Yogyakarta, 31 th March Journey towards excellence

CBM Development – CBM Development p – An Alternative Energy for Better Future for Better Future Yogyakarta, 31th March 2012 Journey towards excellence

Introduction

Energy from Nature. For Nature

CBM Potential Business in Indonesia

Source: DitJen MIGAS

KEMENTERIAN ENERGI DAN SUMBER DAYA MINERAL

PETA WILAYAH KERJA GAS METANA BATUBARA DI INDONESIA COALBED METHANE PSCs ACROSS INDONESIA Status : Juni 20112011 STATUS OF JUNE

© DJ MIGAS 2011


INDONESIA COALBED METHANECBM DEVELOPMENT ROAD MAP PERKEMBANGAN DI INDONESIA ROADMAP

Reg: CBM - 1 Rambutan (APBN) Ministerial Reg No.1669

1998

Ministerial Regulation No. 036/2008, revision to g Ministerial Regulation No. 033/2006

CBM Prod Est of 1500 MMSCFD

CBM1.0 Prod d fD E Estt off 1P 0B BcfD 500 MMSCFD

CBM Prod Est of 1.8 BcfD 900 MMSCFD

Gov Reg of CBM to Power

2007 2008 2003 2004 2005 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Signing of more CBM PSCs Avg prod rate assumed = 250 MSCFD/ well Ministerial Min RegNo.033/2006

Notes: Projects with Gov. involvement

Feasibility & Economics Study

1st CBM PSC

Start of CBM Contract period CBM production PP: Pilot Project © DJ MIGAS 2011


TYPICAL INDONESIA CBM DEVELOPMENT SCHEME 30 YEAR CONTRACT PERIOD

BEFORE CONTRACT

EXPLOITATION 20 YEAR

EXPLORATION (6+4) YEAR 1. OPEN AREA GENERAL SURVEY (SPEC. SURVEY, RESEARCH) JOINT STUDY 2. OVERLAPPING AREA (O/G AND MINING) GENERAL SURVEY (SPEC. SURVEY, RESEARCH JOINT EVALUATION

1st 3 (Three) year Firm Commitment 1. G&G EVALUATION 2 CORE HOLES 2. DRILLING 3. MARKET SURVEY 5. PILOT PROJECT 1ST STAGE

2nd 3 (Three) year

3 Th

1. G&G EVALUATION 2. CORE HOLES DRILLING 3. MARKET SURVEY 4. PILOT PROJECT 2ND STAGE

17 Th

FULL FIELD DEVELOPMENT

(DRILLING & DEWATERING)

(DRILLING & DEWATERING)

CONTRACT SIGNING

POD

© DJ MIGAS 2011

FLOW CHART CBM RESOURCES

REGIONAL GEOLOGY

SURFACE GEOLOGICAL SURFACE GEOLOGICAL DATA

SUBSURFACE SUBSURFACE GEOLOGICAL DATA

• SURFACE MAPPING • CROSS‐SECTIONS • COAL SAMPLES

• 2D/3D SEISMIC • WELL DATA • GRAVITY • RESISTIVITY

• GEOCHEMISTRY ANALYSIS • COAL PROPERTIES COAL PROPERTIES • COAL RANKS

• 3D COAL DISTRIBUTION • WELL BASED (CORRELATION) WELL BASED (CORRELATION) • SEISMIC ATTRIBUTES

CBM RESOURCES LAPI ITB, 2012

INTRODUCTION ‐ Coal is a source, seal and reservoir rock. Gas is sorbed on the coal surface. Typically over 90% methane with some ethane and d carbon b dioxide. d d

‐ Slow Sl i i i l desorption initial d i and d relative l i permeability bili effects ff create a “negative gas decline curve.” Unique production characteristics of CBM results in low but inclining initial gas production, peaking around 4‐6 years as the coal is d dewatered d (depressurized). (d i d)

MCFD or BPD D

‐ CBM production requires dewatering the coal formations. When the pressure is reduced, gases are desorbed and flow to the h wellbore llb via a naturall networkk off fractures f ( l (cleats). ) After gas arrives at the wellbore, it is produced utilizing conventional hydrocarbon gas extraction technology

Stage 1,

Stage 2,

Dewaterin g

Mid Life

Wat er

Stage 3, Decline production Gas

Time

‐ There are many benefits of CBM, such as for energy sourcing (gas), power (electricity), industry (methanol, fertilizer). CBM can be b used d locally l ll or to be b exported d (LNG). (LNG) Even E CBM offer ff benefits for global climate purposes (CO2 sequestration, Carbon Trading) 8

Sedimentation and The Formation of Coal

From DOE 2004 ALL Consulting (RyderScott Conf CBM 2006)

Cycle of Coal Development

The Natural Fracture System

RyderScott Conf CBM 2006

The Flow Path

Ryder Scott Conf CBM 2006

The Flow Path


Regulatory Requirement for CBM Development in Indonesia

Kedalaman Sumur CBM vs. Gas Bumi

CH4

Coal Seam (CBM)

Best >300 <1,000m

Natural Gas (Oil Gas Reserves)

Oil

Presented to MIGAS, Jakarta 19 July 05_K.Sani

Natural Gas (Gas Reserves)

3,000~ 6,000m ,

(After Lemigas, 2005)

GAS CONTENT CALCULATION Formula Kim (1977) G = 32 x (1-a-m) x 0.75 x { ko x (0.096d)no – 0.14 x( 1.8d/100) + 11)} Rf ¾ ¾ ¾ ¾ ¾ ¾ ¾ ¾ ¾

( ) G = Gas content (sct/ton) a = ash content (%) m = moisture content (IM) fc = fixed carbón (%) vm = volatile matter (%) d = depth of coal seam (feet) ko = 0.8 (fc/vm)+5.6 no = 0.39 – 0.013 ko Rf = recoveryy ffactor (%) range Rf : 50% – 85%

Coal Cutoff • 300 – 1500 m (depth) • ≥1.5m (thickness)

Recovery Factor Estimating the RF From the sorption isotherm: (initial gas content – abandonment gas content) / (initial gas content) x 100 = % Recovery Factor

Depending on many factors, the expected range for Recovery factor might be 50% to 85%


DRILLING ‐ CBM drilling basically similar to oil and gas conventional, except keeping the drilling cost as low as possible in order to achieve economics of the project since typical CBM development needs massive number of wells. In order to do so safe and creative approaches in CBM drilling is strongly recommended.

