October - December 2014 www.spe.or.id

Indonesian Domestic Oil and Gas A Snapshot † platform

Oilfield Review app now available for the Android

Oilfield Review Apps

The Schlumberger Oilfield Review app for Android† devices is now available free of charge on the Play† store. This new app complements the iPad‡ app, which is available at the Apple‡ iTunes‡ online store. For Android devices, including phones, this is a stand-alone app; accessing content on the iPad device is done through the Newsstand. An iPhone‡ compatible version is in devel- opment and will be available in the near future.

Oilfield Review communicates advances in finding and producing hydrocarbons to oilfield professionals. Articles from the journal are augmented on the apps with animations and videos, which help explain concepts and theories beyond the capabilities of static images. The apps also offer access to several years of archived issues in a compact format that retains the high-quality images and content you’ve come to expect from the print version of Oilfield Review.

To download and install the app, search for “Schlumberger Oilfield Review” in the ‡ or online store or scan the QR code below, which will take you directly to the device-specific source.

†Android and Google Play are marks of Google Inc. ‡Apple, App Store, iPad, iPhone and iTunes are marks of Apple Inc., registered in the US and other countries.

14-OR-0004 Advertisements Contents Dear SPE Members; 3 Contents & Advertisement SPE Java Section Newsletter is issued every other month; they are printed 1,500 copies per issue, 4 Chairman’s Message circulated among members, industry leaders, stakeholders (staff and manager), and students. 6 Fish Fry 2015 In order to improve the content of our Newsletter, we urge you to send us an article worth sharing to 8 Adriansyah - President Director of PT. update and enrich our reader (at no cost to you), with Pertamina E&P application of certain technology, and/or CSR activity which made an impact on our industry. 11 ITB Sudent Chapter We would also like to invite your Company to place an Advertorial, which serves as a showcase, at the 12 Trisakti Sudent Chapter same time to cover the cost of printing the Newsletter accordingly to the following fee structure with effect July 2012: 13 Firman A. Yaman - Chief Executive Officer of PT. Saka Energi Printing Charges in USD Old Rate No. of Issue New Rate 16 Peter Cockcroft - Independent 385 1 400/issue Consultant, Cockcroft Co. Full page 2 375/issue = 750 3 350/issue = 1,050 22 Sigit Rahardjo - President Director of 4 325/issue = 1.300 PT. Pertamina UTC 5 300/issue = 1,500 6 275/issue = 1,650 24 Tumbur Parlindungan - Chief Operation and Commercial Officer of PT. Saka Printing Charges in USD Energi Indonesia Old Rate No. of Issue New Rate

220 1 250/issue Half-a-page 2 235/issue = 470 26 Medco Energi: Decades of Growth 3 210/issue = 630 4 200/issue = 800 30 Utilization of Aerated Technique in 5 190/issue = 950 Drilling Sub-Pressure Well 6 180/issue = 1,080 32 A New Platform for Offshore Note: Exploration and Production 1. Full page size is 21x28cm with format of .pdf or .jpg and resolution of 300 dpi. 2. Article will be printed in Color only; paid article 43 Distinguished Members will also be displayed on our website, with the same duration. 44 Shrimp Boil 2014

For all advertising enquiries, please contact: 48 Distinguished Lecturer William Ongseputra Cougar Drilling Email: [email protected] 50 Young Professionals Mega Section Officer 52 Technical Discussion Group Email: [email protected] 55 Asia Pacific Meeting Plan & Training 42nd Floor Wisma Mulia Jl. Gatot Subroto No. 42 60 Membership Application Form 12710 Tel: (62-21) 2942-8222 Ext.253 www.spe.or.id 62 Board of Directors 2014-2015 Chairman’s Note

ear Readers, February 28th, 2015 (mark your have been organized and performed calendars!). through the year. DI would like to wish you • “SPE Golf Tournament” in and your families a Happy New April was again a great success Also some important recognitions Year and all the best for 2015! with over 240 participants – have been received – the SPE Regional Bob Shearer, Brad Sincock Service Award for Bambang P. Istadi The SPE Java Section had a very and the team did as always an (SPE Java Section Chairman 2012- successful 2014, for which I would like outstanding job organizing this 2014) and Steve Caron (SPE Java to thank everyone involved sincerely – huge event; the next SPE Golf Fish Fry Chairman 2012-2014); and without all your hard work, dedication Tournament is scheduled for the Bandung Institute of Technology and enthusiasm, this would not have April 2015. Student Chapter is the 2014 Award been possible. • “Shrimp Boil” in November was Recipient for “Outstanding Student with 700 participants fun pure Chapters”. Damian Dion Salam (ITB For example: and delicious – Doug Slusher SC) has been the winner of the 2014 - 28 students from 8 student chapters and his team did again a brilliant SPE Asia Pacific Regional Paper received a SPE scholarship; 3 job in making this event so nice Contest and is invited to present his students from each UI, Trisakti, and enjoyable; the next Shrimp work at the SPE International Student UGM, ITS, UNPAD and UNDIP Boil will be in November 2015. Paper Contest, to be held at the 2015 as well as 5 students from each • The events above raised SPE Annual Technical Conference UPN and ITB. substantial funds for the and Exhibition (ATCE), scheduled 28- - 3 large scale social events have support of Indonesian students, 30 October 2015 in Houston, United been organized and extremely well student chapters and University States of America. carried out: activities. • “Fish Fry” in February was - 4 editions of the “SPE Java I look forward to another exciting and with 400 tickets completely Newsletter” have been distributed successful year! sold out and a fantastic event– with a record of 11 published thanks a lot to Steve Caron and interviews! Yours sincerely, his team for the excellent job; - 4 Technical Discussion Groups and Dr. Thomas Schievenbusch the next Fish Fry will be held 4 Young Professional Workshops Chairman 2014-2015

4 SPE Java . Oct - Dec ‘14 SURFACE LOGGING SYSTEMS

A Case In Point: Precise fluid characterization The Weatherford GC-TRACER™ system saved an operator in the Barnett shale formation $900,000. at the wellsite. ™ The system provided ratio analysis The unique Weatherford GC-TRACER advanced mud gas extraction/detection showing connectivity with an area system is the most flexible and accurate gas measurement device available at affected by a previous frac job. By wellsite. It provides a full range of petrophysical and geosteering data, enabling identifying the depleted zone within a operators to make fast, knowledgeable decisions. lateral section that had been drained Let the Weatherford GC-TRACER detector service help you overcome drawbacks of by an offset well, the operator avoided conventional gas-trap systems and get a precise assessment of reservoir fluids. a costly completion. Learn more at weatherford.com

