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The year 2022 has been quite an active and eventful year for the oil and gas industry in Indonesia, especially in drilling.

Oil and gas operators drilled 760 development wells in 2022. This is slightly below its target of 790 wells, but it is a big increase from 480, the number of development wells drilled in 2021. We expect to see even higher drilling activities as the target of development drilling in 2023 is set at 991 wells.

In exploration drilling, oil and gas operators in Indonesia spudded 30 exploration wells in 2022 compared to 28 wells in 2021.

Out of the 27 exploration wells which were completed in 2022, 22 of them tested hydrocarbon resulting in an 81% success ratio in exploration drilling.

Here are the 22 exploration wells that tested hydrocarbon.

Here are the locations of the exploration wells.

We expect to see a huge increase in exploration drilling in 2023 with a target of 57 wells as Indonesia is serious in its intention to meet its targets of producing 1 million barrels of oil per day and 12 billion SCF of gas per day by 2030.  

Here are synopses of oil and gas production, field development, and exploration activities in Indonesia in 2022, and what we can expect to see in 2023, according to SKK Migas.

This post is adapted by LDI Training from information provided by SKK Migas.

Jamin Djuang

The total average daily oil and condensate production volume from all the oil producers in Indonesia in 2022 amounts to 612,712 barrels.

Here are the top 15 oil producers in Indonesia and their average daily oil and condensate production volume in barrels in 2022.

Oil and gas production in Indonesia in 2022 is lower than in the previous year, nevertheless, the year 2022 has been quite an active and eventful year for the oil and gas industry in Indonesia. We saw several new platforms were installed and an old platform was decommissioned, many development wells were drilled, and many idle wells were reactivated.

Here are synopses of oil and gas production, field development, and exploration activities in Indonesia in 2022, and what we can expect to see in 2023, according to SKK Migas.

Oil and gas production in Indonesia in 2022 is lower than in the previous year, nevertheless, the year 2022 has been quite an active and eventful year for the oil and gas industry in Indonesia. We saw several new platforms were installed and an old platform was decommissioned. Many development wells were drilled, and many idle wells were reactivated.   

Here are synopses of oil and gas production, field development, and exploration activities in Indonesia in 2022, and what we can expect to see in 2023, according to SKK Migas.

Oil Production

The average daily oil production in 2022 is 612,300 BOPD. This is below its 2022 target and also below the actual oil production in 2021. The oil production target for 2023 is 660,000 BOPD.

The top three oil producers are ExxonMobil Cepu Ltd., Pertamina Hulu Rokan, and Pertamina EP. Here are the top 15 oil producers in Indonesia in 2022.

Gas Production

The daily gas production in 2022 is 5,347,000 MMSCFD. This is below its 2022 target and also below the actual gas production in 2021. The gas production target is 6,160,000 MMSCFD in 2023.

Development Wells

Operators drilled 760 development wells in 2022. This is slightly below its target of 790 wells. However, it is a big increase from the number of development wells drilled in 2021. The target of development drilling in 2023 is 991 wells.

Workovers and well services

Oil and gas operators carried out 639 well workovers and 30,299 well services in 2022.

Reactivation of Idle Wells

As one of the strategies to increase oil and gas production, 968 idle wells were reactivated in 2022. The target of idle wells that will be reactivated in 2023 is set at 1086.

Investment

Investment in oil and gas projects in 2022 amounted to 12.3 billion USD. This is below its 2022 target but is higher than the amount of investment in 2021. The target of investment in 2023 is 15.5 billion USD.

Reserves Replacement Ratio (RRR)

With 890 million barrels of oil equivalent of reserves added in 2022, the ratio of reserves replacement in 2022 reaches 156%. This is higher than the RRR of 116% achieved in 2021. The target RRR for 2023 is 100%. The two biggest new reserves came from the Hidayah field development and the rejuvenation of the Sanga Sanga field.

The Hidayah field is located in the North Madura II work area and is operated by Petronas Carigali. It has estimated oil reserves of 88 million barrels of oil.

Exploration Drilling

Oil and gas operators in Indonesia drilled 30 exploration wells in 2022. This is higher than the 28 exploration wells drilled in 2021. The target of exploration drilling is set at 57 wells for 2023.

