Mitsubishi to develop SNG in Sumatra

Japan industry giants Mitsubishi Heavy Industries, Ltd. ( MHI ) and Mitsubishi Corporation (MC) announced on Thursday that they have agreed with the Indonesian government to collaborate in a large-scale substitute natural gas (SNG) synthesis project utilizing Indonesia's abundant low rank coal (LRC) which will be conducted by MHI/MC and Indonesian partners comprised of government institutions and private companies.

The deal is a follow up of Indonesia-Japan Energy Round Table held in November 2010, the companies said in a joint statement.

A feasibility study has already gotten under way with support from the Indonesian and Japanese governments. MHI, MC and Indonesian partners plan to complete the FS by March 2012, targeting inauguration of commercial operation of the new SNG synthesis plant in 2017.

The project plans call for production of SNG at the new plant, to be built by MHI and Indonesian partners, through coal gasification using abundant LRC in Sumatra.

Consumer of the gas is still being studied and will be determined after FS, the statement said.

The large amount of carbon dioxide (CO2) produced as a "by-product" of the plant's operation will be sequestered deep underground applying a carbon capture and storage (CCS) system. The project will also study partial use of the CO2 for enhanced oil recovery (EOR).

The Japanese side plans also call for introduction of a "bi-lateral offset mechanism," based on the agreement between the governments of Indonesia and Japan , whereby the amount of greenhouse gas reduction achieved through the project would be reflected in Indonesia and Japan emission reduction efforts.

?A number of Indonesian companies have already shown interest in the project, both state-owned and private companies, and if the project is realized, it will mark as the first SNG synthesis production in Indonesia ,? the statement said. (alex)