Unlocking Sumatra by Ian Wollff

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Unlocking Sumatra by Ian Wollff

  1. 1. UNLOCKING SUMATRA COAL ; OUTLOOK AND CHALLENGERS IN EXPLORATION OF NEW GREENFIELD COAL. Manual mining multi seam mining- interburden removed with bull dozer Bukit Asam – Suban Pit 1975 Photo – Ian Wollff
  2. 2. 1. Sumatran coal is generally divided between east coast and west coast. Manual mining pit supervision Bukit Asam – Suban Pit 1975 Photo – Ian Wollff
  3. 3. 1.1 East coast coal tends to be thick continuous coal seams of low rank, with low dip. Manual mining coal with drill & blast Bukit Asam – Suban Pit 1975 Photo – Ian Wollff
  4. 4. 1.2 West coast coal tends to be thin strongly faulted coal seams of moderate rank and often high dip. Manual mining with mattok Bukit Asam – Suban Pit 1975 Photo – Ian Wollff
  5. 5. 1.3 In each case the rank and complexity of the seams tends to increase towards the central mountain range. Coal seams are locally upgraded when in proximity to intrusions. Manual mining coal with pick & shovel into wicker baskets Bukit Asam – Suban Pit 1975 Photo – Ian Wollff
  6. 6. 1.4 Most of the Sumatran coal fields were mapped over 100 years ago by Shell in their oil exploration program, and are reflected in today’s Government regional geological maps. Manual mining fill carry baskets at coal face Bukit Asam – Suban Pit 1975 Photo – Ian Wollff
  7. 7. 1.5 Most of the Coal COW’s and IUP’s are located in proximity to the Governments maps indications of such coal fields. Manual mining carry coal to rail head Bukit Asam – Suban Pit 1975 Photo – Ian Wollff
  8. 8. 1.6 The greenfield exploration has largely been about relocating and further defining the various coal seams. Manual mining loading rail cars Bukit Asam – Suban Pit 1975 Photo – Ian Wollff
  9. 9. 2. Exploration programs tend to follow a well established pattern of outcrop mapping, drilling with down hole geophysical logging, coal assay and surveying. Manual mining rail loading Bukit Asam – Suban Pit 1975 Photo – Ian Wollff
  10. 10. 2.1 The Indonesian development of light weight drills & geophysical logging unites, plus assay laboratories contributes to low exploration costs. Tanjung Enim Coal wash plant Tanjung Enim – 1975 Photo – Ian Wollff
  11. 11. 2.2 The overall growth of the Indonesian coal exploration industry contributes to the development of geologists, surveyors and such skilled work force to support the exploration industry. Tanjung Enim Coal power station Tanjung Enim – 1975 Photo – Ian Wollff
  12. 12. 3. The commercial targets for Sumatra Coal are mainly; Tanjung Enim main street Tanjung Enim – 1975 Photo – Ian Wollff
  13. 13. 3.1 Modest amounts of coal are being exported from each coast, however haulage distance is a restricting factor for economic development for export. General view coal mining Mechanized mining- Air Layer Pit – 1975 Photo – Ian Wollff
  14. 14. 3.2 Coal upgrading for export (to justify haulage) is yet to succeed commercially. Overburden bucket wheel excavator & conveyor spreader #1 Mechanized mining- Air Layer Pit – 1975 Photo – Ian Wollff
  15. 15. 3.3 Development of coal rail (to lower haulage operating costs) is working for PTBA, however a combination of high capital cost, difficult land compensation and government regulations have hampered new private rail. Overburden bucket wheel excavator & conveyor spreader #2 Mechanized mining- Air Layer Pit – 1975 Photo – Ian Wollff
  16. 16. 3.4 Mine mouth power stations have been developed & are being considered on each side of Sumatra, however small local consumption of electricity limits development opportunities. Overburden bucket wheel excavators Mechanized mining- Air Layer Pit – 1975 Photo – Ian Wollff
  17. 17. 3.5The new Government regulations on royalty for mine mouth power station, and for selling electricity into the national grid and abroad may help some exploration projects. Dragline to prepare floor & for overburden spreading Mechanized mining- Air Layer Pit – 1975 Photo – Ian Wollff
  18. 18. 3.6 Coal Seam Gas holds some potential, however unsuitable government regulations and sparcity of oil pipe infrastructure has stalled this potential development. Mechanized mining #1 Air Layer Pit – 1975 Photo – Ian Wollff