Twenty-two out of the twenty-seven completed exploration wells tested hydrocarbon. This represents an 81% success rate in exploration drilling.

Here are the 22 exploration wells that tested hydrocarbon in 2022.

2D Seismic Surveys

Oil and gas operators carried out 1950 KM of 2D seismic survey in 2022. This is below its target and the actual survey done in 2021. The target of the 2D seismic survey for 2023 is set at 1087 KM.

3D Seismic Surveys

3790 KM2 of the 3D seismic survey was conducted in 2022. This is below its target but higher than the actual survey done in 2021. The target of the 3D seismic survey for 2023 is set at 4602 KM2.

Unconventional Oil and Gas

Another strategy to increase oil and gas production in Indonesia is to explore the potential of unconventional oil and gas resources. Pertamina plans to drill two unconventional wells in 2023 in the Rokan work areas.

Strategic Oil and Gas Projects

Here are updates on the status of the 4 national strategic oil and gas projects.

1.           Jambaran Tiung Biru – Gas production from the two unitized fields of Jambaran and Tiung Biru came on stream on 20 September 2022. It is considered a strategic project as it will supply gas to industries in Central Java and East Java.

2.           Tangguh LNG train #3 – Train #3 of the Tangguh LNG plant is expected to come on stream in the first quarter of 2023.

3.           The IDD project – The Indonesia deepwater development project is in the process of changing partnerships and operatorship. 

4.           The Abadi Masela project – Pertamina is in the process of acquiring the interest of Shell in the project. The project is expected to be completed in 2029. 

Epilogue

As Indonesia is serious in its ambition to increase its oil and gas production, SKK Migas has set higher exploration and production targets for 2023. Also, the government has said that it will ratify the current oil and gas regulations to give stronger legal certainty to oil and gas investors and to attract more investments in 2023 and beyond.

We shall see an even more active and eventful year in 2023.

This article is adapted from the announcement made by SKK Migas on 18 January 2023. – Jamin Djuang

The latest total oil reserves in the world amount to 1757 billion barrels.

This amount can last for 55 years assuming the daily global oil consumption of 97 million barrels per day.

Here are the world’s top 20 countries having the largest oil reserves in billions of barrels in 2021.

1. Venezuela – 303.8
2. Saudi Arabia – 258.6
3. Iran – 208.6
4. Canada – 170.3
5. Iraq – 145
6. Russia – 108
7. Kuwait – 101.5
8. United Arab Emirates – 97.8
9. Libya – 48.4
10. USA – 47.1
11. Nigeria – 36.9
12. Kazakhstan – 30
13. China – 26
14. Qatar – 25.2
15. Brazil – 12.7
16. Algeria – 12.2
17. Ecuador – 8.3
18. Norway – 8.1
19. Angola – 7.8
20. Azerbaijan – 7

The Government of Indonesia has granted a 20-year extension of the Tangguh production sharing contract (Tangguh PSC). Under the agreement, the Tangguh PSC which is due to expire in 2035, has been extended to 2055.

The Tangguh PSC covers three work areas. They are Berau, Muturi, and Wiriagar.

The partners under the Tangguh PSC are BP as the operator, MI Berau B.V., CNOOC Muturi Ltd., Nippon Oil Exploration (Berau) Ltd., KG Berau Petroleum Ltd., KG Wiriagar Petroleum Ltd., and Indonesia Natural Gas Resources Muturi Inc.

The 20-year contract extension is expected to generate 5 billion USD in revenues for the government of Indonesia.

Anja-Isabel Dotzenrath, BP’s EVP of Gas & Low Carbon Energy, said: “This extension reflects BP’s long-term commitment to Indonesia. It will allow us to continue to build on the great work that our Indonesia team has been doing with our partners and the strong support of the Government to deliver much-needed natural gas safely and reliably from Tangguh to Indonesia, and other markets. Today’s agreement will help open new possibilities for Tangguh’s future.”

The prolific Tangguh is currently the largest gas-producing work area in Indonesia, accounting for around 20% of the country’s gas output. It has generated significant revenues for Indonesia, both at the national government level and in both Papua Barat province and Teluk Bintuni regency where the project is located.