Formation Evaluation | Well Construction | Completion | Production

© 2013 Weatherford. All rights reserved. 6 SPE Java . Oct - Dec ‘14

Interview with Adriansyah President Director of PT. Pertamina E&P

initially, I wanted to technical aspects of Pertamina were study Astronomy and centralized under the EPTC division (now become an astronout. UTC), where I was assigned until 2009 But I backed off and before moving to Business Development. decided to have a In the latter role, I had to learn and master career in oil and gas non-technical aspects of the business industry instead. So I such as commercial, appraisal, evaluation, started Geopyhiscs at financial, regulatory, and law. It was quite ITB in 1979. At that a contrast. At UTC, I led the team for time, explorationists unitization negotiation of Jambaran came from a geology with ExxonMobil. Perhaps our Board background, with very of Directors considered this experience few geophysicists. before assigning me to the Business After I graduated, I Development function to develop a new worked for Geco- and working Merger and Acquisition Prakla (Schlumberger) machine. Earlier, the M&A division for a year before acquired ONWJ, but was not successful joining Pertamina for an Australian asset. I was there for in 1988. I was in the 1.5 years, during which time we setup and first BPST batch with shaped the division to only acquire assets Pak Salis Aprilian with great value to Pertamina. Since and Pak Syamsu Alam. We were, as it then, we have secured overseas assets in r Adriansyah, or Ancha, was was planned by Pertamina then, to be Algeria and Iraq. In Indonesia, we knew born in on 18 July the new generation of professionals we had to start with a small acquisition, M1960. He graduated from the in Pertamina, equipped with strong but a successful one, to catalyse the Geophysics department at ITB in 1987. technical capabilities. As part of this first future efforts. We won Talisman’s and He joined Pertamina through its very first generation, I feel we have a responsibility Anadarko’s Nunukan and Ambalat assets. Bimbingan Profesi Sarjana Teknik (BPST) to deliver. I consider this as my first Our team comprised young and energetic EP in 1988. He holds a Masters Degree principle for success: be responsible. people, unfamiliar with the Pertamina from ITB and a Doctoral Degree from system and capabilities. Hence, my job the University of Texas in Dallas. Ancha I was assigned to Pangkalan Brandan, was to bridge this gap. We improved was appointed VP of the Pertamina for seismic acquisition and processing. our assessment system. Before, asset Upstream Technology Centre (UTC) We designed our own first seismic evaluation could take up to eight months in 2009, SVP of Upstream Business acquisition paramaters. Throughout for one asset. We methodologically Development in 2011, President Director my career in Pertamina, the company reduced it to three weeks. Overall, I of Pertamina Geothermal Energy in May has been my parent, in the sense that I enjoyed the role as I learned a lot from 2013, and since 20 November 2013, he was sent to many training courses and it, with precise deliverables and exposure has been President Director of Pertamina schools as their child. Pertamina sent me to our Board of Directors and Boad of EP. Ancha received SPE in his office to to ITB for my Masters degree and then Commissioners. share insights on Pertamina EP and his to the University of Texas in Dallas for vision. my Doctoral degree. The education has In 2013, we had several urgent issues more value than just a monetary benefit. in geothermal. All the Pertamina Can you share with us your career I will repay that by dedicating my time Geothermal Energy management was journey? and skills for Pertamina, solely, as good replaced, and I was assigned to fix corporate governance dictates. I urge the problems. Geothermal projects I grew up in South Sumatera. My village all to have the same level of ethics and are different to that of oil an gas. The was close to , the backbone of responsibility. electricity price was set by law. Hence we Stanvac back then, so I was very familiar knew how much revenue we would get for with the oil and gas industry. However, Prior to the Oil and Gas Law 2001, all the 30-year duration of the contract. We

8 SPE Java . Oct - Dec ‘14 therefore have to manage costs. During opportunity to improve, and to deliver by the same portfolio over time. In fact, my six months there, the Geothermal law themselves at the same or higher quaility we may need to relinquish some of the was being formulated, and I provided as the competition. Pertamina EP is no acreage prior to PSC expiry in 2035. input to many stakeholders including Pak longer a regulatory body. We increase our Therefore, our main role is to ensure Bambang (now Finance Minister) and own production, not relying on others. the level of production is maintained. his team on risk, cost recovery and other We need to be proactive, not passive. Exploration will naturally come second. financial matters for geothermal. I think the best people with the right Do you see upsides for Pertamina EP? In November 2013, I was assigned to mind-set come first; then the best Pertamina EP. I realized this is not a system. I believe Pertamina EP has had Yes. Currently we may be seen as under- small boat like PGE. EP is a large boat, a good or comparable system, through achieving. It is not entirely incorrect. so it takes time to change the direction. I benchmarking and certification. I need Many of our fields are producing below am doing my best with my team here. We to awaken Pertamina EP employees to their potential. There is plenty of room have a responsibility to deliver. realize that field maturity is real. Hence for improvement, in the technology to we need to do primary, secondary, or implement, infrastructure to renew, and In addition to being responsble to tertiary recovery, starting from now, and other matters. We do have value in our deliver, do you have another recipe for by ourselves. I also need them to take assets and resources. Many parties see success? ownership in building and adding new this as well; hence the strong interest of capacity in Pertamina EP that we have not cooperating with us in KSO’s. Focus on what you are good at and be had before. Exploration and production the best at it! I will fight the best I can to will be more difficult. We need to acquire Are our fields really mature? One thing be the best in what I do. This will bring more advanced technology and apply we know for sure is that our knowledge you other things. In my career, I never better risk assessment, mitigation and of their subsurface is relatively mature, thought to be in Business Development management. and that we have sat on them for a long or President Director. I am a technical period already. We are familiar with the person, with a Doctoral degree in a The other challenge is infrastructure. basins, and the bypassed oil layers. It is technical discipline. I am a geoscientist Pertamina EP only has one PSC, but our responsibility – my responsibility first and foremost, and definitely nota it spreads from Sabang to Merauke. – to instill a sense of urgency and politician. Our current production is around 120 accountability in each Pertamina EP kbopd, but the biggest field, Sukowati, employee, from the General Managers, What is the vision of Pertamina EP, contributes not more than 20 kbopd. Field Managers, down to the office boy, and what are your critical challenges? We have hundreds of other fields to collectively own the company and that producing marginally, with aging think of a better way forward. We have We are one Pertamina, therefore our infrastructure such as piping and pumps. a strong sense of belonging, but we have Vision and Mission is the same as that The consequence of bundling all PSC’s been unable to go together in the same of Pertamina Corporate. We will be a into one, which expires in 2035, is that we direction. world-class energy company, a Fortune cannot sell non-productive fields or swap top 100 company, by 2025. The challenge them with other PSCs. I take the analogy of some multinational is massive. Pertamina’s role prior to companies that have a mind-set as a river. 2001 was as a regulator. Now we are an The key producing assets act as the Regardless of your swimming skill, once operator. In the big picture of Pertamina backbone of our operation, and the you are in that river, you flow to the same Corporate, Pertamina EP is the core. The majority of investment will be channeled direction. Once you master swimming, working areas, fields, even the people are to them. We more or less understand how you flow even faster, or lead the pack. the same as during the Directorate EP to efficiently operate these backbone Pertamina EP is more like a lake. Even era. People do not really see the change assets, and cannot afford to halt their if you can swim, you do not know where in their surroundings and still think it is operations for the sake of experimenting to swim. My role is to make sure that, business as usual. We need to change the with new but unproven technology. first, we know where to swim – this is the culture to support a mind set. That is the Marginal fields, which we have attempted mindset I have been talking about. main challenge. to produce but which have yielded low returns, will be operated through Kerja How do you develop people’s mindset I would like each individual in our Sama Operasi (KSO), whereby a third- and capability? company to have an acountability in party will come along and invest and whatever he/she does. The mind set I introduce new approaches to operations. I am not that worried about the technical want is they are professionals, competing quality of Pertamina EP employees. We with their colleagues in other companies, Unlike Pertamina Hulu Energy (PHE), recruit the best employees from the best including mutlinational energy where new assets and acquisitions are institutions. We also have strong technical companies. They have to look for each pooled and operated, Pertamina EP has support from UTC. We need to focus

