Pertamina plans to develop more coal-bed methane projects in a bid to meet the growing demand for new energy sources in Southeast Asia’s largest economy, a top company executive said on Wednesday.
Pertamina Hulu Energi, a unit of state-owned energy company Pertamina, expects to start generating electricity from its Tanjung Enim coal-bed methane assets in South Sumatra in December, said Salis Aprilian, chief executive of PHE.
It will be PHE’s first CBM project and the country’s second after the Sanga Sanga field in East Kalimantan, run by Virginia Indonesia Company.
“The gas will generate around 2 megawatts of electricity, not much, but enough to bring power for two or three villages near the site,” Salis said.
Coal-bed methane is natural gas trapped in underground coal beds. Water is injected into the coal beds to extract the methane.
Pertamina is looking to develop more CBM assets across Indonesia, with a production target set at 500 million metre standard cubic feet per day (MMSCFD) by 2025.
“We are looking to develop it further as CBM is more durable than other energy sources,” Salis said.
PHE has 12 CBM working areas – eight located in South Sumatra, two in South Kalimantan and two in East Kalimantan.
The company plans to spend around $50 million through 2015 to further develop its CBM assets.
Salis said PHE’s venture into unconventional energy sources will be in line with the government’s efforts to reduce energy costs, by cutting the portion of expensive oil to 26.2 percent in 2025.
The company will aim to produce 71,000 barrels of oil per day and 545 mmscfd of natural gas this year, Salis added.
“Currently oil production stood at 60,000 barrels of oil per day and gas at 500 mmscfd but we are still on schedule to meet our target,” he said.
Salis said the company set aside Rp 11.6 trillion ($1.22 billion) in capital expenditure in April, to help finance various projects this year. The company has spent Rp 1.9 trillion in the first quarter.
Advances Resources International, a consulting firm providing services related to unconventional gas, ranked Indonesia sixth in the world for CBM reserves. According to the firm, Indonesia has some 400 trillion cubic feet of potential CBM reserves, with South Sumatra alone holding around 183 trillion cubic feet.
The government has planned a road map for CBM development, aiming to produce 1,500 mmscfd by 2025. State oil and gas regulator BPMigas approved eight CBM development contracts in April, bringing the total to 50 so far.
Pertamina recently changed its description from an oil and gas company to an energy company, in a bid to tap into other energy sources such as geothermal and bio-ethanol.
Salis spoke positively about the name change and said PHE shared the same vision with its parent company.