upstream geothermal development

Skyline Building Lt. 11Jl. MH. Thamrin No. 9, Jakarta PusatTelp: 021‐39833222 Fax: 021‐39833230www.pge.pertamina.com

Upstream Geothermal Development

Narendra Widjajanto

Netherlands, November 19, 2013

Outline

02 Desember 2013 Pages 2

Overview of Indonesia Geothermal PotentialOverview of Indonesia Geothermal Potential

Overview of Geothermal CyclesOverview of Geothermal Cycles

Exploration and Resource ConfirmationExploration and Resource Confirmation

Key Factor for Geothermal DevelopmentKey Factor for Geothermal Development

Next StepNext Step

Outline






Next StepNext Step

Source :

Indonesia has the highest potential for geothermal energy in the world, which remains largely untapped

02 Desember 2013

▪ In spite of having the world’s largest geothermal resource, utilization remains low at only 4%

▪ Geothermal resource in Indonesia is high temperature resource, which enables more economical geothermal project development

GoI is making a strong push for renewable energy, with plans to significantly increase geothermal power generation

02 Desember 2013

Target geothermal capacity

GW

100% =

2025 1

670 TWh

126 1

17

64

2010

146 TWh

57

17

25

46

GeothermalHydroOil

GasCoal

Newrequired

2025target

8.6

2013capacity

1.3

4.9

Plannedadditions

2.3

1 2025 proposition is assumed to be the same as shown in RUPTL 2020

Government plans to have 8~9 GW of geothermal energy capacity by 2025

▪ ~7 GW of additional geothermal capacity is needed by 2025, to reach RUPTL’s projected 12% share of power generation

▪ Current capacity expansion plans will only cover 1/3 of the gap

Target energy mix in Indonesia

SOURCE: PGE annual report, Press reports, Team analysis

Geothermal Resources Map of Indonesia

02 Desember 2013

2554

IIbbooii‐‐JJ aabbooii 1100MMWWSS eeuullaawwaahh AAgg aamm 227755MMWW

LL aauu DDeebbuukk ‐‐DDeebbuukk // SS iibbaayy aakk 22MMWW,, 3388MMWW

SS aarruullaa –– SS iibbuuaall BB uuaall ii 66 3300MMWW

SS .. MMeerraappii –– SS aammppuurraagg aa 110000MMWW

SS iippaahhoolloonn –– TTaarruuttuunngg 5500MMWW

MMuuaarraallaabbuuhh 224400MMWW

GG.. TTaallaanngg 3300MMWW

SS uunngg aaii PP eennuuhh 335555MMWWLL eemmppuurr // KK eerriinncc ii 2200MMWW

BB .. GGeedduunngg HHuulluu LL aaii ss // TTaammbbaanngg SS aawwaahh 3000MMWW

MMaarrgg aa BB aayyuurr 117700MMWW

LL uummuutt BB aallaa ii 662200MMWW

SS uuoohh AAnnttaattaaii –– GG.. SS eekkiinnccaauu 339900MMWW

RR aajjaabbaass aa 112200MMWW

WWaaii RR aattaaii 112200MMWW

UUlluubbeelluu 444400MMWW

KK aammoojjaanngg 200 MMWW,,120 MMWW

CC ooss oollookk –– CC iiss uukkaarraammee 118800MMWW

CC iittaammaann –– GG.. KK aarraanngg 2200MMWW

GG.. SS aallaakk 3375MMWW,, 112200MMWW

DDaarraajjaatt 125555MMWW,, MW

GG.. WWaayyaanngg ‐‐ WWiinndduu 111100MMWW,, 229900MMWWGG.. PP aattuuhhaa 550000MMWW

GG.. KK aarraahhaa –– GG.. TTeellaagg aabbooddaass 440000MMWW

TTaannggkkuubbaannppeerraahhuu 2200MMWW

DDiieenngg 6600MMWW,, 334400MMWWTTeelloommooyyoo 5500MMWW

UUnnggaarraann 118800MMWWWWiilliiss // NNggeebbeell 112200MMWW

IIjjeenn 4400MMWW

BB eedduugguull 117755MMWW

HHuu’’uu DDaahhaa 3300MMWW

UUlluummbbuu 3366MMWWWWaaii SS aannoo 1100MMWW BB eennaa –– MMaattaallookkoo 2200MMWW

SS ookkoorriiaa –– MMuuttuubbuuss aa 2200MMWW

OOkkaa –– LL aarraannttuukkaa 2200MMWWAAttaaddeeii 1100MMWW

LL aahheennddoonngg ‐‐ TToommppaass oo 40 MMWW,, 332200MMWWKK oottaammoobbaagg uu 114400MMWW

SS uuwwaawwaa –– GGoorroonnttaalloo 5555MMWW

MMeerraannaa 220000MMWW

TTuulleehhuu 2200MMWW

JJ aaii lloolloo 2200MMWW

110

03

PGE’s Working Areas

02 Desember 2013

STATUS : 2013

Sarulla - Sibual-buali(@=… MWe)

Sungai Penuh(@=… MWe)

Hululais – TambangSawah

(@= … MWe)

Lumut Balai -Margabayur(@= … MWe)

Ulubelu - Waypanas(@= 110 MWe)

JOC Cibeureum - Salak(@= 378 MWe)

JOC Wayang Windu(@= 227 MWe)

JV Patuha(@= … MWe)

JOC Darajat(@= 271 MWe)

Karaha - Talaga Bodas(@= … MWe)

Kamojang(@ = 200 MWe)

Iyang Argopuro(@= … MWe)

