Publications

Coal Bed Methane is an unconventional source of gas and represents a significant energy resource in many countries worldwide. Indonesia has vast prospective resources (unproven reserves) of CBM - estimated up to 450 Tcf. The host coal beds are located at shallow depths throughout the Archipelago from West to East. Coals have been mined for many years with the most prolific seams located in South Sumatra and Kalimantan. Yet these prolific CBM prospects have remained largely untapped. Indonesia was a relatively late starter in the exploitation of CBM assets given that this unconventional source of gas has been exploited for several decades worldwide (i.e., USA, Russia, Canada, China and Australia). The history of exploration here is relatively brief - less than a decade - and can arguably be described as ‘unsuccessful’ to date. A comparatively limited number of wells have been drilled, a mere scratch of the subsurface! The main players have included some conventional gas explorers as well as many start-up companies with limited experience in the field of CBM exploration. VICO is considered to have had the most success (albeit relatively minor and not commercial) following an intensive drilling campaign in their conventional oil and gas SangaSanga PSC, (East Kalimantan). Others such as Pertamina, Ephindo, NuEnergy, Medco, Santos, CBM Asia, Sugico, ExxonMobil and Star Energy have also been key players. Indonesian coals are Tertiary in age which differs from most of those worldwide (Cenozoic or older). As expected variations are also evident in their bulk, chemical and thermal properties. These factors have in some instances labelled the coals as unattractive with regards exploitation, but certain key data do not corroborate this opinion. Several challenges have been encountered on the journey towards making Indonesian CBM coals a significant energy source and these pitfalls are not solely limited to being geological in nature. Difficulties include adherence to government regulations, land and permit acquisitions and sale gas agreements. Added to this is an absence of clarity on concession rights where coal mines and/or oilfields are located at surface or in the shallow subsurface. Furthermore, the industry has also been challenged in adopting optimum drilling practices. All these issues have caused some frustrating delays in expediting many projects with the result that some of the larger players have changed strategy and relinquished acreage (e.g., ExxonMobil, Santos and BP). What of the future for CBM Indonesia? A serious objective and independent review is required by the government-appointed regulators and stakeholders to kick-start renewed interest in such a large and valuable resource. Failure to do so will allow this asset to remain untouched and leave the country with a deficit in gas supply in the very near future. This would also signal a negative impact on investment in other unconventional ventures such as shale gas/oil exploitation.