  19. 19. 3.7 Coal upgrading for export has been tested and tried, but there are no viable operations, and funding for such new technology is difficult. Mechanized mining #2 Air Layer Pit – 1975 Photo – Ian Wollff
  20. 20. 4. Social factors now provide a growing restriction over exploration. Coal Conveyor – mechanized mining Air Layer Pit – 1975 Photo – Ian Wollff
  21. 21. 4.1 Indonesia’s population doubles about every 33 years, leading to two divergent community aspirations ; Arial view coal mining Mechanized mining- Air Layer Pit – 1975 Photo – Ian Wollff
  22. 22. 4.1.1Competition for land use for housing, infrastructure etc, imposes higher land compensation costs and longer periods to acquire land. This makes the marginal coal fields always “just out of reach” for many coal project developments. Arial view Air Layer pit & workshop Mechanized mining- Air Layer Pit – 1975 Photo – Ian Wollff
  23. 23. 4.1.2 Demand for employment and electricity may encourage some coal development projects. Overburden bucket wheel excavator next to buried coal shovel Air Layer Pit – 1975 Photo – Ian Wollff
  24. 24. 4.2 Indonesia’s growing social awareness of the environment, history and recognition of human rights contributes to more regulations placing restrictions on exploration and development. Mechanized mining- top of electric shovel buried by mud slide Air Layer – 1975 Photo – Ian Wollff
  25. 25. 4.3 Competition for land use by other industry sectors – particularly forestry wherein the faster pace of plantation development is placing growing restrictions on exploration and commercial coal development. Tanjung Enim Rail yards Tanjung Enim – 1975 Photo – Ian Wollff
  26. 26. 5. Greenfields exploration needs risk taking investors – opportunists. Mechanized Barge loading conveyor system Kertapati Palembang– 1977 Photo – Ian Wollff
  27. 27. 5.1 Greenfields exploration is typically undertaken by investors when there is an opportunity to make great profits. Such opportunities mainly occur when the price of coal is rising (demand greater than supply). Mechanized Barge loading Kertapati Palembang– 1977 Photo – Ian Wollff
  28. 28. 5.2 Greenfield exploration is well known as a high risk - high cost venture, which relies upon sound legal certainty and long development & operation periods. Coal Barge Kertapati Palembang– 1977 Photo – Ian Wollff
  29. 29. 5.3 Indonesia’s recent Government regulations now imply poor legal certainty for foreign investors (divestment) and Indonesian companies (land compensation, forestry, local regulations), needing higher profits to offset the higher project risks. Trans Sumatra Highway Prabamuli – 1977 Photo – Ian Wollff
  30. 30. 5.4 The pool of potential and capable Indonesian investors is very limited, where alternative business opportunities (high rise building etc) may offer more competitive business opportunities. Shell Exploration -Helicopter visit for socialization Lubik Linggau– 1975 Photo – Ian Wollff
  31. 31. 5.5 The pool of potential and capable foreign investors is vast; however other countries may present a more attractive investment opportunity. Shell Exploration -Helicopter spotting of coal outcrops South Banko– 1975 Photo – Ian Wollff
  32. 32. 6. Recommendations. Shell Exploration –picnic at coal outcrop South Banko– 1975 Photo – Ian Wollff
  33. 33. 6.1 The Governments need to become pro active in attracting investors into the greenfield coal exploration industry. The Government has an active program to support the tourist industry, so why not the failing Sumatran coal exploration industry! Shell Exploration –drill access Banko – 1977 Photo – Ian Wollff
  34. 34. 6.2 The Government should be encouraged to lift the moratorium on new coal lease applications, such that companies can restart green field exploration. Shell Exploration – drill & geological logging Banko – 1977 Photo – Ian Wollff
  35. 35. 6.3 The Government should be encouraged to formally publish its coal & mineral spatial planning maps, to provide the exploration industry with assurances that not all the prospective land will be allocated to other uses (plantations etc). Shell Exploration – drill Banko – 1977 Photo – Ian Wollff
  36. 36. 6.4 The Government may reconsider its National development strategy, with Sumatra as a centre for mine mouth power stations supporting manufacturing industries. Shell Exploration – drill moving on road Tanjung Enim– 1977 Photo – Ian Wollff