COMPLETION

CBM wells completion objectives : maximizing contact area of dewatering and minimizing damaging coalseam dewatering and minimizing damaging coalseam. Surface to In‐Seam Drilling / Completion

Formation Jetting

Diagram showing the production scheme of gas and water for a typical coalcoal-bed methane well

From USGS Fact Sheet FS-123-00 (RyderScott Conf CBM 2006)

SURFACE FACILITIES & VARIOUS ARTIFICIAL LIFT Production lift damages is the most d lf d h problem encountered in CBM ESP SUCKER ROD PUMP

PCP

CBM well site in Marathon

CBM TRANSPORTATION

CBM can be transported and shipped similar to gas conventional similar to gas conventional LNG

PIPELINES

CNG

Medco CBM Portfolios & updates


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Challenges


CHALLENGES OF CBM DEVELOPMENT IN INDONESIA CHALLENGES OF CBM DEVELOPMENT IN INDONESIA

‐ Footprint

‐ Strategy

‐ Environment

‐ Reporting

‐ Logistics

‐ Administrasi

‐ Perception 28


Footprint p Obyektif: Mengurangi seminimal mungkin dispute yyangg diakibatkan bentrokan kepentingan p g antar berbagai pemangku kepentingan (ganti rugi, g , sewa,, o Pembebasan Lahan: Perda,, Skema (g kontrak lahan), tumpang sari o Luasan standar per sumur atau fasilitas pendukung o Aturan mengenai densitas / kerapatan sumur CBM

29


Lingkungan g g Obyektif: Green industry dengan tanpa g efisiensi dan efektifitas mengorbankan pengembangan CBM / , AMDAL,, Studi Lingkungan, g g , Hydrogeology y g gy o UKL/UPL, o Aturan pemanfaatan air terproduksi ke lingkungan sekitar o Protokol Kyoto – mengurangi efek rumah kaca o Reklamasi lahan / bekas sumur CBM

30


Logistics g Obyektif: Pengadaan barang dan jasa dalam pengembangan p g g CBM yyangg fleksibel,, efisien,, dan efektif, mulai dari perencanaan, persetujuan, dan p eksekusi operasional o Prosedur AFE, WP&B o Aturan pengadaan barang dan jasa o Kontrakting, Amandemen o Pemanfaatan asset ‐ transfering

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Perception p Obyektif: Merubah mind set dalam masyarakat g berbeda dengan g oil/gas, /g , bahwa CBM sangat terutama dalam hal berikut: p rendah o Keamanan – tekanan dan temperatur o Kenyamanan – bisa berdiri berdampingan dengan industri lain / masyarakat o Kemanfaatan langsung ke masyarakat – gas metana, listrik, dan air terproduksi

32


Strategy gy Obyektif: Skema pengembangan yang sesuai untuk CBM o Sangat fleksibel, disesuaikan keekonomian masing‐ masing blok CBM yang bisa sangat berbeda‐beda o Aturan mengenai POD migas yang bisa tidak sesuai o Komersialisasi retail o Skema Sk PSC – Gross G PSC dimana di costt di manage oleh l h kontraktor

33


Reporting p g Obyektif: Format report yang sesuai untuk CBM dan bersifat real time

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Administrasi Obyektif: Good CBM Engineering Practices y, Health,, Environment)) o SHE ((Safety, o Metode / Teknis Pelaksanaan o Peralatan – rig, sub surface, surface facilities o Akreditasi – laboratorium pendukung, sertifikasi cadangan

35

Tipikal Pengembangan GMB & Tantangan Butuh Lahan Luas untuk mengakomodasi sumur GMB ….

Hutan disekeliling sumur

S Salah satu stasiun O/G Medco

T t Tetangga dengan d Kampung K

???

Pengembangan CBM yang bersahabat dengan lingkungan

Analisa Air sumur CBM di blok y Sekayu Chemical Oxygen Demand

Total Dissolved Solid

FUTURE CBM WATER MANAGEMENT Irrigation Households

Providing a better life to locals

Livestock

In US, water produced from CBM field can contribute positively to community t ib t iti l t it

Pengembangan GMB di AS

Sumber: Unlocking Indonesia’s CBM Resources Learning from Global Experiences, Lilian Fandriana, BP, 3rd IndoCBM, 29th Apr 2010

PADMA Award 2003 & 2007 :

PROPER Hijau 2009 :

Government of Indonesia Award for Sustainable Community Development Program

Minister of Environment Award for consistent environment management

Thank You PT Medco E&P Indonesia ….. Proud off its achievements! PROPER Hijau 2009 :

Zero Accident 2007 :

Minister of Environment Award for consistent environment management

Minister of Manpower and Transmigration Award for zero accident 22.927.321 hours

Social Empowerment Award 2007

ISO 14001 (2007 & 2009) :

National Welfare Coordination Minister Award for community development program commitment

TUV Nord Indonesia certification for environmental quality management system

Yogyakarta, 31 th March Journey towards excellence

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