alternate gas resource should be found to buffer the gas supply. One of the alternate lowcost gas supplies is the CBM (coalbed methane). The CBM is methane trapped in micropores of coal due to a thermogenic or a biogenic process. In South Sumatra basins, the best coal mostly developed in Muara Enim Formation ( m deep) As metioned in the introduction, South Sumatra has abundance of CBM that can be developed as alternate energy. The advantages of developing CBM in South Sumatra are as follows: - The CBM is located in onshore fields - The infrastructures have been settled, since the oil and gas fields has been established more than a hundred years ago. - The markets are in there. Background. Alhough in the US and other countries the CBM has been established as a reliable and low-cost gas supply source, but not in Indonesia. The CBM is still an undeveloped gas resource in Indonesia. Prior to this study, the work was limited on identifying the resources. Our work is based of the facts that: - Developing the CBM is similar to the conventional gas projects, except the period of production, - The existing gas infrastructures can be used - The produced water can be disposed in the non-active wells - The gas can be used for field fuel or compressed to buffer the existing gas needs Based on these considerations, the objectives of the stdy are as follows: - Evaluating the CBM reserves in South Sumatra basin based on integrated study using seismic, log, cores, and topography data - Developing the pilot project of the CBM exploitation based on the reserves and the markets - Making the plan of fully development of the CBM based on economic evaluation of the projects Proposed Study The study is a preliminary study consisting of GG&R evaluation, and selecting area of the pilot project. The possible production in exploitation of the CBM is discussed by considering the well and reservoir characteristics. Figure 2 shows the workflow of the sudy. The Plan of Development will be the final product of three phases of the study, i.e.: resource analysis; production analysis; and economic analysis. Resource Analysis. The study is started on February 2002 that used the existing data of seismic and log. The coal layers are identified at about 600 to 1300 m deep. The well correlations were made using the exploration well data since the development wells have no log data in the shallow intervals. The seismic data interpretation supports the layers correlation with a wide extention from the north to the south area. The geodetic data created a clear topographical images tha can identify the faults and the surface lithology and its environment. It mapped the whole area based on the satellite data images. The study identified that the coal layer gets thicker to the north and it disappears to the south. Based on the generated maps, the CBM resource from this study is 124 tcf of CBM that closes to the mentioned number in the previous study (120 tcf). Figure 3 and 4 shows the example of the CBM correlation and its maps. The example of sattelite images (geodetic data) can be seen in Figure 5. Unlike the conventional gas reservoir, the CBM reservoir can be an anticline or a syncline structure. The CBM is trapped in the coal fractures and matrix. The methane is then produced after the dewatering process. The process is happened in a low pressure, therefore, sometimes it needs artificial lift to produce large amount of water for a relatively long period. Production Analysis. To exploit the CBM, we must design a proper method of production. The well configuration and its completion must be suited for the CBM reserves and the production capacity. Two alternate methods of production are illustrated in Figure 6. Implemetation of this method will be evaluated and analyzed in the Pilot Project. At least four new wells will be drilled in 2003 to make five-spot model as illustrated in Figure 7. The activities include drilling, fracturing, dewatering, production, compressing, and reinecting produced water (water disposal). Environment aspects as the most important issues in this project are studied integratedly. The produced water will