To process the produced natural gas, the Tangguh LNG was constructed in 2009. The plant has safely delivered more than 1,450 cargoes of LNG to both local and international markets.

Its two LNG production trains have a combined liquefaction capacity of 7.6 million tons of LNG a year.

A third LNG train is currently under construction and is expected to come online in 2023, increasing Tangguh’s production capacity by 50%. 

BP and its partners are also working on the Tangguh UCC project, for which the Government of Indonesia approved a Plan of Development in 2021. The project comprises the development of the Ubadari gas field, enhanced gas recovery (EGR) through carbon capture, utilization, and storage (CCUS) in the Vorwata field, and onshore compression.

BP has vast interests in Indonesia. As the operator of the Tangguh project, BP also has interests in the Andaman II block offshore Aceh and has recently signed new PSCs for Agung I and Agung II blocks. 

Source: BP Press Release on 23 December 2022

We are seeing growing interests on the application of the CCS technologies to reduce carbon emissions around the world. CCS (Carbon Capture and Storage) is one of the ways to achieve net zero emissions.

Although CCS technologies have been around for many years, so far, there are only a few industrial plants that are equipped with CCS facilities. However, this is set to change as companies, especially oil and gas companies, begin to have serious interest in undertaking CCS and CCUS.

CCUS goes beyond CCS by utilizing the captured CO2 to achieve other purposes such as enhancing the recovery of hydrocarbon from the reservoirs.

Here are a few CCS and CCUS projects that are in the pipeline or being planned around the world.

JAPAN

Aiming at reducing the carbon emissions, Japan’s Ministry of Economy, Trade and Industry (METI) initiated the Tomakomai CCS Demonstration Project in 2012.

For this project, Japan CCS was commissioned to construct a CCS demonstration test plant in Tomakomai, Hokkaido, drill several injection wells, and construct a monitoring system to observe the behavior of CO2 and subsurface conditions after CO2 injection.

In April 2016, Japan CCS commenced injection of CO2 into a formation about 1,000 meters below the seabed.  In November 2019, the CO2 injection reached the target of 300,000 tonnes.

Following the injection, the company started Monitoring work that includes confirming that there is no CO2 seepage through monitoring the behavior of the injected CO2, constant monitoring of micro-seismicity and natural earthquakes, and conducting marine environmental surveys.

MALAYSIA

Petronas Carigali took FID (final investment decision) to develop the 3.3-million tonne/year carbon capture and storage (CCS) project at 3.2 TCF Kasawari sour gas field in Block SK316 offshore Sarawak, Malaysia.

The project, about 200 km off Bintulu, will capture and process CO2 from the field for injection into a depleted gas field.

THE UK

Phillips 66 in the UK is developing what could become the first-ever industrial-scale carbon capture project executed within a refinery at its affiliate’s 221,000 b/d Humber plant, with front-end engineering and design work awarded to Worley Ltd. expected to be complete by the end-2023.

NEW ZEALAND

New Zealand Energy has requested that the New Zealand oil and gas regulator, New Zealand Petroleum and Minerals, amend petroleum mining licenses 38140 (Waihapa) and 38141 (Ngaere) to allow for carbon sequestration.

INDONESIA

ExxonMobil and Pertamina signed a Heads of Agreement to further progress their regional carbon capture and storage hub (CCS) for domestic and international CO2.

The agreement defines the next steps for the project offshore Java—where the companies estimate geologic storage potential of up to 3 billion metric tons—including concept-select, pre-front-end engineering design, and a subsurface work program.

PEMA (PT Pembangunan Aceh) recently formed a joint-venture company, PT Carbon Aceh, to repurpose the now-depleted giant Arun field gas reservoir offering open-access storage of CO2 in 2029.

BP Indonesia has opened a pre-qualification tender for the provision of onshore front-end engineering and design (FEED) services for a carbon capture and storage (CCS) project at its Tangguh liquefied natural gas (LNG) complex in Indonesia.

BP and its Tangguh LNG partners today confirmed that Indonesian oil and gas regulator SKK Migas has approved the plan of development (POD) for a key carbon capture utilization and storage (CCUS) project at the Tangguh LNG export complex.