9 SPE Java . Oct - Dec ‘14 on developing engineers to become the decline, better than other operators in leader of the 1988 National Bridge team, best engineers, well designers to become Indonesia. Imagine what we can do if we and even ran for president for National the best well designers, etc. They need fix the challenges above. Bridge Association. I also frequently to be not only technically sound, but teach at the Graduate Program at UI. also proactive in managing the work and What do you do outside your I like the interaction with students leading the teams. We will develop them professional world? and professionals. My message for the to work collectively so that they can students: be active, but always focus to deliver the results proportional to their I like audio and audio equipment. This your core competency. individual capability. is something that I spend serious time on. I find a close connection between Do you have any other message to Pertamina EP will continue the 6-month audio, and its technicality including its young professionals? BPS program that goes beyond technical audible frequency, to seismic processing. graduates. Upon completion of the I cannot play a musical instrument but The oil and gas industry is getting BPS, new employees will be assigned as I like to listen to many genres of music, tougher. Fossil energy is limited and interns and assessed again for their future in particular hard rock. I also like sports, not renewable. In Indonesia, the era of placement. We will improve on the way from golf to bridge. oil and gas is getting closer to an end, we monitor their deliverables. This is which means we, as professionals, need currently the challenge in developing I have two sons. The elder one initially to work harder to explore and exploit people to become experts. wanted to take social studies. After new energy sources. This tremendous consultation with us, with a little bit of challenge will require professionals with a We have various experts in the company. persuasion, he chose natural science. He pioneer mindset, equipped with new play Take one example - Enhanced Oil even goes further to choose the subject concepts, breakthroughs and ideas. Recovery (EOR). We have never that I liked best long ago: astronomy at done the EOR from A to Z. I ask our ITB. Be careful what you wish for. My The future will also see the requirement to employees to implement what they know second son takes Chemical Engineering master multiple disciplines. A best and deliver to the expectations. For at UI. As parents, we can only guide and engineer needs to understand geology, those challenges where we need better advise, and create the environment that geophysics, production, reservoir, technology and expertise, for example they are comfortable to explore their management, and business. We need heavy oil and underbalanced drilling, we potential. At the end it is their life, not professionals with open minds, that are will get it from reputable KSO partners. ours that they will live in. quick to find solutions, and that are able I would like to see the composition of to identify the technology that will help our KSO partners change to include Were you also active as a student? him/her deliver the solutions. the companies such as Conoco Phillips, ExxonMobil and Petronas. Yes, I was chief of our Himpunan Furthermore, we need to embrace Mahasiswa (Student Community), unconventionals: CBM and shale The Government of Indonesia expects and had experienced various student hydrocarbons. a lot from Pertamina EP. We have leadership roles while I was in university. answered that challenge by showing that I was also the chairman of our Alumni we are able to minimize the production organization. In sport, I was also the

1010 SPE Java . Oct - Dec ‘14 ITB student wins Regional Student Paper Contest in Australia - next to Houston

PE coordinates 10 regional student Division representing 12 academic various backgrounds such as academic paper contests at the undergraduate, institutions from 8 countries. institution, research & development Smaster’s and doctorate level. The institution, and oil & gas industry. Each students compete against other students This year, one of ITB students, Damian participant was given the presentation that from their region for the opportunity to Dion Salam (PE’12) has been selected as last 12 minutes, plus an additional 5 minutes participate in the International Student a finalist for the Undergraduate Division for question & answer session. Fortunately, Paper Contest, held during the Annual of the Regional Student Paper Contest our delegation from ITB, Indonesia as Technical Conference and Exhibition to be held at the SPE Asia Pacific Oil well, presented impressively in front of the (ATCE). and Gas Conference and Exhibition in judges and audience. Therefore, Damian Adelaide, Australia October 14-16, 2014. Dion Salam became the winner of the Currently, the 11 regional contests are Therefore, Damian Dion Salam (PE’12), 2014 SPE Asia Pacific Regional Paper recognized by the Society: Canada, together with lectures from petroleum Contest and would be invited by SPE to Russia & Capsian, Europe, Gulf Coast engineering department, conducted a present his work at the SPE International North America, Rocky Mountain/Mid- number of preparations and stimulations Student Paper Contest to be held at the Continent/Eastern North America, Latin to compete in that Asia Pacific Regional 2015 SPE Annual Technical Conference American & Caribbean, Western North level. After those hard work preparations, and Exhibition (ATCE) scheduled 28-30 America, Africa, Asia Pacific, Middle East Damian Dion Salam was sent to Adelaide, October 2015 in Houston, United States of and South Asia. Australia on October 13, 2014 and having America. Currently, Damian Dion Salam is the competition the next day. still working further on his research project, The 2014 SPE Asia Pacific Regional Student titled “Novel Analysis to determine the Gas Paper Contest received 33 submissions During the competition, there were 12 Permeability without using Klinkenberg from 12 academic institutions representing participants from 12 academic institutions Correlation”, with Ir. Asep Kurnia Permadi, 6 countries for the Undergraduate Division; representing 6 countries that present their M.Sc., Ph.D. to improve the quality of the and 44 submissions for the Postgraduate research project. There were 4 judges from paper. Congratulation and good luck!