  37. 37. 6.5 The Government should ensure the project data derived from the recent surge in exploration is properly secured and stored (digitized) as a foundation for the next cycle of exploration. Shell Exploration – drill heli rig with platform above blow out preventer Tanjung Enim– 1977 Photo – Ian Wollff
  38. 38. 7. Conclusions. Shell Exploration – blow out preventer – heli drill rig Tanjung Enim– 1977 Photo – Ian Wollff
  39. 39. 7.1 The opportunity to undertake greenfields coal exploration tends to be cyclic, with most opportunities coming from : Shell Exploration – drill heli moving#1 Tanjung Enim– 1977 Photo – Ian Wollff
  40. 40. 7.1.1 Upturns in the coal price (demand more than supply) Shell Exploration – drill heli moving #2 Tanjung Enim – 1977 Photo – Ian Wollff
  41. 41. 7.1.2 Changes in Government support for the coal industry (tax concessions, ease development barriers, support for mine mouth power stations etc). Shell Exploration – Winky rig Banko – 1977 Photo – Ian Wollff
  42. 42. 7.1.3 Change regulations to ease development for the CBM industry. Shell Exploration – Winky rig & pump Banko – 1977 Photo – Ian Wollff
  43. 43. 7.1.4 Technology breakthroughs – new systems for upgrading or transporting coal etc. Shell Exploration – BPB logging unit- trailer mounted Banko – 1977 Photo – Ian Wollff
  44. 44. 7.1.5 Greenfields success often comes from creative geologist looking in places, and in ways, others have not. Shell Exploration – BPB logging unit- heli mounted Banko – 1977 Photo – Ian Wollff
  45. 45. 7.2 The previous cyclic for Sumatran Greenfield exploration was 40 years ago with Shell in South Sumatra, 20 years ago with the development of the Coal COW, and 5 years ago with the KP system. Shell Exploration – BPB logging unit(heli ) - operation Banko – 1977 Photo – Ian Wollff
  46. 46. (7.2 continued) Each cyclic phase had an essential Government stimulant component through making attractive concession licensing and business environment. Shell Exploration – Geological core logging Banko – 1977 Photo – Ian Wollff
  47. 47. (7.2 continued) The present down turn in the greenfields exploration industry can not be blamed solely on coal price, but the Government should acknowledge its lack of support for the industry. Shell Exploration – Surveying Banko– 1977 Photo – Ian Wollff
  48. 48. 7.3 Limited short term potential for greenfields coal exploration may lie with opportunities associated with; Shell Exploration – Banko exploration camp Banko – 1977 Photo – Ian Wollff
  49. 49. 7.3.1 High value specialist coals, principally on the west coast. Shell Exploration – Interested onlookers Banko – 1977 Photo – Ian Wollff
  50. 50. 7.3.2 Mine mouth power stations to supply local power demand. Shell Exploration – Local slash & burn agriculture (Not Shell) Banko – 1977 Photo – Ian Wollff
  51. 51. 7.3.3 Mine mouth power stations in the far south of Sumatra to feed the national grid connected to Java (short transmission losses). Ship loader – Bamco / World Bank Tanjung Karang – 1985 Photo – Ian Wollff
  52. 52. 7.3.4 Mine mouth power stations in close proximity to Singapore to feed future undersea power to Singapore & Malaya. New Bucket wheel excavator – Bamco / World Bank Bukit Asam – 1985 Photo – Ian Wollff
  53. 53. 7.3.5 CBM development in close proximity to, and to feed into, the existing oil pipe networks. New Bucket wheel excavator (201)– Bamco / World Bank Bukit Asam – 1985 Photo – Ian Wollff
  54. 54. 7.4 Longer term potential for greenfields coal exploration is largely dependent on a change in coal price, or some form of national support. Mobile transfer for OB conveyor – Bamco / World Bank Bukit Asam – 1985 Photo – Ian Wollff
  55. 55. A story associated with these historic photos by Ian Wollff can be found in the Petromindo.com magazine “Coal & minerals Asia” Vol 34. Mobile OB spreader – Bamco / World Bank Bukit Asam – 1985 Photo – Ian Wollff
  56. 56. Ian Wollff is a Principal Geologist working with PT. CSA Global international geological consultants , located in Jakarta. Switching station for OB conveyor – Bamco / World Bank Bukit Asam – 1985 Photo – Ian Wollff
  57. 57. Thank You World Bank Exploration –plotting outcrop map Tanjung Enim– 1985 Photo – Ian Wollff

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