Circa 360 bcf of additional gas discovered at West Kerendan

By Romel S. Gurky

UK firm Salamander Energy announced on Tuesday that following the successful completion of the West Kerendan 1 exploration well, it has identified c. 650 bcf of recoverable gas within the Kerendan-West Kerendan development area (onshore Central Kalimantan). Of these volumes 120 bcf are currently under contract, and the firm is now pursuing the commercialization of the additional volumes.

?A key operational milestone in Indonesia is first production at the Kerendan gas field. We remain encouraged by the progress that the off-taker has made during the first half of the year with momentum building toward the completion of the power plant and transmission lines,? the firm said in a statement.

Manufacture of the 16 gas engines for the power plant has been completed in Finland and the first shipment of eight engines is currently in Kalimantan waiting to be transferred up river to site. The second shipment is en route to Indonesia. The installation of the transmission lines continues apace. Negotiations are on-going regarding the improved pricing for the initial GSA and are these expected to be concluded later in the year.

The West Kerendan gas discovery was announced in March with resources estimated to be c. 360 Bcf. The well tested at 50 MMscfd making it the most productive well in the area and removing the immediate need to drill a further appraisal well in support of negotiation of a second GSA.

Salamander is now focused on commercializing the c. 520 Bcf inventory of un-contracted gas in the Kerendan area, and the Group has opened discussions with the regulator with a view to expanding the Kerendan plan of development to include the West Kerendan area.

With five wells in the Kerendan area testing at a combined flow rate of 90 mmscfd, there is plenty of production capacity to support incremental gas sales. Salamander sees potential to deliver the 70 mmscfd to meet the maximum capacity of the power plant once its planned expansion is completed. The next step in commercializing the un-contracted gas involves the certification of reserves by the Indonesian authorities of the enlarged Kerendan resource. This will determine the volumes to be sold under additional gas sales agreements.

Finally, on the exploration front, the Ocean General rig is expected to arrive on location in the North Kutei area in late May/early June for the re-drill of the North Kendang prospect, the original well having been abandoned following a significant wet gas kick. The majority of this well is being paid for through insurance proceeds.

Salamander has a 70 percent operated interest in the Kerendan field which contains 120 bcf of 2P reserves and a further 160 bcf of contingent resource.

Editing by Johannes Simbolon