ECONOMY SCALE OF COAL BED

METHANE (CBM) DEVELOPMENT

Unggul Setyatmoko
Country Manager Dart Energy Indonesia
Palembang, 6 July 2011

What is Coal Bed Methane (CBM)?

Coal Bed Methane

Conventional Gas

Methane 70-90%
ethane
propane
butane
pentane trace
carbon dioxide 0-8%
nitrogen 0-5%
hydrogen sulfide 0-5%

Methane 94-98%
Traces of:
carbon dioxide
ethane
nitrogen

Typical calorific
value of
1,005BTU/scf

Typical calorific
value of
1,040BTU/scf
Heating Value can be spiked
via LPG or blending

CBM Production Mechanism

Methane gas adsorbed into coal seams

that can hold 5 times as much gas as an
equivalent volume of sandstone

Gas held in coals by hydrostatic water

pressure

By drawing down hydrostatic pressure

(dewater) gas diffuses from the micro
pores into cleats and fractures.

As water flow rates go down gas

production initially increases.

Result is high volumes of upfront water,

slowly building gas production and longer
times to payback

200

10

180

160

140

CBM

120
100

7
6
5

80

Water

60

40

20

0
1

9 10 11 12 13 14 15 16

Years of Operation

Gallons of Water / Minute

MC F of C B M / D ay

CBM and Water Production

In Comparison with Conventional Gas

Sand grain

Pressure

Sandstone
(Oil and Gas)

Producing Rate

Pore
space

Producing Time

Gas free in pore space

Gas
Water

Coal
(CBM)
Face
cleat

Gas adsorbed in matrix

Pressure

Producing Rate

Butt
cleat

Producing Time

World CBM Potential

Canada 600 2,700 Tcf

US 700 Tcf

UK 70 Tcf

Poland 100 Tcf

Russia 600 4,000 Tcf

Germany 100 Tcf Ukraine 70 Tcf

China 1,300 Tcf
India 300 Tcf

Indonesia 450 Tcf

South Africa 70 Tcf

Australia 350 Tcf

Indonesias has the 5th largest potential CBM resources in the world.
CBM Industry is only developed in North America and Australia to date..
Source: Tri-Zen presentation to CSG 2010, Brisbane Conference March 2010

CBM Resources in Indonesia

Indonesias potential CBM resources : 453 TCF

32 CBM Blocks have been awarded by Government to date
Source: MIGAS

In Comparison with Conventional Gas

ACEH (NAD)

5.72
NATUNA

NORTH SUMATRA

1.27

52.59
CENTRAL SUMATRA

24.96

8.15

EAST BORNEO
PAPUA

SOUTH SUMATRA

24.21

3.18

28.00

CELEBES
WEST JAVA
MOLUCCAS

4.16
5.08

13.65

EAST JAVA
(Advance Resources Interational, Inc., 2003 processed)

Conventional Gas Reserves : 170 TCF (112 Proven + 58 Potential)

CBM Resources : 453 TCF..
Source: MIGAS

Indonesia Suppy & Demand Overview

EXPORT

Domestic Supply Shortage:

75 MMSCFD in 2011 - 2014

Supply Shortage:
100 MMSCFD Now
350 MMSCFD in 2025

Domestic Supply Shortage:

50 MMSCFD in 2011
200 MMSCFD in 2025

Limited Domestic
Demand Large Supply
Sources for Java
Domestic Supply
Shortage in 2016 in
Order to Fulfill Export
Commitment

Shortage by
450 MMSCFD in 2016
3300 MMSCFD in 2025
(Existing & Future
Supplies from SS
Accounted)

Longer & Experimental Appraisal Program

Ramp-up Risk & Length

Number of Wells

CBM Economics

CBM : Margin Business - Manufacturing

Development Parameters
Luas (Km2)
Luas Sweet Spot (Km2)
OGIP (BCF)
Maximum Jumlah Sumur (120 Acres)
Produksi (BCF)
Harga Gas ($/MMBTU + 2% eskalasi)
Capex (Juta $)
Opex (Juta $)
Total Investasi (Juta $)

1000
350
900
480
265
6
517
424
941

NORMAL DEVELOPMENT SCHEDULE

IRR Kontraktor (%)
NPV Kontraktor (Juta $)
Gov Tak e (Juta $)

10.7
8.5
561

ACCELERATED DEVELOPMENT
IRR Kontraktor (%)
NPV Kontraktor (Juta $)
Gov Tak e (Juta $)

15.2
50.4
618

Fast, Low Cost, Low Risk Exploration

CBM Rig
This

Not This

Logging Unit

This

Not This

Drilling Cost Comparison

Description

Indonesia
(USD)

India
(USD)

China
(USD)

Australia
(USD)

Core Well

600,000

280,000

320,000

350,000

Exploratory Wells

800,000

350,000

500,000

650,000

Production Wells

900,000

600,000

650,000

750,000

Land &
Construction/m2

26.5 - 30

27 - 30

3.5 - 35

18 - 28

CBM Polycarbonate Pipeline

Ability to Commercialize Small Volume

Innovation in Early Pilot and Development Options

No Technology Magic Bullet

Three Basins Three Reservoirs Three Techniques

Each coal bed is different and requires different completions

and reservoir management techniques
Source: IndoCBM Conference

Contribution to Environmental Agenda

CBM & Coal Mining Cooperation

CBM will normally overlap with coal exploration and coal production

tenures everywhere. Therefore, CBM company relationship with coal

companies is critical.
CBM companies work together with coal mining companies by

generating CBM development plan which takes into account coal

mining long term planning to maximise the value proposition for both
parties.
Produced CBM can be commercially negotiated with the coal mining

company for its usage (power, CNG vehicles, etc.)

There are a lot more cooperation with underground coal mining

which benefit both parties.

Dart Energy Indonesia

They Say..
the majority of successes in the CBM business have been at the hands of
focused, energetic, low cost independents. Dart Energy is already establishing
itself as a clear leader in that field.
(Nick Davies, Chairman - Dart Energy Limited)

dari pengalaman bertahun-tahun di dalam industri migas, pemboran

sumur migas yang sangat kompleks selalu dapat diatasi melalui aplikasi
teknologi. Akan tetapi, pemboran sumur CBM di Indonesia sangat
sulit..karena dituntut untuk dikerjakan dengan biaya rendah untuk menjaga
keekonomian proyek CBM.
(Pudjo Suwarno, Direktur Medco CBM)

Terima Kasih