111 SPE Java . Oct - Dec ‘14 We started with an Overview of Wayang Windu presentation, continued by visiting some well pads and the Separation System. Late in the afternoon, we visited the Control Room and Turbine System. The participants spent the night in Citere Hotel Resort. On the second day,

Day was held as an act of giving back to nature after the countlesswe benefits had a that presentation we humans had from the Subsurface Division to know more about the reservoirs and all received. Mangrove Reforestation and Coral Planting was donegeological during the landscapeevent. of the region. Later on, the weather got worse and it rained heavily. But The Main Event, consisting of a 2-day Grand Seminar, Team Building Session, we managed to look around the Warehouse area and Coring samples. Finally, Mr. Timothy International Conference, and the Energy Debate. On the 2-day Grand Seminar, we were We started with an Overview of Wayang Windu presentation, continued by visiting honored to be joined by valuable key speakers from Schlumberger,Stefan Weatherford, Darsana, Halliburton, the Project Manager, gave a memento to Star Energy for the outstanding some well pads and the Separation System. Late in the afternoon, we visited the Control Room SPE Trisakti Universityand YCAB Student (Ms. Chapter Veronica Colondam). The International Conferencehospitality and Energy and Debate valuable were also knowledge given during the Field Trip. Newsletter (October –November 2014) We started with an Overview of Wayang Windu presentation, continued by visiting andTrisakti Turbine System.held successfully, TheStudent participants involving Engineering spent Chapter the Student night Invitees in Citere from Hotel other Resort.student chapters. On the second day, some well pads and the Separation System. Late in the afternoon, we visited the Control Room

Day was held as an act of giving back to nature after the countless benefits that we humans had EVENT I (OCTOBER 2014) EVENT I (OCTOBER 2014) we had a presentationall received. from Mangrove the SubsurfaceReforestation and Coraland Division PlantingTurbine was toSystem. done know during The the moreparticipants event. about spent the the reservoirs night in Citere andHotel Resort. On the second day, The Main Event, consisting of we a 2 -hadday Grand a presentation Seminar, Team from Building the Subsurface Session, Division to know more about the reservoirs and geological landscape of the region. Later on, the weather got worse and it rained heavily. But International Conference, and the Energygeological Debate. On landscape the 2-day Grandof the Seminar, region. we Later were on, the weather got worse and it rained heavily. But we managed to lookhonored around to be joined the by Wareh valuable keyouse speakers area from Schlumberger, and Coring Weatherford, samples. Halliburton, Finally, Mr. Timothy In October 2014, SPE Trisakti University Student Chapter has successfully held its and YCAB (Ms. Veronica Colondam). The Internationalwe managed Conference to look and Energy around Debate the were Wareh also ouse area and Coring samples. Finally, Mr. Timothy biggest annual event nof the Octoberyear, PETROWEEK 2014, 2014, with SPEthe theme Trisakti"The Energy Compass". It was with Stefanthe hope of understanding Darsana, where the world's the energyheld Project successfully,development Manager,is goinginvolving in terms Engineering of gave Student Stefan a mementoInvitees Darsana, from other the to student Project Star chapters. Energy Manager, for gave the a memento outstanding to Star Energy for the outstanding University Student Chapter has technology advancements and environmental awareness that this theme is thoughtfully made. SPE Trisakti University Student Chaptersuccessfully held its biggest annual hospitality and valuable knowledge given during the Field Trip. PETROWEEKhospitality 2014 was divided and into valuable its series of Pre-Events, knowledge Main Events, and Closinggiven during the Field Trip. I event of the year, PETROWEEK 2014, Events. Participants of this event vary from High School students, Undergraduate Engineering Then finally, PETROWEEK closed with 2014 2 activities, was closed SPE with Fun 2Day activities, SPE Fun Day and the SPE Newsletter (October –Novemberstudents, to 2014)professionalswith the in theme the oil & gas“The industry. Energy Compass”. It was with the hope of understanding where and the SPE Cultural & Family Dinner. the world’s energyCultural development & Family is goingDinner. Everyone Everyone took took pictures,pictures, shared shared their their experiences with their student

