Balikpapan – The Most Interesting Oil Town of Indonesia

City of Balikpapan - Photo by Uut Minhudan
The city of Balikpapan – Photo courtesy of Uut Minhudan

Balikpapan, located in East Kalimantan, is the most well known and interesting oil town in Indonesia, and possibly in the world. It is at the center of oil and gas exploration and production activities that have been taking place in East Kalimantan since 1897 when the first oil well was drilled in Balikpapan. It is also the battleground of two fierce battles during World War II. It is set to become even more well known with the announcement of the relocation of the capital city of Indonesia from Jakarta to East Kalimantan.

Here are the interesting facts about Balikpapan.

The first oil discovery in Balikpapan

Oil was discovered in Balikpapan in 1897 when Jacobus Hubertus Menten, a Dutch mining engineer observed oil seepages in the area. With the help from Sir Marcus Samuel from Shell Transport and Trading Ltd, they drilled the famous Well Mathilda B-1 on 10 February 1897. The well was drilled to 222 Meter and it flowed initially at 184 barrels per day. This oil discovery in Balikpapan took place 38 years after Sir Edwin Drake drilled the world’s first oil well in America.

With the discovery, Jacobus Hubertus Menten and Sir Marcus Samuel formed Nederlandsch Indisch Industrie en Handel Maatschappij (NIIHM), and it continued to discover other oil fields away from Balikpapan. 10 February 1897 is considered the birth date of Balikpapan.

The Balikpapan Refinery

To process the crude oil from the surrounding area and to meet the needs for fuel, the oil refinery of Balikpapan was completed in 1922 by BPM (Bataafsche Petroleum Maatschappij) which was a subsidiary of Royal Dutch Shell. The Balikpapan refinery was damaged in 1942 when the Japanese army invaded Balikpapan. The refinery was controlled by the Japanese army in 1942-1945. BPM regained control of the refinery after the Allied forces ended the Japanese occupation of Balikpapan in 1945.

Several years later, Pertamina gained control of the refinery in 1949. The refinery has been expanded and upgraded several times to meet the increasing demand for fuel in the eastern part of Indonesia.

As one of the largest refineries in Indonesia, it is set to become even bigger. It is currently undergoing a large 4-billion-dollar expansion which will increase its processing capacity from 260,000 barrels per day to 360,000 barrels per day when it is completed in 2021. The refinery will have the capability to produce high-quality Euro V standard fuels.

The Discovery of Giant Oil and Gas Fields

Balikpapan experienced its biggest boom when several large international oil companies came to town after the production sharing contract scheme was introduced by Indonesia in 1966.

Balikpapan was the base of Union Oil of California (Unocal), Total and Roy M. Huffington Incorporated (Huffco) during their exploration and production operations in East Kalimantan where they discovered several giant oil and gas fields.

Pertamina has a huge presence in Balikpapan since 1949 when it took over the oilfields and the refinery which were previously operated by BPM (Bataafsche Petroleum Maatschappij), a subsidiary of Royal Dutch Shell.

Operated from Balikpapan, Unocal in partnership with Japex discovered the giant offshore oil field of Attaka in 1970. It also discovered the offshore Sepinggan field and the Yakin field both of which are clearly visible from the hills at Balikpapan. In 1996, Unocal discovered and developed the West Seno field which is the first deepwater oil field in Indonesia.

Total with its partner, Inpex, acquired the Mahakam Block in 1966. They discovered several giant offshore oil and gas fields: Handil, Peciko, Tambora, Bekapai, South Mahakam, Sisi-Nubi, and Tunu.

Huffco discovered the giant onshore Badak gas field in 1970 in East Kalimantan. The discovery of the giant Badak gas field had a huge influence on the course of oil and gas development in East Kalimantan. It prompted Huffco and Pertamina of Indonesia to build an LNG plant making it possible to export the gas.

Besides the Badak field, Huffco subsequently discovered the Nilam, Pamaguan, Semberah, Mutiara, Beras, and Lempake fields.

Huffco later became known as VICO Indonesia (Virginia Indonesia Company) in 1990 after Mr. Roy M. Huffinton sold the company.