BP said this CCUS project will make Tangguh one of the lowest greenhouse gasses (GHG) intensity LNG plants in the world.

The scope of the Tangguh CCUS project includes the utilization of the separated CO2. The CO2 separated from the incoming natural gas will be reinjected back to the Vorwata gas reservoir for sequestration and enhanced gas recovery. The total emissions reduction is up to 25 million tonnes of CO2 equivalent by 2035.

AUSTRALIA

British Petroleum has entered into a non-binding agreement with Santos that will lead to BP investing in Santos’ Moomba carbon capture and storage (CCS) project in South Australia.

The carbon dioxide that is separated from natural gas will be captured at the Moomba gas processing plant and reinjected into the geological formations of the Cooper Basin. This will aim to capture 1.7 million tonnes of carbon dioxide each year.

The Cooper Basin’s reinjection capacity has been assessed at up to 20 million tonnes of carbon dioxide per year, for 50 years. This has the potential to be a large-scale carbon sink for power generators and other industries in Australia.

SINGAPORE

Chevron through its Chevron New Energies International subsidiary, and Mitsui O.S.K. Lines (MOL) will explore the technical and commercial feasibility of transporting liquified CO2 from Singapore to permanent storage sites offshore Australia.

“Developing safe and reliable CO2 transportation services is a crucial step in developing large-scale Carbon Capture, Utilization, and Storage (CCUS) solutions, said Mark Ross, president of Chevron Shipping Co.

THE US

BP and Linde recently announced plans to advance a major carbon capture and storage (CCS) project in Texas that will enable low-carbon hydrogen production at Linde’s existing facilities. The development will also support the storage of carbon dioxide (CO2) captured from other industrial facilities – paving the way for large-scale decarbonization of the Texas Gulf Coast industrial corridor.

Upon completion, the project will capture and store CO2 from Linde’s hydrogen production facilities in the greater Houston area – and potentially from its other Texas facilities – to produce low-carbon hydrogen for the region. The low-carbon hydrogen will be sold to customers along Linde’s hydrogen pipeline network under long-term contracts to enable the production of low-carbon chemicals and fuels.

This article is adapted by LDI Training from various sources.

About The Unique Arun Gas Field

The Arun field is a supergiant gas field. It had 16 trillion cubic feet of original gas in place and was discovered in 1971 by Mobil Oil in Aceh, Sumatra.

Interestingly, the gas concession was initially held by Asamera. Due to unsuccessful exploration by Asamera, it was sold to Mobil Oil in 1968.

The Arun gas reservoir had abnormally high temperatures and pressure of 178 degrees C and 7100 PSIG respectively. The reservoir is made up of carbonate rock located at 10,000 feet in depth.

Due to its high pressure, porosity, permeability, and reservoir thickness of about 500 feet, the Arun gas wells were extremely productive. Each well could produce more than 100 MMSCF of gas per day.

The highly prolific Arun field produced over 3000 MMSCF of gas per day from its 78 wells for more than 10 years. The produced natural gas was fed into the Arun LNG plant to recover the condensate and liquefy the gas.

The field is estimated to have produced over 14 trillion cubic feet of natural gas and 840 million barrels of condensate.

As a retrograde gas reservoir with no water drive, Mobil Oil took extreme care to manage the reservoir to achieve the highest gas recovery possible. Steps, such as gas reinjection, were taken to manage the reservoir pressure. Up to 900 MMSCF of dry gas were injected back into the reservoir daily through 11 injection wells.

As the reservoir and wellhead pressures eventually declined, gas compressors were used to boost gas production.   

By 2014, the Arun field gas production had become so low that the LNG plant was shut down permanently.

The now depleted and low-pressure Arun gas reservoir is a great candidate for storing captured CO2 as it is a volumetric reservoir meaning the reservoir is completely sealed. It is enclosed by impermeable barriers that prevent any fluid from entering or leaving the reservoir.

The Arun LNG Plant

The Arun LNG plant was built to monetize the huge amount of the discovered gas. It is the first LNG plant built in Indonesia and Southeast Asia.

Initially, the Arun LNG plant consisted of three LNG trains that started to operate in August 1978, September 1978, and February 1979 respectively.

