Ephindo: CBM project could help solve Sangatta?s power shortage
Thursday, March 17 2011 - 07:24 AM WIB
On Saturday, March 12, Well Number 1, of the Sangatta CBM Production Sharing Contract (PSC) was drilled to a designated depth of 830 meters by operator, Sangatta West CBM Inc., a joint-venture company. The JV partners are Indonesia?s Ephindo Energy (with a 24 percent indirect interest in the PSC), Australia?s Dart Energy, formerly Arrow Energy (24 percent) and PT Pertamina Hulu Energy Metana Kalimantan-A with a 52 percent participating interest.
Tests on the well commenced over the weekend to judge the quality and quantity of gas reserves in the coal seams.
Sangatta West General Manager Amrullah Hasyim said that, depending on a sustainable gas flow rate, the first well could begin sending gas to state power company Perusahan Listrik Negara (PLN) as early as second quarter of this year.
This would add up to 1 megawatt (MW) to Sangatta?s power grid, or about 14 percent of PLN?s existing diesel fired capacity in the area. Ephindo has signed a memorandum of understanding with GE and local gas fired genset supply company Navigat with an aim to supply gas-fired electricity to the local grid.
?CBM gas has the potential to begin reducing Sangatta?s power problems and is an exciting development for the Sangatta community,? Amrullah said. ?Total power supplied to PLN could rise to 3-6MW as more wells are drilled and come online,? he said. This is the first well in a 4 well program that includes three pilot wells, which follow a successful 3 well exploration program in 2009, and one exploration well designed to further delineate CBM potential in the area.
As a fast-growing coal mining town in East Kalimantan, Sangatta currently endures serious power shortages due to fuel supply shortages and under-utilized capacity. PLN has installed capacity at only 7.4 MW, while demand from a population of more than 200,000 people is well above this level. Presently, the town?s electricity capacity is being supplied by 10 diesel fired generator sets, a significantly more expensive fuel than natural gas.
Sammy Hamzah, Ephindo?s CEO and President Director, said coal bed methane?s efficiencies and cost-effectiveness meant it was an excellent way for PLN to quickly meet local government power needs. ?CBM can be developed in stages and is produced on a much smaller scale than conventional natural gas projects. This makes the investment costs much smaller and production times faster.?
While it normally takes conventional natural gas projects from six to ten years to come online, CBM wells can begin producing as early as six months to one year after exploration, Sammy said.
?This is because with CBM we use the same equipment to appraise and produce from wells, meaning the whole process moves much faster.?
With huge reserves of coal, East Kalimantan is one of Indonesia?s many potential sources of CBM. Together with South Sumatra, the province is thought to make up about 60 percent of Indonesia?s 450 trillion cubic feet (TCF) of estimated CBM reserves.
?At almost three times Indonesia's current proven reserves of natural gas, the potential for CBM is great,? said Sammy. ?It?s conceivable in the future that the Sangatta West CBM PSC could contribute significant quantities of gas,? he added.
Hamzah continued: ?The sky really is the limit and our potential gas market is huge. In addition to local needs, the gas could be piped to the Bontang LNG Plant for processing and export overseas. Bontang is currently running at 7 mtpa (millions tonnes per annum) below its rated capacity. This is a perfect situation for a CBM company, large coal seam potential and large market potential.? (ends)