in terms of technology advancements and experiences with their student chapters, chapters, and their hopes of better teamwork and bonding among chapters in the future. environmental awareness that this theme is and their hopes of better teamwork and EVENT III NOVEMBER 2014 EVENT I (OCTOBER 201 4) Then finally, PETROWEEK 2014 was closed with 2 activities, SPE Fun Day and the SPE thoughtfully made.Positive appraisals givenbonding by Sponsors, among chapters Speakers, in andthe future. Participants validated the success of Cultural & Family Dinner.Positive Everyone appraisals took pictures, given shared by their Sponsors, experiences with their student PETROWEEK 2014 and made all our hard work worth-while. PETROWEEK 2014 waschapters, divided and into their hopesSpeakers, of better and teamwork Participants and bond validateding among the chapters in the future. The Preits-event series consisted of of SPE Pre-Events, Goes to School and Main SPE Earth Events, Day. SPE Goes successto School of PETROWEEK 2014 and made was held withand the purposeClosing of introducing Events. the oilParticipants andSee Positive gas yo industryu appraisalsin of to next thethis young year's given generation,all our by PETROWEEK Sponsors, hard work Speakers, worth-while. 2015 and! Participants validated the success of hoping that there would be more of the young generationPETR interestedOWEEK in2014 choosing and the made energy all our hard work worth-while. event vary from High School students, EVENT III NOVEMBER 2014 industry as theirUndergraduate career path. Schools visitEVENTEngineering was to SMA II 8(NOVEMBER Jakarta students, andSee SMA yo u82 in toJakarta. next2014) Seeyear'sSPE Earth you PETROWEEK in next year’s 2015 !PETROWEEK 2015! EVENT III (NOVEMBER 2014) professionals in the oil & gas industry. EVENT II (NOVEMBER 2014) EVENT II (NOVEMBER 2014) The Pre-event consisted of SPE Goes to In October 2014, SPE Trisakti University Student ChapterEVENTSchool has IIIand NOVEMBER successfullySPE Earth Day. held2014 SPE its Goes to School was held with the purpose of biggest annual event of the year, PETROWEEK 2014, with the themeintroducing "The Energythe oil and Compass". gas industry It to On Wednesday the 12th of November 2014, SPE Trisakti student chapter got the chance the young generation, hoping that there was with the hope of understanding where the world's energy developmentwould be more is ofgoing the inyoung terms generationOn Novemberof 10Onth- 11Novemberth, SPE Trisakti 10th-11th,University Student SPE ChapterTrisakti successfully On Wednesday held a Field the 12th of November th th On Wednesday theto 12th ho ofld November an annual 2014, SPE event Trisakti stud thatent ischapter Company got the chance Visit. We got the opportunity to witness the interested in choosing theOn Tripenergy November to Starindustry Energy 10 GeothermalUniversity-11 , SPE Wayang StudentTrisakti Windu ChapterUniversity. Sponsored successfully byStudent Pukesmigas Chapter2014, Trisakti, SPE successfully Prowell Trisakti student held achapter Field got technology advancements and environmental awareness that thisas theme their career is thoughtfully path. Schools made. visit was to held a Field Trip to Star Energy Geothermal the chance to hold an annual event that is Energi Indonesia and SPE Java Section, thisto event hold garnered an annual much attention event and that applicants. is Company A Visit. We got the opportunity to witness the SMA 8 Jakarta Tripand SMA to Star82 Jakarta. Energy SPE Geothermal Wayang Windu. Wayang Sponsored Windu by. SponsoredPukesmigas employees byCompany Pukesmigas Visit. workingWe Trisakti, got the opportunity Prowellin PGN SAKAto (Perusahaan Gas Negara) located in SCBD the Energy building. PETROWEEK 2014 was divided into its series of Pre-Events, Main Events, andtotal Closing of 14 students (8 of them members) and 2 accompanying lecturers were welcomed on the Earth Day was Energiheld as Indonesiaan act of givingand SPE Trisakti, Java Section, Prowellemployees thisEnergi event Indonesia working garnered inand PGN much witnessSAKA attention (Perusahaan the employees and Gasapplicants. working Negara) in locatedA PGN in SCBD the Energy building. back to nature after the countlessfirst day bybenefits the representati SPEves Java of Star Section, Energy. this event garnered SomeSAKA (Perusahaanof the experi Gas Negara)ence locatedwas transferred to us on that day. It was a very special event as only Events. Participants of this event vary from High School students, Undergraduate Engineering Some of the experience was transferred to us on that day. It was a very special event as only that we humans totalhad all of received. 14 students Mangrove (8 of muchthem attentionmembers) and and applicants. 2 accompanying A total of lecturersin SCBD werethe Energy welcomed building. on theSome of students, to professionals in the oil & gas industry. Reforestation and Coral Planting was done 14 students (8 offew them people members) could ever and saw2 few thewhat experiencepeople we will do wascould if wetransferred ever ever going sawto tous work whaton in a we company will suchdo if as we PGN. ever going to work in a company such as PGN. during theOn event. Wednesdayfirst day by thethe representati 12th ofaccompanying Novemberves of Star lecturers Energy. 2014, were SPE welcomed Trisakti on studthat entday. Itchapter was a very got special the event chance as only the first day by Bythe visiting representatives PGN, we of also Star learnByfew visiting edpeople to be could readyPGN, ever in anywesaw circumstanceswhatalso we learn will edbecause to bethe HRDready were in so any circumstances because the HRD were so to hold an annual event that isEnergy. Company nice Visit. to teach We us gotif we were the dogoing opportunit if we to everbe interviewed goingy to work witness by in their a company company. the A certain examples were such as PGN. By visiting PGN, we also We started withgiven an Overview to us by ofthem Wayang on how nicelearned to improve to to teach be ourready softus in skills, ifany we circumstances technical were skills,going and to social be skills.interviewed We were by their company. A certain examples were employees working in PGN SAKA (PerusahaanWindu presentation, Gas continued Negara) by visitinglocated because in SCBD the HRDthe Ewerenerg so ynice building to teach. some well pads and the Separation givenus if we to were us goingby them to be interviewed on how by to improve our soft skills, technical skills, and social skills. We were Some of the experience was transferredSystem. Late to inus the on afternoon, that day. we visited It was their a verycompany. special A certain event examples as only were the Control Room and Turbine System. given to us by them on how to improve our fewThe people Main Event, could consisting ever sawof a what2-day weThe will participants do if wespent ever the night going in Citere to work soft inskills, a companytechnical skills, such and socialas PGN. skills. Grand Seminar, Team Building Session, Hotel Resort. On the second day, we had a We were very grateful for this opportunity ByInternational visiting PGN, Conference, we alsoand the learn Energyed presentationto be ready from inthe anySubsurface circumstances Division and tobecause PGN who themanaged HRD to givewere such so an Debate. On the 2-day Grand Seminar, we to know more about the reservoirs and inspiring speech, we looking forward to nicewere to honored teach to us be ifjoined we by were valuable going key togeological be interviewed landscape of theby region.their Latercompany. hold an A event certain like this examples again in the future. were The Pre-event consisted of SPE Goes to School and SPE Earthspeakers D ay.from SPE Schlumberger, Goes to Weatherford,School on, the weather got worse and it rained givenHalliburton, to us byand themYCAB on(Ms. how Veronica to improve heavily. Butour we soft managed skills, to technicallook around skills, and social skills. We were was held with the purpose of introducing the oil and gas industryColondam). to the The young International generation, Conference the Warehouse area and Coring samples. and Energy Debate were also held Finally, Mr. Timothy Stefan Darsana, the hoping that there would be more of the young generation interestedsuccessfully, in choosinginvolving Engineering the energy Student Project Manager, gave a memento to Star Invitees from other student chapters. Energy for the outstanding hospitality and industry as their career path. Schools visit was to SMA 8 Jakarta and SMA 82 Jakarta. SPE Earth valuable knowledge given during the Field Then finally, PETROWEEK 2014 was Trip.

