Publications

Gas fields which have small reserves, located in remote areas far from existing pipeline network and infrastructure are considered as a stranded marginal gas fields. Special incentives would be required to commercialize the gas.The Kerendan gas fied, Bangkanai PSC, is regarded as a stranded marginal gas field. it is located in the middle of Kalimantan Island (North Barito Regency - Central Kalimantan), has small reserves, far from existing pipeline network and no adequate access road and infrastructure. The Kerendan gas field was discovered by Unocal in 1982 with the exploration well (Teweh Block). Unocal relinquished the block in 2000, due to lack of a gas market.There is Currently chronic shortage of electricity in Kalimantan. This opens an opportunity to develop the Kerendan gas field as fuel for power generation. Due to the location of the Kerendan gas field in a remote area, it will be effective for the power plant to be built near the producing wells. There is a company interested to build and operate the power plant and sell the electricity to PLN.The problem is at the expected netback gas price price from domestic power generation is not favorable even with the existing applicable incentives. The prevailing gas price for domestic power generation is constrained since the electricity price is regulated by the government.To be able to develop the Kerendan gas field, better incentives from the government are needed. Several incentives such as investment credit, interest cost recovery and change of profit split are examined. If the incentives could not lift up the economics above the minimum requirements, the assistance of government on the gas price would be required. These incentives are ranked to their impact on the economics.