After the introduction of the production sharing contract scheme  (PSC) in 1966, and with the discovery of several giant oil and fields in East Kalimantan and in other parts of Indonesia, crude oil production in Indonesia increased from 500,000 BOPD to 1,650,000 BOPD at its peak in 1977.

The Badak LNG Plant in Bontang

The LNG plant known as the Badak LNG was completed in 1977. Located in Bontang, besides processing the gas produced by Huffco from the Badak field, the Badak LNG plant also processes gas produced from the fields operated by Unocal and Total located in East Kalimantan. Up until the completion of the LNG plant, most of the associated gas produced by Unocal and Total were flared.

The Badak LNG plant initially comprised of two trains. Over the years, with new field discoveries, six additional trains were constructed. With 22.5 million tons per year LNG production capacity, it is one of the largest LNG plants in the world.

As of 16 September 2019, Badak LNG has delivered 9445 LNG cargoes to countries such as Japan, Taiwan, Korea, China, USA, Russia, and India. 

The Fierce Battlefield during World War II

Being rich in oil and having a refinery, Balikpapan was so vital that it became a battlefield twice during World War II.

The battle of Balikpapan in 1942

During World War II, in order to control the supply of fuel, Japan invaded Balikpapan in 1942. The Dutch garrison resisted the invasion but eventually was defeated by the much bigger Japanese forces. The refinery was partially destroyed during the invasion. Japanese forces took control of Balikpapan, oil production and the refinery from 1942 to 1945.

The Battle of Balikpapan in 1945

To regain control of Balikpapan and the oil supply, the Allied forces directed by General Douglas McArthur and spearheaded by the Australian 7th Division invaded Balikpapan on 25 June 1945. After 3 weeks of fierce fighting and heavy bombing, the Japanese soldiers in Balikpapan finally surrendered on 21 July 1945. Many Japanese soldiers fought to the end in the battle. There is a Japanese cemetery hidden among the hills in Balikpapan.

The Coal Boom of Balikpapan in the 1990s

Balikpapan experienced another economic boom when it became the center of the booming coal production in East Kalimantan beginning in the 1990s.

The Balikpapan Coal Terminal completed in 1995 is one of the biggest coal terminals in Indonesia. It has a throughput capacity of 15 million tons of coal annually.

Will Balikpapan continue to boom?

Since the discovery of the first oil well in Balikpapan in 1897, Balikpapan has seen several booms in the last 120 years. It has grown from a small fishing village to become a city with a population of 850,000 today.

On 26 August 2019, the President of Indonesia, Joko Widodo, announced that Indonesia will relocate its capital city from Jakarta to East Kalimantan. As the main gateway to East Kalimantan, Balikpapan will be the center of activities during the construction of a new capital of Indonesia. So, Balikpapan will likely continue to boom.

Finally, Balikpapan indeed is a very interesting town. As an oil and coal mining town, it has been voted several times as the most liveable city in Indonesia.  Thousands of oil people from around the world have worked and lived here. Many children of international expatriates and Indonesian oil professionals from Java, Sumatera and other parts of Indonesia grew up in Balikpapan. Most of them have fond memories of Balikpapan.

Many sons and daughters of the first-generation Indonesia oil professionals follow the footsteps of their parents to work for oil companies in Balikpapan. There is a saying in Balikpapan whoever has drunk the water of Balikpapan will surely return. The writer of this article lived and worked for Unocal in Balikpapan from 1976 to 1980, and he has returned to visit this interesting place many times.

Jamin Djuang

Pertamina Dumai Refinery reduces its fuel costs by 40%

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The PLN power plant at Muara Karang, Jakarta.

Pertamina has completed the construction of the 67 km gas pipeline supplying gas to its Unit II Refinery in Dumai. With the commissioning of the 24-inch pipeline on 14 April 2019, the fuel needed to operate the refinery is now supplied by the gas produced from the nearby gas fields.