Two trains were later added to the plant in October 1983 and January 1984 respectively.

All five trains produced a total of 55,000 M3 per day of LNG and 115,000 barrels per day of condensate.

The LNG plant eventually had six trains. The sixth train was completed in November 1984.

Up till 1999, Indonesia produced one-third of the LNG in the world.

A major problem in processing Arun gas is that the gas has a large percentage of mercury and it reacts with aluminium in the cryogenic system to form an amalgam.

After 36 years in operation, the Arun LNG plant was finally shut down in 2014.

The Gas Well Blowouts

The massive blowout in the Arun field happened in 1978 when the CII-2 well in the Arun field was being drilled.

The blowout killing efforts were led by Red Adair. Initially, the well control team attempted to kill the well from the top.  However, it failed.

Finally, the blowout was killed by drilling a directional well and then pumping a huge amount of acid followed by heavy mud into the bottom of the CII-2 well.

The blowout was so huge and due to the extremely high reservoir pressure, more than fifty high-pressure and high-volume mud pumps, and more than one hundred pump operators and engineers were brought in from several countries to kill the blowout.

Another Arun well, CIII-8, blew out two years later in 1980.

The Ambitious Arun CCS Project

Although the huge Arun field reservoir has been almost completely depleted for some time, it may have a second life.

As the world is committed to reducing carbon emissions by capturing emitted CO2, the Arun field has a huge potential to become the largest storage facility for captured carbon in Asia.  

PEMA (Pembangunan Aceh) has formed a joint venture company, Carbon Aceh, to perform a feasibility study up to the development, implementation, and operation of the Arun CCS project which is planned to start operating in 2029.

The depleted Arun gas reservoir is a perfect candidate for storing CO2 for the following reasons:

• It is almost completely depleted and therefore it has low pressure.
• It is completely enclosed and therefore the storage space is completely sealed.
• It has an enormous volume of storage space. It can store more than 1 billion metric tonnes of CO2.

Moreover, the Arun field already has infrastructure that can be used to facilitate the CCS project such as offshore terminals that can receive CO2 shipments from CO2 tankers and pipelines that can transport the CO2 to the Arun field.

Marzuki Daham, former Chairman of BPMA – Aceh Oil & Gas Regulatory Body – gave his comment on this important CCS project.

“A great location with the existing infrastructure will surely be a plus to support the project. It would be even more interesting if Arun can be an open-access storage for captured CO2 from many countries around the area. It is a step to save the planet.”

When the Arun carbon storage facility becomes operational, the Arun field will be known not just as one of the largest gas fields and LNG plants in the world, but it will also be known as one of the largest carbon storage facilities in the world.

This article is adapted from various sources by Jamin Djuang – Chief Learning Officer of LDI Training and author of “The Story of Oil and Gas – How Oil and Gas are Explored, Drilled and Produced”.

The oil and gas industry of Indonesia has been active and alive in the first nine months of 2022, and it expects to up the tempo of its exploration and production activities as it marches toward the year-end.

Here is the summary of oil and gas activities in Indonesia at the end of the third quarter of 2022 according to a report published by SKK Migas.

DEVELOPMENT WELL DRILLING

Oil and gas operators in Indonesia drilled 545 development wells in the first three quarters of 2022.

The head of SKK Migas, Mr. Dwi Soetjipto, said that the number of development wells drilled by the end of the third quarter of 2022 has exceeded the number of wells drilled in 2021.

To meet the daily oil and gas production targets, it has increased the target of the number of development wells in 2022 from 790 to 801.

EXPLORATION DRILLING

Oil and gas operators drilled 21 exploration wells in the first three quarters. This is the same number of exploration wells drilled in the same period in 2021.

WELL INTERVENTION

Oil operators carried out 495 workovers in the first three quarters. This number is 87% of the 2022 workover target.

At the same time, well service operations also took place at a high tempo. Companies carried out more than 22000 well service operations. This number represents 99% of the 2022 target.

OIL AND GAS PRODUCTION

Here is the daily oil and gas production at the end of September 2022.
Oil – 613,000 BOPD
Gas – 5,353,000 MMSCFD

The combined daily oil and gas production is 1,562,000 BOEPD. This number is around 90% of the 2022 target.

