BP captures gas resource in Indonesia
BP’s production sharing contract (PSC) to develop the Sanga-Sanga coal bed methane (CBM) project in Indonesia’s East Kalimantan, further boosts BP’s global portfolio of unconventional gas
A successful development will commercialise another significant energy resource to supply world markets.
The PSC was signed on 30th November 2009 between the Government of Indonesia and a consortium led by VICO, a joint venture between BP, ENI and others. Each holds a 37.8% interest in the existing Sanga-Sanga PSC. Preliminary studies on the block suggest it has a CBM resource potential of at least 4 trillion cubic feet of gas.
The PSC overlays the same acreage as the existing Sanga-Sanga conventional PSC which has extensive gas production infrastructure already in place with access to markets internationally, through the Bontang LNG plant, as well as the local customers. The existing infrastructure is expected to allow rapid and efficient development of CBM production.
BP Indonesia President William Lin said: ‘Combining BP’s deep CBM expertise with VICO’s long experience will open a new chapter for Sanga-Sanfa, translating its significant CBM potential into material levels of gas production. With VICO’s existing knowledge and infrastructure, we expect production to begin rapidly –in a very few years- and its supply to Bontang will enable Indonesia to become the world’s first CBM-to-LNG producer’
CBM is a form of natural gas present almost everywhere there is coal. Indonesia has significant but yet untested CBM potential across the country and is believed to hold over 450 trillion cubic feet of CBM resources 1.
While CBM is certainly plentiful, extraction can be expensive. Methane and water are pumped to the surface, where separation to produce dry methane takes place and the produced water is safely disposed of through re-injection into deeper non-productive sandstone.
Global production has grown as understanding of the gas and of the technologies needed to safely extract it has improved. In the USA, CBM contributes approximately 9% of domestic gas production and represents 4% of their gas resources. In recent years, production has also commenced in Canada, Australia, China and India.
BP pioneered the development of CBM technology and has over 30 years operating experience as the largest producer in the San Juan Basin, in the USA, with about 650 mmscfd (gross) production from approximately 1,300 company-operated wells.
The first step towards CBM production at Sanga-Sanga will be an appraisal programme to determine the CBM production capacity of the block. As work begins, BP’s experience at San Juan will be paramount in maximising recovery.
1 Source: Advanced Resources International Inc.