The gas comes from the following three blocks:

  1. The prolific Grissik field located in the Corridor Block which is operated by ConocoPhillips. The Grissik field produced more than 900 MMSCF of gas per day in 2018. With an area of 2258 square kilometer, the Corridor Block is one of the largest gas blocks in Indonesia. Other very large gas blocks are the Tangguh and the Mahakam blocks.
  2. The fields located in the Bentu Block which is managed by PT Mega Energi Persada (PT EMP). The Bentu Block is located near the city of Pekanbaru. PT EMP also supplies its gas to Indonesia’s state power company (PLN) and Riau Andalan Pulp and Paper (RAPP).
  3. The oil and gas fields located in the Jambi Merang Block which is now operated by Pertamina Hulu Energi Jambi Merang (PHE Jambi Merang). PHE Jambi Merang acquired the block from the Joint Operating Body Pertamina-Talisman Jambi Merang on 9 February 2019.

In the past, the refinery used the fuel oil, Naptha and fuel gas it produced internally to meet the fuel needs of the refinery.

The project has brought significant economic benefits to both the gas producers and the refinery. In using the gas, the refinery is able to reduce its fuel costs by 40%.

The Top 10 Crude Oil Producing Companies in Indonesia in 2018

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The photo showed the drilling activity at the West Seno field, the first deepwater field in Indonesia. The photo was taken by Dr. Tony Tirta.

The average crude oil production in Indonesia in 2018 is 803,000 barrels per day according to SKK Migas of Indonesia.

Here are the top ten crude oil producing companies in Indonesia in 2018.

Chevron Pacific Indonesia – 209,000 BOPD

Chevron is the biggest oil producer in Indonesia in 2018 and has been a leading oil producer in Indonesia for more than 90 years. It started operating in Indonesia in 1924 under Standard Oil Company of California.

Chevron operated oilfields in Sumatera and East Kalimantan. It’s East Kalimantan assets came from the acquisition of Unocal in 2005. Chevron handed back all the assets in East Kalimantan to Indonesia government on October 24, 2018, after 50 years of operation under Unocal and Chevron.

Currently, Chevron’s oil production comes mainly from the oil fields located in Riau, Sumatera under the Rokan Production Sharing Contract. The biggest oil field in the Rokan PSC is the Duri field which has been under steam-flood since 1985 and is one of the largest steam flood projects in the world.

ExxonMobil Cepu Ltd – 208,000 BOPD

ExxonMobil Cepu Ltd is the operator of the Cepu block located in Central Java and East Java. The Cepu Cooperation Contract (KKS) was signed on 17 September 2005 and will continue until 2035. ExxonMobil holds a 45% interest in the Cepu block.

ExxonMobil started exploration in 1999, and the oil from the Banyu Urip field started to flow in December 2008.

Pertamina EP – 79,000 BOPD

Pertamina EP operated 21 oil and gas fields located in various parts of Indonesia. These oilfields are managed under five asset groups based on their geographical locations.

Located in North Sumatera and some part of South Sumatera, the Asset One oilfields include Rantau Field, Pangkalan Susu Field, Lirik Field, Jambi Field, dan Ramba Field.

Located in South Sumatera, the Asset Two oilfields include Prabumulih Field, Pendopo Field, Limau Field dan Adera Field.

Located in West Jawa, the oilfields included in Asset Three are Subang Field, Jatibarang Field dan Tambun Field.

Located in Central and East Jawa, the Asset Four oilfields include Cepu Field, Poleng Field dan Matindok Field.

Located in Eastern part of Indonesia, the oilfields in Asset Five are Sangatta Field, Bunyu Field, Tanjung Field, Sangasanga Field, Tarakan Field dan Papua Field.

Pertamina Hulu Mahakam – 42,000 BOPD

Pertamina Hulu Mahakam became the operator of the oil and gas fields located in the Mahakam Block on 1 January 2018. The fields were previously discovered and operated by Total along with Inpex as its partner. They acquired the block in 1966.

Several giant oil and gas fields are located in this block such as the Handil field, the Tunu field, and the Peciko field.

Pertamina Hulu Energi OSES (Offshore South East Sumatera) – 30,000 BOPD

Pertamina Hulu Energi OSES became the operator of the oil fields in Block South East Sumatera on September 6, 2018. The fields were previously operated by CNOOC, China National Offshore Oil Company.