1212 SPE Java . Oct - Dec ‘14 Interview with Firman A. Yaman Chief Executive Officer of PT. Saka Energi Indonesia

company operating was a small company so I was involved and drilling gas fields in everything including managing the in Queensland. When drilling operation. At one stage, I spent I presented my father four months on a small remote island east with my employment of Flores called Lomblen or Lembata. papers, he was very We drilled 1.5 inch core holes looking for pleased. copper mineralization. The closest village was several hours away by foot. After my first paycheck, my manager told me I got married in 1978 and needed to “Firman we now have work in Jakarta. I sent my application an office in Jakarta, and Atlantic Richfield (Arco) and Caltex Indonesia and an oil responded. Caltex was interested because production operation the exploration manager was related to me, on Seram Island. What but the process of interviews and medical do you think?” I did not took forever. Meanwhile, Arco said “This want to move so quickly is your salary. Start tomorrow”. That because I wanted a few lesson lives with me till today. years of Australian experience on my CV, I worked 20 years for Arco from 1978- thinking it would make 1999. I started as a well-site geologist, it easier to jump to a and slowly moved up the ladder. During ak Firman, thank you very bigger company later on. But around that my time, Arco reached 215,000 barrels much for making time for us. time, my father was back in Jakarta and oil per day production from the Java Sea Our readers would like to know his health was deteriorating, he had to go but no gas sales. Gas at that time had no Pabout your background, starting with for kidney dialysis twice a week. My family value, so the Parigi gas accumulation was how you came to go to an Australian asked me to come home because you handed over to Pertamina. They paid Arco university. never know what would happen to him. something like 20 cents per thousand So I took the Jakarta job offer, because of cubic feet to process and deliver the gas My father was in the Foreign Service, and family concerns. to Cimalaya. we were stationed in Canberra in 1969, as I finished my high school. I aspired to study So after enjoying one month of Australian During my time, we discovered the shipbuilding, but the only university that salary, I came back here and got my Bima (Zulu) Field and we call it “the offered the course was in Sydney, a long Indonesian salary. When I showed it to sleeping giant”. Everyone got excited and way from Canberra. However, my father my father he was very proud because at we built huge platforms and facilities. didn’t allow me to be out of his sight. that time my salary was Rp 175,000, whilst Unfortunately production was not up to “Stay here so I can watch you”. At that his salary, as a high-ranking staff member the name. The reservoir is a carbonate, time, mineral exploration was booming of the Foreign Service with 35 years of very heterogenous and difficult to produce. in Australia and my father had friends in experience, was Rp 75,000. So he got the mining industry that said, “your son to know that his son has succeeded, by Arco also discovered the Tangguh gas should go study geology”. As a good son getting more than twice what he earned. field in Papua. The operator at that time I followed his wishes. was ConocoPhillips and they didn’t want Shortly after, my father passed away in to drill the deeper section. So we sole It took me almost 4 years to complete my 1975, just 1 year after I graduated. When I risked to drill the deeper formation and undergraduate study, as I spent the first half- remember him I always get a bit emotional. found the Tangguh reservoir. The well and year adjusting to the new environment and He had very high hopes for me to succeed. follow-up wells were classified as tight- improving my English. I graduated in 1974 holes. People tried to get information. and went straight to Brisbane to work for I worked and stayed in the Bula Field, A friend of mine from a competing oil an Australian company called Associated Seram until 1978. That was quite an company wanted to know the results. He Australian Resources (AAR). It’s a small experience for a young geologist. AAR fished for information here and there, and

1313 SPE Java . Oct - Dec ‘14 typed this information into an email memo in Libya, North Africa, as exploration the Ketapang PSC. Then we went on to but sent it to the wrong recipient, a high manager for two blocks. It was an exciting acquire a portion of Bangkanai PSC from ranking government official. At that time and new experience for me. We completed Salamander, as we already knew what’s in email was a brand new tool to exchange a seismic acquisition program in the there. Then we continued on to acquire mail. They traced the email back, and they onshore block, but never had the chance 25% of Pangkah PSC from Kufpec, which fired him. My friend however, decided to to drill, so I resigned in 2009. was good because now we had production bring this to court as he did not violate to generate cash flow for the company. any company regulation. He only sent the I came back to Jakarta and for a while Bangkanai and Ketapang were supposed email to the wrong person. He won and joined my friend from ex Mobil Oil to start production this year but are now was compensated a substantial amount of working on two TAC’s in area and delayed for at least 6 months. money. This shows that one stroke of a then for a friend ex Unocal working on the button can do a lot of damage or in his Pasir PSC in Kalimantan and Puri PSC in Then we acquired the other 75% of case a financial reward. Central . Pangkah from Hess. Our Directors said that if you feel that this is an asset that we I spent 1995-1996 in Los Angeles. All Lastly I joined Saka at the end of 2011. can rely on, then do it. So in January 2014 senior staff had to spend time in another PGN had been looking for an upstream we were suddenly an operator with people operating unit of Arco. Some went to business since 2009, but never got far and a building. Being an operator was not Alaska, others to Arco R&D facilities in because they didn’t have people to manage our primary objective at that time. We were Texas. I went to Arco HQ in LA. That was it. They hired an ex Arco commercial looking for gas to fill PGN transmission my wife’s first time overseas. I enjoyed this analyst with an engineering background to and distribution pipelines as PGN doesn’t job. It was easygoing, to coordinate and to start the operation. I knew him quite well want to rely on gas sources that they cannot relay projects in Indonesia, and to present as we worked together on the ONWJ PSC control. But then there are regulations that them to the Board. extention proposal in 1996. He started to say gas allocation is by the government, gather ex-Arco people to build a technical and PGN is at best third priority behind In 1999, Arco downsized due to the very team. “Firman, are you available?” “No PLN and fertilizer. So for now we can’t low oil price; it was $10 a barrel. We were I’m working”. “We are with PGN, and supply to ourselves, but at least we can given the chance to resign with extra you will be paid more than what you are make money. I’m sure the new government incentives. Unlike when I joined Arco, now making now”. A good start. We talked, will change the regulation. PSC’s like to be there were 30-50 companies operating in and I became convinced that PGN independent. As businessmen, they want Indonesia, so I was confident to find a new was serious and had funds to run this to sell for the highest price or to get a job. I took the package and moved on. upstream company. Then we assembled strategic advantage. So hopefully, the new our friends from different companies like government will allow PSCs to sell gas to With friends, I formed a consulting ConocoPhillips, BP,Chevron and Shell. whoever they want. company called Geotama. That was tough, People we knew well so we could start visiting potential clients to search for working right away. Its comfortable to Will Saka be carried through into the projects and clinch the deals. We got a few work with when you know the people for next SES PSC? jobs from small companies but none from a long time. In our first 6 months in 2012 the big companies. we were mostly people who had 20+ years Saka currently is in seven PSC’s including of experience. We were kind of an old a part of the South East Sumatra PSC Then I worked for two years with Pertamina people congregation. The only young ones we bought from KNOC. There, we have on their Production Enhancement Project were our two secretaries. PGN were short uncontracted gas that we can sell if the in Prabumulih, . of office space, so they stuffed us in their regulations open up. For the next PSC’s conference room. We partitioned it into extension or renewal, the government will In 2003, a friend of mine, an ex-geophysicist cubicles, and we worked from there for the of course prioritize Pertamina but I believe in Pertamina (I did a few projects with him) whole of 2012. There were people from the government will give the national oil called and said “Firman, I need a geologist two backgrounds; oil and gas professionals companies like Medco, EMP and others to be my working partner for Elnusa. They that we hired from our network, and the a role to play. want to go upstream. Here are tenders for administration, finance and procurement two blocks: Malawi and Bangkanai. Can people given to us by PGN. It worked So yes, we are confident that we will be you help me to evaluate them?” I said quite well because PGN had its eye on part of the next SES PSC. of course, so we submitted the tender finance, procurement and HR, and let and Elnusa won the Bangkanai block. As us go freely on the technical side. PGN I’m interested with Bangkanai. It Elnusa didn’t have a Geoscientist, I joined Directors never interfered. They almost was discovered a long time ago. It’s them. We put together the Kerendan gas gave us a blank check to do whatever is far from everywhere. How do you discovery POD, which was approved by necessary to run this company and to commercialize the gas? BPMIGAS in 2006. Unfortunately Elnusa acquire producing and under-development didn’t have the money to develop the field. assets as soon as possible. By the end of Yes it was discovered in 1976. We will sell 2013 we already had 3 assets. The first the gas to PLN at their new nearby gas So I joined Pertamina again: this time one was a 20% participating interest in plant. They are in the process to complete

