VICO banks on CBM potential to maintain gas production

East Kalimantan gas producers VICO Indonesia is banking on the huge coal-bed methane (CBM) potential at its Sanga-Sanga PSC area to retain its position as major gas supplier to Bontang LNG as gas its conventional gas supply has been dwindling due to depleting reserves.

According to VICO Indonesia Commercial Analyst Imelda Pasni, the company estimates that the block contains some 10TCF of CBM that could be turned to production starting 2012.

VICO, which is partly owned by Anglo-American giant BP Plc and Italian firm ENI SpA, had submitted proposal to the government to be given right to explore and exploit CBM at its Sanga-Sanga PSC and expecs the contract could be granted soon, she said.

Indonesian government has just awarded first CBM contract area in South Sumatra to Ephindo-Medco consortium. In Indonesia, CBM is regulated according to oil and gas regime, where contractors receive production split after costs are recovered.

Pasni said that VICO had drafted a scenario that would allow production to start in 2012 at a rate of 10 MMCFD, ramping up to a staggering 600 MMCFD 2025 on.

According to Pasni, VICO is very well positioned to tap CBM potential as it had necessary infrastructure in place and deep understanding about the block?s geological structure as the company had been operating the block for more than 30 years.

VICO produced 474 MMCFd of gas in 2007 and plans to produce 485 MMCFD this year and over 500MMCFD next year. The company is spending an investment of US$285 million this year to drill 50 wells to increase production. (alex)