Pertamina Hulu Energi ONWJ – 29,000 BOPD

Pertamina Hulu Energi ONWJ (PHE ONWJ) is currently the operator of the  Offshore North West Java (ONWJ) production sharing contract following the change of company ownership from BP to Pertamina in July 2009.

The contract area, located in the Java Sea, covers an area of approximately 8,300 square kilometers – stretching from the North of Cirebon to Kepulauan Seribu.

The giant Ardjuna field is located in this Production Sharing Contract area. It was discovered by ARCO – Atlantic Richfield Company –  in 1969 and operated by ARCO until BP – British Petroleum – acquired ARCO in 2000.

The production facilities consist of 670 wells, 170 shallow water platforms, 40 processing and service facilities and some 1,600 kilometers of sub-sea pipeline.

Medco EP Natuna – 16,000 BOPD

Medco EP Natuna, a subsidiary of Medco Energi, is the operator of the South Natuna Sea Block B. The field was initially operated by ConocoPhillips until Medco Energi acquired it in 2016.

Besides producing oil, Medco EP Natuna also supplies gas to Singapore using a 656 KM long 28” subsea pipeline.

Petronas Carigali (Ketapang) – 15,000 BOPD

Petronas Carigali Ketapang operates the Bukit Tua Field located in the Ketapang Block in East Java. Bukit Tua is an oil field but with a significant amount of associated gas. The offshore field is situated at a water depth of about 57 m.

The production facilities consist of wellhead platforms, an FPSO – Floating Production, Storage and Offloading – and onshore receiving facilities (ORF) in Gresik.

PetroChina International Jabung – 14,000 BOPD

PetroChina International Jabung operates the prolific Jabung Block located in Jambi in Central Sumatera.

The company produces crude oil, condensate, LPG and gas. PetroChina supplies gas to Singapore using a 450 KM long subsea pipeline.

An interesting aspect about the block is that PetroChina discovered the fractured basement rock contains a significant quantity of gas can flow at significant rates.

Pertamina Hulu Kalimantan Timur – 13,000 BOPD

Pertamina Hulu Kalimantan Timur operates the East Kalimantan-Attaka Work Area. Chevron was the previous operator of the work area until it handed over the operatorship to Pertamina on October 25, 2018.

Attaka, the famous giant oil field is located in this block. The Attaka field was discovered and operated by Unocal until Chevron acquired it in 2005.

The oil fields in this work area are in the late declining phase. Around one billion barrels of oil and 3 TCF of gas have been produced from this work area.

The 10 Giant Offshore Oil and Gas Fields in Indonesia

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A drilling rig on top of a fixed offshore production platform. The drilling operation was supported by a floating platform.

 

Since 1966 when Indonesia began offering production sharing contracts (PSC) for international companies to explore and produce oil and gas in Indonesia, many giant and super-giant oil and gas fields were discovered.

Giant fields are those with estimated ultimate recoverable reserves (EUR) of 500 million barrels of oil or gas equivalent (MMBOE) and super giant oil fields are those holding an equivalent of 5.5 billion barrels of oil reserves.

Here are the ten giant offshore oil and gas fields in Indonesia discovered between 1966 and 2000.

1. Abadi Field

Abadi is a giant gas field discovered by Inpex in 2000 in the Masela contract area in the Arafura Sea. The Abadi field has an estimated ultimate recovery (EUR) of 768 MMBOE and it is located 93 miles offshore from the province of Maluku in the eastern part of Indonesia.

Originally the field would be developed using subsea production system and a floating LNG (FLNG) facility. The plan now is to develop the field based on an onshore LNG development concept.

Inpex in partnership with Royal Dutch Shell is currently conducting preliminary front-end engineering design (Pre-FEED) studies for the Abadi field development based on an onshore concept. The LNG project will produce 9.5 MM tons of LNG annually.

When developed, the Abadi field may become the biggest deepwater gas project in Indonesia. It is expected to produce more than 1 billion SCF of gas per day and 20,000 barrels of condensate per day for 24 years.

2. Gula Field

The Gula field is an offshore gas field discovered by Unocal in its Ganal production sharing contract area located in the Kalimantan strait in 2000. With an EUR of 545 MMBOE, it is a giant gas field.