1414 SPE Java . Oct - Dec ‘14 the power plant and the high voltage than enough gas so they are converting I had a heart condition and so no more transmission line connecting to the East regasification plants into LNG plants so diving. Kalimantan power grid. they can export it outside. We hope that we can take advantage and export the LNG I love tinkering with mechanical things, like In addition, in the next few years PGN here to Indonesia. With a $4 Henry Hub repairing electronics and cars. Whatever will build a gas distribution network in price, adding the piping cost to the LNG is broken in the house, I’m challenged to Balikpapan. We have uncontracted gas in plant, taxes and transport to Indonesia, we repair it. I also used to play tennis, but not Bangkanai, plus there was a discovery early can land LNG here at $12-13/mmbtu. By golf because it takes too much time and it this year, about another 700 bcf of gas then, we expect the domestic gas price will breaks your weekend. that can be utilized. The discovery is less be that high. Pipe gas now is about $9/ than the 1.5 – 2.0 tcf needed to justify a mmbtu. Now I have grandchildren so I like to stay pipeline to Bontang. more at home talking and playing with Why is gas so expensive in Indonesia? them, going to malls, or Waterboms. My We also have a 100% interest offshore in oldest grandchild is 16, the second one just South Sesulu PSC. So now we operate two Supply and demand. There is still a gas turned 9. I have watched them since they PSC’s: South Sesulu and Pangkah. We’re supply shortage. were small. It’s a different feeling between also in the Muara Bakau Jangkrik and NE grandchildren and children. My son and Jangkrik development with ENI and GDF Just curious, the name Saka, what’s the his wife live behind my house, back to Suez. That’s big money, a US$3.8 Billion story behind the name? back with a connecting door so I can see gross capex investment. IDD has been them everyday if I want to. temporarily stopped but Jangkrik and NE Saka is Sanskrit for Pillar or Column. So Jangkrik are still moving along. Saka is a pillar for PGN. It’s the truth. For Saka, my ambition is still to procure We are only 3 years old, but we already gas for PGN, and I hope I can see that Jangkrik and NE Jangkrik are located contribute quite an amount of revenue before I retire. We’re now amongst the offshore Mahakam, just south of IDD. to PGN after the Pangkah acquisition. top national oil companies, alongside the Even though it’s small it’s still big They already see us as a cash-generating established ones such as Pertamina, EMP money. We hope to produce LNG so entity. The holding company is quite small and Medco we can ship it to our LNG regasification with 45 people. The operated blocks are a facility in Lampung. PGN has two LNG separate entity with about 260 employees Why there are not more Indonesian oil regasification facilities,: in Jakarta Bay and including South Sesulu PSC. All non- and gas companies ? in Lampung. We need LNG cargos. We are operated blocks like Bangkanai, Ketapang, interested in PSCs with LNG potential, Muara Bakau and South East Sumatera are Oil and gas business is high risk and requires because unlike gas, you can sell LNG to overseen by Saka Energi corporate. large capital outlay. Even producing whoever you want to. There’s no allocation. assets require a large influx of money. What do you do in your free time? People who manage investment funds in Saka has yet to met the expectation of Indonesia are reluctant to invest in high PGN to be a gas supplier for their pipeline I used to scuba dive. I participated in the risks and businesses that requires large infrastructures. Most of our participating 2009 Guinness World Record for the most capital. These are long-term investments, interest has gas as a major product. divers at one time under the water, part of typically 10-15 years before we can see the Bangkanai and Muria are 100% gas, the Sail Bunaken activities. This was up in results. PGN and Saka will be here for a Ketapang and Pangkah are 50:50 oil:gas. In Menado along the beach with 1,545 divers. long time and we will hopefully get bigger May 2014, we acquired a shale gas interest We had to stay 45 minutes underwater, 20 and be a competitor to Pertamina, in a in Texas. We’re 36% and it’s producing 100 meters below the surface, and wait while good sense, growing in parallel. million cubic feet, and will climb to 220 the lady official from the Guinness World million cubic feet by mid 2015. We are Record counted us. Unfortunately in 2013 partnered with Swift Energy. It’s a small, public company owned by a Texas family. They only operate assets in Texas and Louisiana.