3 SPE A PRELIMINARY STUDY OF DEVELOPMENT OF COALBED METHANE (CBM) IN SOUTH SUMATRA 3 be injected into the non-active wells surrounding the pilot area. The full-scale project will use the produced water for the pressure maintainance, repressuring reservoir, or waterflooding projects. Economic Analysis. The proposal of the Pilot Project consists of the economic evaluation to look for the commertial aspects of the CBM development. It includes the optimization of well spacing, production capacity, and considering the markets and gas proce. The Plan of Development consists of economic parameters, such as the NPV, IRR, POT, PIR, etc. (Figure 2) Results and Discussion A new correlation is interpreted based on the shallow log data. It is somewhat hard to find the log data since the most prospective layers are located in deeper zones. The log data have been drawn from exploration wells that were very limited. The geochemical data are used for analyzing coal and gas properties, while the sattelite images are employed on interpreting the major faults and fractures. The late data is related to the tectonic condition in the shallow zones, and it is useful for interpreting the regional geology structure. Besed on the regional maps of coal distribution and isopach, the updated CBM resource in South Sumatra has been identified about 124 tcf of coalbed methane. It is close to the result on previous study 1 (120 tcf). However, based on the experiences in the developed fields, this huge CBM resource could only be recovered about 10% of the total resource. It also needs the dewatering stage about 3 5 years depends on the coal characteristics and its environment before the stable production stage. The CBM has longer stable production period than the conventional gas production due to the reservoir pressure decline. The coal pressure is low but stable. Hence, the artificial lift is required to take the water out. The low pressure methane associated with produced water needs separator and compressor to flow to the high pressure gas pipe network. The separated produced water from separator is re-injected to the aquifer or piped to water treatment plant in waterflooding project. These required investments must be considered in the project evaluation since the CBM will be produced just after 3 5 year dewatering stage. In this study, the pilot area has been selected based on the best located of the CBM and the existing gas infrastructur. The proposed pilot project will be impelemented in 2003, and at least four new shallow wells (maximum of 600 m) will be drilled. 3. From the experiences in the developed fields, this huge CBM resource could only be recovered about 10% of the total resource. 4. To produce the CBM, it needs the dewatering stage about 3 5 years depends on the coal characteristics and its environment before the stable production stage. 5. The project requires a huge investment on exploitation facilities that must be considered in the project economic evaluation since the CBM will be produced just after 3 5 year dewatering stage. 6. The pilot area has been selected based on the best located of the CBM and the existing gas infrastructur. The proposed pilot project will be impelemented in 2003, and at least four new shallow wells (maximum of 600 m) will be drilled. Acknowledgements We thank Pertamina Management for permitting and supporting the data on this paper. A special thank we extend to our colleges who gave us the ideas and invaluable comments that make this paper available. References 1. Stevens, S.H., Sani, K., Hardjosuwiryo, H., Indonesia s 337 TCF CBM resource a low-cost alternative to gas, LNG, Oil&Gas Journal, October 22, Plan of Development of South Sumatra West Java Gas Project, Petamina DOH SBS, Tamtomo, B., Tedjoyono, B., Mardjuki, Doria, I., : Progress Report II Coalbed Methane and Shallow Prospects, Pertamina DOH SBS, *** Conclusions and Recommendation As discussed in the previous paragraph, the conclusions can be drawn are as follow: 1. It is a preliminary study consisting of assessing GG&R data, interpreting the seismic data combined with log data and sattelite image, selecting the pilot area, proposing a production scheme and an economic evaluation. 2. Based on the new interpretation, it has been identified 124 tcf of CBM existed in South Sumatra basin. It is close to the previous study result1 of 120 tcf of CBM.

4 KUN KURNELY, BUDI TAMTOMO, SALIS APRILIAN, INDRIA DORIA SPE 80518 WORKFLOW OF CBM STUDY RESOURCES ANALYSIS G G - R GEOCHEMIST

CAPACITY MARKET & PRICE TAX & FARES PILOT PROJECT INVESTMENT POD NPV, LIFETIME IRR, POT, PIR ENVIRONTMENTAL ASPECTS

4 4 KUN KURNELY, BUDI TAMTOMO, SALIS APRILIAN, INDRIA DORIA SPE WORKFLOW OF CBM STUDY RESOURCES ANALYSIS G G - R GEOCHEMIST GEODETIC RESERVES PRODUCTION DRILLING FRACTURING PRODUCTION WATER DISPOSAL ETC ECONOMICS WELL SPACING FAC.CAPACITY MARKET & PRICE TAX & FARES PILOT PROJECT INVESTMENT POD NPV, LIFETIME IRR, POT, PIR ENVIRONTMENTAL ASPECTS IMPLEMENTATION Figure 1 Workflow of CBM Study Figure 4 The example of regional map upper Merapi Coal Formation Figure 3 The example of stratigraphic correlation

SPE 80518 A PRELIMINARY STUDY OF DEVELOPMENT OF COALBED

Figure 5 The example of satellite image of Sumatra Figure 7

5 SPE A PRELIMINARY STUDY OF DEVELOPMENT OF COALBED METHANE (CBM) IN SOUTH SUMATRA 5 DEWATERING AREA CBM WELLS Figure 5 The example of satellite image of Sumatra Figure 7 The five-spot model CBM wells Figure 6 A scenario of production

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