The document summarizes key points from a presentation on gas supply issues and consensus building in Indonesia. It discusses definitions of reserves and resources according to SPE standards, outlines Indonesia's gas reserves and resources estimates from various sources, and analyzes some of the major supply opportunities and challenges, including East Natuna gas field development, coal bed methane potential, and gas flaring volumes. The overall reserve replacement rate appears modest given current production levels. Major developments like East Natuna and accelerated CBM development would be needed to significantly increase long-term supply.

1. Gas Development Master Plan
Gas Supply Issues – Consensus Building Workshop
Presented by:
David Aron – Managing Director
Petroleum Development Consultants, UK
Shangri-La Hotel, Jakarta
21 June 2012

2. Contents
• Why does supply matter?
• Reserves and resources - definitions
• Reserves and resources – a debate
• East Natuna – significant but a challenge
• Coal bed methane – the long-term potential
• Flaring – significant in terms of supply?
2

3. Why does supply matter?
• Supply is the foundation for the Gas Development
Master Plan
• However supply is not a fixed number as it depends on
the gas price. Lower gas prices mean that reserves are
lower. Higher gas prices mean that reserves are higher.
• Reserves are classified according to Society of Petroleum
Engineers (SPE) definitions
• Resources are less certain but again are classified
according to the SPE definitions
• Indonesia does not appear to adhere to these definitions
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4. SPE Resource Classification
4

5. Definitions
• Reserves are those quantities of petroleum anticipated to be
commercially recoverable by application of development projects to
known accumulations from a given date forward under defined
conditions. Reserves must further satisfy four criteria: they must be
discovered, recoverable, commercial, and remaining (as of the
evaluation date) based on the development project(s) applied.
• Contingent resources are those quantities of petroleum estimated,
as of a given date, to be potentially recoverable from known
accumulations, but the applied project(s) are not yet considered
mature enough for commercial development due to one or more
contingencies. Contingent Resources may include, for example,
projects for which there are currently no viable markets, or where
commercial recovery is dependent on technology under
development, or where evaluation of the accumulation is insufficient
to clearly assess commerciality
• Prospective resources are those quantities of petroleum estimated,
as of a given date, to be potentially recoverable from undiscovered
accumulations by application of future development projects.
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6. Project Maturity
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7. Indonesia: BP Migas Data Annual Report
2010
Produced Not Yet Produced Total (TSCF)
Proven Potential Proven Potential
36.08 15.08 68.90 33.67 153.72
BP Migas take the total (which appears to be proven + probable + possible)
and divides this by 2010 production (~3.3 TSCF)
This gives a reserve/production ratio of 153.72/3.3 = 46 years
However the total of 153.72 TSCF is not reserves – it is a combination of
reserves and prospective resources
Note: the technical existence of the resource has to be combined with a
development plan
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8. Gas Sector Development Plan,
Becip-Franlab, 2003
Producing Non- Producing Total
Proven Probable Possible Total Proven Probable Possible Total
38.028 11.791 15.130 64.950 52.272 30.916 28.451 111.639 176.589
Based on 176.589 TSCF and production 2001 (2.8 TSCF)
this would give a reserve/production ratio = 63 years
However Becip-Franlab noted that the total included
Natuna East with resources of 46 TSCF. If this is excluded
the reserve/production ratio = (176.589 – 46)/2.8 = 46
years
This suggests that current BP Migas figures correctly
exclude Natuna East
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9. BP Statistical Review, June 2012
• This shows proven reserves for Indonesia of 104.7 TSCF
as end 2011
• BP calculates a reserve/production ratio of 39.2 years
• The total proven (producing + non-producing) estimate
from BP Migas is 104.98 TSCF as at end 2010.Based on
production of 3.3 TSCF in 2010 gives a
reserve/production ratio of 104.98/3.3 = 31.8 years
• This seems about right for the very good reason that in
practice the producers will not go exploring when the
ratio is much above 30 years as they would not be able to
commercialise their discoveries
• However reserve replacement is not ideal. Gas
discovered in 2010 was 2.2 TSCF which is a reserve
replacement of only 2.2/3.3 = 66.7%
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10. East Natuna
• Discovered in 1973
• Total volume of gas = 222 TSCF
• 71% carbon dioxide, 28% methane plus heavier
hydrocarbons, 0.5% hydrogen sulphide and 0.5% nitrogen
• Recovery factor is 75% which would give hydrocarbon gas
resources of 46 TSCF
• Reservoir approximately 15 miles long and 9 miles wide
• Water depth is around 475 feet
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11. Natuna East location
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12. Natuna East: disposing of CO2
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13. Natuna East: initial development
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14. Natuna East: full development
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15. Coal bed methane (CBM)
Assessment made by Advanced Resources
International of 453 TSCF in 2003
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16. Indonesia CBM resources
Rank Country Resources (in-place) TSCF
1 Russia 450 – 2,000
2 China 700 – 1,270
3 USA 500 – 1,500
4 Australia/New Zealand 500 – 1,000
5 Canada 360 – 460
6 Indonesia 400-453
7 Southern Africa 90-220
8 Western Europe 200
9 Ukraine 170
10 Turkey 50-110
11 India 70-90
12 Kazakhstan 40-60
13 Central/South America 50
14 Poland 20-50
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17. US Powder River Basin
Reserves
Estimate In-place (TSCF) Recoverable Recovery
(TSCF) Factor (%)
Potential Gas Committee (2000) 24
US Geological Survey (2002) 14
ARI (2002) 61 39 64
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18. Powder River Basin
Production build-up
1600
1400
1200
1000
MMSCFD
800
600
400
200
0
1998 1999 2000 2001
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19. Powder River Basin
Type well
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20. Canada Horseshoe Canyon
Reserves
Estimate In-place Recoverable Recovery
(TSCF) (TSCF) Factor (%)
Gas Potential Committee (2001) 139
MGV (2002) 70 13-23 19-33
Alberta Geological Survey (2004) 66
Gas Potential Committee (2005) 54 9-12 17-22
Energy Research Institute (2006) 36 10-12 28-33
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21. Canada Horseshoe Canyon
Production build-up
1600
1400
1200
1000
MMSCFD
800
600
400
200
0
2003 2004 2005 2006 2007 2008
Around 2,000 wells required in 2007 and 2008
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22. BP Migas Forecast
Production build-up
1600
1400
1200
1000
MMSCFD
800
600
400
200
0
2015 2020 2025
2015 target assuming 0.25 MMSCFD per well would require 2,000 wells in
production – 400 wells per year needing ~ 20 CBM rigs. Appears low as wells
decline rapidly…
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23. Flaring – significant in terms of supply
• Volumes need to be more clearly recognised
• Government policy to stop flaring by 2025
• 2009 estimates of 270-350 mmscfd from large number of
fields
• No reporting of flared volumes by field
• May be significant in local areas but probably not in an
overall supply and demand context
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24. Distribution of flaring
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