Andalas completes feasibility study for 60 MW Jambi project
Tuesday, February 28 2017 - 02:06 AM WIB
Andalas Energy and Power Plc, the London AIM traded Indonesian focused energy company, provided Monday an update on its activities in Indonesia including the completion of a feasibility study for its first 60 MW wellhead gas to power project in partnership with Pertamina, Indonesia?s state-owned oil and gas company, in the Jambi province of Sumatra.
Andalas said in a statement that its strategy is to develop a portfolio of at least five wellhead independent power producer projects (IPPs) totaling 250-500MW of installed capacity fired with gas from proven fields.
Andalas CEO, David Whitby, said ?The results of the feasibility study by PLN Enjinering for our first gas to power project alongside Pertamina confirm what we have long known: not only is the project viable but it can also play a vital role in satisfying local demand for power. Importantly, the Government recognizes that Wellhead IPPs can play an important role in helping solve the country?s energy crisis. The recently announced new regulations have elevated Wellhead IPPs to a priority level within the Government?s 35,000MW program. The Government?s new regulation governing Wellhead IPPs is exactly aligned with Andalas? gas to power strategy and I look forward to informing shareholders as we progress our first project through to approval.?
He further said that Andalas was established to focus on a niche but nonetheless important and scalable gas monetization strategy to contribute to solving Indonesia?s power crisis at the local level. ?In September 2016 we signed an agreement with Pertamina that gives us access to numerous potential gas fields, and the recent change in regulations from the Government, gives us confidence that we are working in a sector with enormous potential with a government that is continually renewing its support and emphasising the urgency with which it wishes to see projects on line,? Whitby said.
Andalas has now presented the feasibility study for the first Wellhead IPP project, which is to be located in the Jambi province of Sumatra. The report was prepared by PLN Enjinering (a division of PLN), the highlights and conclusions of the feasibility study are as follows:
? PLN Enjinering assumed construction could commence by fourth quarter (Q4) of 2017 with a planned completion by end Q4 2018.
? The report assessed the power demand in the region and concluded that the 60 MW generated will be in high demand, highlighting:
o Power demand in the region requires additional generating capacity
o Power demand will continue to exceed supply for the foreseeable future. Furthermore, electrical demand is projected to increase by some 12.5 percent per annum in the Jambi Province.
o Power produced by the project can be efficiently connected to the PLN system and the power generated can be absorbed by the network without any operational problems.
o The power generated will be exported via a 150 kV transmission line to an identified sub-station.
o The IPP would be located at the wellhead.
The Ministry of Energy and Minerals published on February 2, 2017, three new regulations intended to foster the efficient and timely development of new electricity generating capacity in the Republic of Indonesia.
Regulation 11 2017 on Utilization of Natural Gas for Power Plants is intended to improve the utilization of natural gas in the mix of energy for the generation of electricity and to guarantee the supply of natural gas at reasonable and competitive prices for the electricity sector. More particularly, the regulation provides that the procurement of wellhead power generation may be undertaken by direct appointment (i.e. without public tender).
Pertamina have been quick to identify that the cooperation agreement with Andalas is a real opportunity to materially increase production of gas from its asset base. As a result, there continues to be genuine enthusiasm to work to expand the number of projects under the cooperation agreement, which in tandem with the recent regulations are expected to accelerate the expansion of Andalas? strategy.
Andalas and Pertamina are now focused on identifying the location of gas supply for the next Wellhead IPP projects. Andalas is targeting the initiation of a further four new projects during the course of 2017 as it seeks to build towards its target of 500MW.
?Work to date highlights that the first target area should be the Jambi province area, within which Andalas and Pertamina have identified a significant inventory of gas fields with IPP potential,? Andalas said in the statement.
Editing by Reiner Simanjuntak