The Gula field, along with the Gendalo discovery and the Gada discovery, is one of the many discoveries made by Unocal in the deep-water area between Kalimantan and Sulawesi. These discoveries confirm that the Central Delta play contains world-class gas resources.

The Gula field is currently an undeveloped discovered resource.

3. Ubadari Field

Ubadari is a giant offshore gas field discovered in 1997. The Ubadari field has an EUR of 500 MMBOE and it is located at Bintuni Bay in West Irian province.

The Ubadari field will supply its gas to Tangguh LNG plant when the Tangguh LNG Train-3 project is completed in 2020. The Tangguh expansion aims at meeting the ever-increasing demand for energy in Indonesia and accelerating the development of West Irian.

PLN, Indonesia’s electricity company, has signed a sales and purchase agreement to buy up to 1.5 million tons of LNG produced by Tangguh LNG plant annually.

Tangguh LNG plant is scheduled to process the gas produced from the six gas fields located at Bintuni Bay: Vorwata, Wiriagar Deep, Ofaweri, Roabiba, Ubadari, and Wos.

4. Vorwata Field

Vorwata is an offshore giant gas field located in Bintuni Bay in West Irian Province. The Vorwata field, with EUR of 1833 MMBOE, was discovered by ARCO in the Berau block in 1997. BP became the operator of Vorwata field after it acquired ARCO.

Gas production from Vorwata field started in 2009. The field is capable of producing more than 1 BCF of gas per day and the gas is processed into LNG by the Tangguh LNG plant.

5. West Seno Field

The West Seno field is a deepwater oil field discovered by Unocal in 1996. Having an EUR of 553 MMBOE, it is a giant oil field and is currently operated by Chevron.

Lying in water depths of 2,400 to 3,400 feet, the West Seno field is Indonesia’s first deepwater development. It lies in the Makassar Strait PSC off Kalimantan on the continental slope of the northern Mahakam Delta.

The oil is produced using two tension leg platforms and a floating production unit, tied back by two export pipelines to onshore infrastructure.

6. Peciko Field

Peciko is a gas field located offshore in the Mahakam Delta in East Kalimantan. The field was discovered by Total with INPEX as its partner in 1991. The Peciko is a giant gas field having EUR of 1180 MMBOE.

Of all the producing fields in the Mahakam River delta, the Peciko field is unique in that its reservoir trap is both structural and stratigraphic.

The Peciko wells are highly productive having an average well productivity of 80 MMSCF of gas per day. Total daily gas production exceeded 1 BSCF during its peak. A substantial quantity of condensate is being produced along with the gas.

7. Tunu Field

The Tunu field is a supergiant gas field discovered by Total along with Inpex as its partner in 1977. It is located at the shallow waters along the outer limits of the delta offshore Mahakam Block in East Kalimantan. It has an EUR of 4378 MMBOE.

Started in 1978, the Tunu field produces gas and condensate having negligible CO2 or H2S, with the main productive reservoirs lying at depths from 2,200 to 4,900 meters.

Developing the large Tunu field is challenging and producing the gas requires drilling a large number of wells. The field has a large surface area of 20 Km wide and 75 Km long and it is located at the wetland of Mahakam swamp.

8. East Natuna Field

The offshore East Natuna gas field was discovered by AGIP in 1970. It is located 140 miles northeast of the Natuna Islands, Indonesia’s northernmost territory. It is a super-giant gas field with estimated recoverable reserves of 46 trillion cubic feet (TCF) of gas.

There were serious studies done and attempts made by Exxon-Mobil and Pertamina to develop this field.

The field is currently undeveloped due to its very high CO2 content of 71%. To produce the gas will require removing the CO2 from the gas and injecting it back into the reservoir. Production can be commercially viable when the price of oil is above $100 per barrel.

9. Attaka Field

The Attaka field is a giant oil and gas field discovered by Unocal in partnership with Inpex in 1970.   Chevron became the field operator after it acquired Unocal in 2005. Having an EUR of 1000 MMBOE, the Attaka field is located 12 miles from the shore of East Kalimantan.