As most of the oil and gas fields are very old, while operators are drilling wells to increase production, they also are experiencing high rates of natural decline.

STATE REVENUES FROM OIL AND GAS

The oil industry contributed USD 13.95 billion or IDR 202 trillion to the coffers of the government of Indonesia in the first nine months of 2022.

In just 9 months, this amount has exceeded the entire 2022 target of the state revenues from oil and gas by 40% due to the high prices of oil.

RESERVE REPLACEMENT

The oil and gas reserve replacement ratio (RRR) reaches 97.5% of the 2022 target.

SKK Migas expects the RRR will reach 186% of the 2022 target by the end of this year as several plan of development (POD) will be approved.

The RRR realized in the past five years has been greater than 100% of the target.

MULTIPLIER EFFECTS OF OIL AND GAS OPERATIONS

The oil and gas industry activities create positive and significant multiplier effects to the economy of Indonesia besides generating substantial revenues to the government.

The value of the components produced domestically in oil equipment and services sold amounts to USD 2.9 billion or IDR 42 trillion.

TKDN (Tingkat Komponen Dalam Negeri), the percentage of domestic components or services in products, reaches nearly 64%.

SKK Migas is actively encouraging and promoting national entrepreneurs and equipment manufacturers to meet the needs of the oil and gas industry.

ONE-DOOR SERVICE POLICY

The One Door Service Policy (ODSP) of SKK Migas has been very instrumental in getting permits and licenses approved quickly.

The average licensing process period has been sharply reduced to about 1 day from 14 days before the ODSP policy was introduced.

SKK Migas is committed to making it easy for oil operators to carry out their exploration and production activities as it continues to encourage massive and aggressive efforts by oil operators to increase their oil and gas production.

This article is adapted by Jamin Djuang from a recent article published by SKK Migas – The Special Task Force for Upstream Oil and Gas Business Activities of Indonesia.

Do you want to be a “high potential individual”? The secret lies in having a good education.

Education is a great social equalizer. A good education can level the playing field for everyone, especially disadvantaged people. Education can open more and better opportunities for them in the future and provide the chance for them to work and live in the places of their dream.

Indeed, the UK government has just announced it is inviting “high potential individuals” to apply to work and live in the UK.

You are considered a “high potential individual” by the UK Government if you are a recent graduate from the world’s top 37 universities outside of the UK. These are universities outside the UK that appeared at least twice in the Top 50 rankings in 2021.

So, you are a “high potential individual” if you are a recent graduate from the following 37 universities located outside the UK:

• California Institute of Technology (Caltech) — U.S.
• Chinese University of Hong Kong (CUHK) — Hong Kong
• Columbia University — U.S.
• Cornell University — U.S.
• Duke University — U.S.
• Ecole Polytechnique Fédérale de Lausanne (EPFL Switzerland) — Switzerland
• ETH Zurich (Swiss Federal Institute of Technology) — Switzerland
• Harvard University — U.S.
• Johns Hopkins University — U.S.
• Karolinska Institute — Sweden
• Kyoto University — Japan
• Massachusetts Institute of Technology (MIT) — U.S.
• McGill University — Canada
• Nanyang Technological University (NTU) — Singapore
• National University of Singapore — Singapore
• New York University (NYU) — U.S.
• Northwestern University — USA
• Paris Sciences et Lettres – PSL Research University — France
• Peking University — China
• Princeton University —  U.S.
• Stanford University — U.S.
• Tsinghua University — China
• University of British Columbia — Canada
• University of California, Berkeley — U.S.
• The University of California, Los Angeles (UCLA) — U.S.
• University of California, San Diego — U.S.
• University of Chicago US — U.S.
• University of Hong Kong — Hong Kong
• University of Melbourne — Australia
• University of Michigan-Ann Arbor — U.S.
• University of Munich (LMU Munich) — Germany
• University of Pennsylvania — U.S.
• The University of Texas at Austin —  U.S.
• University of Tokyo — Japan
• University of Toronto — Canada
• University of Washington — U.S.
• Yale University — U.S.

Now we know why everyone wants to go to the best universities in the world.