Production at Mahakam continues to decline
Production at Mahakam continues to decline
Upstream oil and gas regulator BPMigas said it will work with Total E&P Indonesie, operator of the Mahakam block in East Kalimantan, to ensure the gas production decline at the block would not exceed 150 million standard cubic feet per day (mmscfd) this year.
BPMigas deputy for operations, Rudi Rubiandini, said on Tuesday the agency had established a special team to monitor production activities at the Mahakam block so that output would not fall any further.
BPMigas had earlier estimated that production at the gas-rich block might drop by 35 percent from the targeted 2,020 mmscfd due to aging wells. Production at the gas block is currently only around 1,800 mmscfd, or nearly 11 percent below target.
Supply from the Mahakam block accounts for around 80 percent of total supply for the Bontang liquefied natural gas (LNG) plant, which is operated by PT Badak Natural Gas Liquefaction (NGL), a subsidiary of state-run oil and gas firm PT Pertamina.
Rudi revealed that the largest decline at the block was attributed to two fields; Tunu and Peciko. The main factor behind the decline was aging wells, which meant that their peak production period had ended, he added.
“The two fields will enter the production decline period at the natural pace of 35 percent, but we’ll try to make it below 10 percent,” he explained. “The indication is [when] the wells start to produce water.”
Total president director Elisabeth Proust revealed earlier the production decline at the Mahakam block was natural because the reserves had been exploited by around 70 percent since the first production sharing contract (PSC) for the block was first signed in 1967.
“However, we will need to mobilize all resources to boost production to the maximum level,” she claimed.
The Mahakam block’s participating interest is owned by Total and Japan-based Inpex with a share composition of 50-50.
With the decline of 150 mmscfd, the Bontang LNG plant may lose between 18 and 20 cargoes of LNG. However, BPMigas ensures all LNG contracts can be fulfilled.
This year, the plant is expected to produce 15.35 million tons of LNG or equal to 271 cargoes, including the allocation for the spot market. Output was 16.48 million tons, or 313 cargoes last year. Plant capacity is 22.5 million tons per annum (mtpa).
PT Badak NGL had earlier revealed that this year the plant’s production might be below the target because the supply from gas producers, including Total, was estimated to only reach around 2,000 mmscfd from the target of 3,300 mmscfd.
The LNG plant exported to Japan, South Korea and Taiwan. Last week, it had also started delivery to the floating storage and re-gasification unit (FSRU) in Jakarta Bay, West Java, which was the first allocation of LNG for the domestic market.
In addition to Mahakam, the Bontang plant also receives natural gas supply from Virginia Indonesian Company (Vico) and Chevron [and eventually, CBM Asia ].