Publications

East Kalimantan economic growth of 24% in the past 10 years has stimulated increasing electricity demand. However, current coal and diesel base engine power plants need to be converted to gas bases engines for better environmental sustainability, thus near field gas development becomes valuable to address the discrepancy between gas supply and gas demand for electricity in East Kalimantan. This paper will present the strategy and integrated study on how to monetize the stranded gas zone in the onshore South Mahakam field and optimize its project economics under unfavorable domestic gas price. Development drilling results in the past 5 years dictate the likelihood of finding the un-prognosed gas zone of about 30% - 40% from total net pay found, and it has been proven by several Drill Stem Test (DST) performed in different gas zone resulting in 0.50 to 1.70 MMSCFD gas rate. Limited volume of gas resources scattered across the field, and the lack of an existing gas network lead to the unattractiveness of project economics for its development. The development scenario and project management play a significant role in the project economics, hence a comprehensive analysis of subsurface, surface and project engineering has been performed to achieve a reliable development strategy which will deliver added value. An integrated geoscience and engineering evaluation along with project cost optimization offer new hope for monetizing the gas resources of the onshore South Mahakam field. Planning for the most appropriate development concept involves an analysis of some possible scenarios which consist of subsurface uncertainty, workover candidate selection and project engineering design, i.e., the use of MP, VLP compressor and the re-useable pipeline. The result of the study shows that the option to complete a workover program focusing on a high-pressure zone, sequential pipeline installation strategy, and the use of a VLP compressor to extend field lifetime will solve the issue of unattractive project economics in monetizing stranded gas resources in the onshore South Mahakam field. This strategy will successfully deliver 19 BCF of gas resources which will be transferred to the state-owned power plant with 10 years gas delivery commitment. A positive project NPV and project IRR greater than the company’s hurdle rate indicate the project's feasibility. In addition, this development initiative is a concrete move toward the net zero emission target by Pertamina, since the produced gas used to power engines for electricity, will be replace coal and diesel base engines in the long run.