The huge Attaka reservoir, formed in the very prolific Kutei basin, has an areal closure of 8000 acres. Due to its large areal extent, originally the oil and gas were produced from more than 100 wells located in 6 remote wellhead platforms.

Ten years later, five subsea wells were completed in 1981-1984 to produce the untapped oil accumulation in areas out of reach of the existing remote platforms. These are the first subsea completions in Indonesia.

Attaka field daily oil production was 110,000 BOPD at its peak and gas production was 150 MMSCFPD. Now the Attaka field is quite depleted.

10. Ardjuna Field

The Ardjuna Field is a giant oil field having an EUR of 698 MMBOE. This is the first offshore giant field discovered since the birth of the Indonesian PSC system in 1966.

The Ardjuna field was discovered by ARCO in the Offshore North West Java (ONWJ) production sharing contract area in 1969. Subsequently, it was operated by BP when it acquired ARCO in 2000. Now the field is operated by Pertamina Hulu Energy ONWJ Ltd.

Interesting facts about the Ardjuna field include the drilling of the first horizontal well in Indonesia in 1985 and supplying gas to PLN’s power plant in Muara Karang in Jakarta in 1993.

Pertamina’s refinery in Cilacap began using crude oil from Ardjuna field in 1986.

Jamin Djuang

1 September 2018

The largest tidal power plant in the world

Indonesia will build the largest tidal power plant in the world in the straits of Larantuka at the Island of Flores. The power plant is designed to provide electricity to more than 100,000 residents in that area.

This Larantuka power plant project aligns with Indonesia’s commitment to increase the share of renewable energy in the total energy supply to 25% by 2025. It also commits to reduce the emission of CO2 by 300 million tonnes by 2030.

The tapping of ocean energy, consisting of wave and tidal energy to produce clean and cheaper power will grow significantly.  According to Market Research Future, the annual growth rate of the global wave and tidal market is expected to be more than 17% till 2023.

Please read this great article on “Larantuka Straits, Indonesia will be home to the largest tidal power plant in the world” written by Novrida Masli.

You can learn how to tap the energy from the ocean in this video.

10 Interesting Facts About The Super-Giant Oil Field of Attaka

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This is the Attaka field, a super-giant offshore oil field located 12 miles from the shore of East Kalimantan in Indonesia. It was discovered by Unocal in August 1970. Unocal, and later on Chevron, was the operator of the Attaka unit on a 50-50 interest basis with Inpex. Attaka field is considered a super-giant oil field having 1023 MMBOE of recoverable reserves.

Here are the interesting facts about the Attaka unit:

  1. Two years after its discovery, Attaka field started producing oil in November 1972, making it as the first offshore field in Indonesia.
  2. It has 10 platforms, 6 of which are remote well head platforms producing oil and gas from 109 wells.
  3. Five subsea wells were completed in 1981-1984 to produce the oil accumulation in areas out of reach of the existing remote platforms. These are the first subsea completions in Indonesia and in Asia.
  4. Following the first discovery well, the Attaka Well 1A, seven appraisal wells were drilled to assess to size and potential of the hydrocarbon accumulation.
  5. The huge Attaka reservoir, formed in the very prolific Kutei basin, is a faulted anticline. It has an areal closure of 8000 acres. Attaka field is one of five super-giant fields discovered in the Kutei basin.
  6. Its oil reserves are attributed to oil found in 22 separate sands at depth between 2800 feet and 7600 feet.
  7. Attaka sands have very high permeability. It is as high as 5 Darcy in some wells.
  8. Attaka field daily oil production was 110,000 BOPD at its peak and gas production was 150 MMSCFPD.
  9. A significant milestone was reached when cumulative oil production of 600 million barrels was recorded at 6:42 PM in March 7, 2001. Cumulative gas production in that same year was 1.3 trillion SCF.
  10. Attaka field has more than 50 sands with variable oil reserves. Reservoir sand thickness ranges from 5 to 100 feet. To produce them economically, multiple zone completion method using dual tubing strings and multiple packers was selected. This method allows the engineers the flexibility to select from which of the 2 to 4 perforated zones in each well they would like to produce from.

Jamin Djuang

15 October 2017