JOC Tabanan- Bali(@= … MWe)

Kotamobagu(@=… MWe)

Lahendong - Tompaso(@= 80 MWe)

Legend :

ProductionExploration/pengembangan

JOC : Joint Operating Contract

@ : Installed Capacity

KALIMANTAN

SULAWESI

MALUKU

PAPUA

Sibayak - Sinabung (@ = 12 MWe)

Concession Area = 14 (MEMR Decree No 2067K/30/MEM/2012Total Installed Capacity PGE = 402 MW

PGE projects are in different stages of project development

SOURCE: PGE

PRELIMINARY

Future projects PGE own projects

Iyang ArgapuroSemurupMargabayurTambang SawahMasigit GunturCiharus

Waypanas

Lumut Balai 1&2

Ulubelu 3&4

Kamojang 5

Karaha

Lahendong 5&6

Ulubelu 1&2SibayakKamojang 1‐4Lahendong 1‐4

Lumut Balai 3&4

Hululais

Sungai Penuh

Kotamobagu

Delineation drilling

Feasibility study

Infrastruc‐ture and exploration drilling

Geo scientific analysis

Desktop study

Production drilling

Power plant FEED

Power plant EPC

Steam field operation

Power plant operation

Exploration Operations and reservoir management Development

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GEOTHERMAL PROCESS

02 Desember 2013

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A typical Geothermal Project has 3 Phases Upstream

SOURCE: Expert inputs

TYPICAL 50 MW PROJECT

NORCMajor mile‐stones

DevelopmentExploration Operation

Geology & Geo‐chemistry

Geo‐physics

Infrastructure & exploration drilling

Feasibility study

Desktop study

Delineation drilling

Production drilling

SGSconstruction

Opera‐tions and main‐tenance

Reservoir manage‐ment

Internal go/no‐go milestones

NOID Commissioning

Key activities

Drill 4‐7 production and injection

wells

Construct steam

gathering systems and

piping

Regular operations

Approxduration (months)

1 3‐4 6‐9 12‐15 2‐3 0‐6 Up to 15months

In parallel with

production drilling

N/A N/A

Approxcost ($)

$5k $30‐50k $300‐500k $15‐25m $300k (If needed) $25‐50m $10‐15m N/A N/A

MT survey

Approximate figures

Drill up to 3 discovery wells


No Phase Activites Potensial Risk

1 • Geology & Geochemistry

• Geophysics• Infrastructure & exploration drilling

• Prepare exploration program • Process project approval for Environment

• Process local and regional permit for land and forest usage

• Procurement process and execution• Bridges dan roadways preparation• Land clearance with locals

• Geological Hazards (Landslide Subsidence vs“Cut & Fill”)

• Civil Works (Technology & Competency)

• Uncertainty for various permit approvals

2 Drilling(exploration & production)

• Prepare detailed drilling program • Rig Mobilization & Logistics• Rig review• Dilling process execution

• Drilling execution risk• Geological risk (hard rocks, fracture, permeability)

• Gas / steam leakages

3 Production Testing • Prepare testing facilities• Heating up period• Final testing

• Steam result confirmation delay due to long heating up period.

• Resource risk leads to steam availability/reinjection well below target

Exploration & Resource Confirmation Phase


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Key Barriers For Developing Indonesia’s Geothermal Potential

02 Desember 2013

Barriers make it challenge to mobilize significant investments for achieving GoI target

Key Barrier

Resource Risks

Domestic Capacity

High Exploration Cost and

Investment

Price Regulation

Land Permits & Concession

Rights

Resources can only be proven following expensive on‐site exploration

To date, no geothermal IPP tender has reached financial closure

Need government support to have favorable pricing mechanism for green

energy

Financial cost of geothermal higher than base‐load substitute (i.e. coal), when environmental impacts not considered

Mostly geothermal area is located in conservation

areas, need regulation to exclude geothermal activity

in forest regulation

Resource Risk Make it More Challenging To Mobilize Investment

02 Desember 2013

Uncertainties associated with geothermal field conditions and resource characteristics during the initial stages of field development will cause developers to require a price premium for taking on this risk

SOURCE: ESMAP World Bank Geothermal Handbook 2012

Geothermal Project Cost Structure

02 Desember 2013

• Cost ranges can vary depending a variety of factors such as: depth of the resource, geologic characteristics and temperature

• Upstream Cost less than Dowstream Cost but having the most riskiest part.

• The upstream phases, (drilling phase), can be considered the riskiest parts of geothermal project development.

For 50 MW Flashed Steam Geothermal Plant, % of totalSource: SBC Summary

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Next StepNext Step


No Barriers Explanation Next Steps1 Project delayed

due to Various Permits uncertainty

• Uncertainty for acquiring apporvals from local and national government agency

• Project socialization• Revised related procedures / regulation to support green energy development especially for geothermal activities

2 Resource and Upstream Risks

• Steam availability below target

• Difficulties in getting injection wells

• Expert and technology enhancement

• Operational excellence • Prepare sufficient time to develop geothermal fields properly (5‐7 years)

• Increase risk mitigation in developing upstream projects in parallel

• Upstream Risk beared by Government

Next Steps for Managing Geothermal Barriers


No Barriers Explanation Next Steps3 Offtake

uncertainty and financial risk

• Adequate pricing for steam and electricity

• Propose more attractive new tariff to the government to increase certainty in geothermal investment projects

• Includes environment cost in coal tariff in order gain comparability with geothermal tariff

Next Steps for Managing Geothermal Barriers

upstream geothermal development

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