The strategy there is just to get a foothold in the US and expand and hopefully we can utilize some of the upcoming LNG liquefaction capacity in the Gulf of Mexico to bring the gas to Indonesia. Ten years ago the US wanted to import LNG because they were short of gas. But now they have more

1515 SPE Java . Oct - Dec ‘14 Interview with Peter Cockcroft Independent Consultant, Cockcroft Co.

spent part of October, November, Manager) of a startup of a producing field December and a bit of January 1966 in in South Sumatra called Air Sedang. We had Jakarta, then we went on to Timor. Do to be very close with Pertamina because it you know one thing that people were was unitized, as well as a JOB. Because I complaining about? The traffic on Jl. had worked inside Pertamina, working in Sudirman! JOB’s were not too hard for me (this was third!). And of course I still mix with some So were you here when Soekarno of those old Pertamina guys. For example, passed away in 1970? Dr. Priyambodo Mulyosudirjo was my “Saksi” when I got married in 1986. No, I was only here for those few months, then I went back to Australia. After the OK Block (Air Serdang) I started I came back during the 70s, and a little company in Indonesia called Energy worked as a development geologist Equity (an Australian public company and petrophysicist, working under the which was founded by an innovative Lemigas/CoreLab umbrella. I didn’t entrepreneur, Maurice Brand). We had two eter, you have been in and out of live here. I was in and out, and worked projects. One was the Sengkang PSC in our country for a long time. also with Cities Service and a brief stint South Sulawesi, which we bought from BP with Basic Earth Sciences (Bessindo) and Chevron (Amoseas), which contained PYes. I first came here in October 1965. My in Prabumulih. I only moved to Jakarta Kampung Baru undeveloped gas discovery. father was writing a book. You can still permanently in the early 80s (1981), then BP asked us, “What do you want there? buy it second hand from Amazon, called again worked as a development geologist What do you want this for? There is no “Indonesia and Portuguese Timor”. - or of a petrophysicist really. I worked gas market.” And I said, “Well that’s my for various companies for Kodeco in the problem”. And they reminded us “by the East Java Sea, Petromer Trend, mostly in way the PSC finishes in 2000” and I said, Salawati Basin, and for Pertamina. In 1987, “Well that’s our problem too. We will take when I was with Husky Oil, we won the that risk”. We went to the Director General first EOR JOB the Limau fields of South of Energy, Electricity, and Development Sumatra. After that I did the same thing (DGEED) to apply for an IPP. they said, with Asamera with Jambi EOR project. “Why do you want a power plant in South Both of those projects made money for Sulawesi? There’s no fuel”. I said, “That’s both the companies and for Pertamina our problem”. So we got the PSC for a (These were basically “bypassed” pay cheap price of US$4 million dollars, with projects). Then I left Indonesia as I was a reserves certificate of 514 BCF. We had offered a job as Country Manager for a to join with a local company called PT New Zealand company (Fletcher Challenge Triharsa whose major shareholder was Petroleum) in Thailand and the Philippines. the oldest daughter of President Suharto. We had a discovery and a small onshore They were pretty good and the people were field development in Thailand, which we excellent, and I am still in contact with their brought onstream, selling our oil to the key guy, Raymond Bernardus. We had good Bangchak refinery in Bangkok. It is still on assistance and advice from the Makassar production, I am advised. We were quite business community, especially with Pak I was around 15 years old. I had a long proud of that discovery, as the wireline Jusuf Kalla, who was a significant local school vacation from Australia, so I came logs did not indicate hydrocarbons, but we businessman at the time. up and joined him and we stayed at the had a very alert wellsite geologist (David Intercontinental Hotel, which is now Waghorn) who insisted that we test, based The other advantage was that we negotiated known as Hotel Indonesia. He had been on “shows”. We also had an offshore the gas sales agreementin just one meeting. in Indonesia during the Second World War carbonate discovery in the Philippines, but The reason for that, the minister at the and in fact he come back and allegedly that was sub commercial at the time. time was Pak I.B. Sudjana, and his right fought on the Indonesian side against the hand man was a guy named Dr. Poernomo Dutch, but we can’t find official records I came back to Jakarta and my daughter was Yusgiantoro, who just recently came back on that. That’s why I first came here. We born in 1992. I was in charge (as Operations from doing his doctorate at Colorado

1616 SPE Java . Oct - Dec ‘14 School of Mines, who not only had practical reservoir work and looked at the Harimau then Kepala of BPMigas. experience (through his days at Bessindo), field. We determined that it was basically but was very knowledgeable, even then, a gas field with an oil rim. We sold the It all got a bit funny when 1998 came about the commercial side of the business. gas to Pertamina for one dollar delivered. around, when President Soeharto resigned. He was trying to find solutions. We agreed Everyone in the industry said to me, “You I had to look after all BHP’s issues in that on parameters, and we agreed on a pricing, are crazy, you are giving this away”. The difficult time of May 1998.. We had about and it was done just like that. We could answer was yes ,we were giving it away so 120 expats, amongst our 3000 employees all do that in those days. Previously in 1987 we can co-produce the oil. When we took the way from Aceh to Irian Jaya (BHP had when I was with Kodeco, we made a GSA over the PSC everyone said it had a life of businesses in coal, minerals, steel, building to bring gas to the Gresik power station in about 2 years. It kept going for another 20!, materials as well as oil and gas). In 1999 East Java, which was being converted from Another example of creative engineering to Timor went independent and BHP were coal to gas. At the same time, ARCO was extend the life of a “marginal” field. The still operating Elang-Kakatua oilfield out doing the Bali North project. We agreed people we dealt with in Pertamina, they of Jakarta, even after the independence of on the price after only three meetings. could make this deal happen in only a few East Timor. The person who had that job then was the weeks. That was a tremendous advantage. adviser to the minister, Pak Wijarso. We We did not have any lawyers involved. We I left Indonesia towards the end of 98 agreed on a price of US$2.53 per million made the GSA without any lawyers and this and went on to India with BHP. I was BTU. The beauty of that, from both was never an issue. We eventually turned offered a job in Pakistan as Managing Wijarso and Poernomo, we got approvals the Enerqy Equity Sengkang project into Director of a substantive company that very quickly, so we could start the project a 135 megawatt IPP. I left in 1995 and had two shareholders; Shell and Premier very quickly. Nowadays when people discus then joined BHP (at that stage, Australia’s Oil. Political upheavals seemed to follow about what can be done better, we don’t largest company). All the people involved me around, as in October 1999 there have to reinvent the wheel here. We just with the Sengkang Gas/Power project was a military coup in Pakistan. General have to look at Indonesia’s own history. are very proud of it, as it was one of the Musharraf took over and became President Having someone who has the authority first combined gas and power projects Musharraf. For us in the oil and gas sector to make those decisions is very important. in Asia. It would never have happened it was a very positive change as President Poernomo was given that authority. In my without the drive and enthusiasm of the Musharraff installed experienced technical time, neither of these fine “bureacrats” Australian Managing Director of Energy people as key people. For example, the used that authority in a bad way. Equity, Maurice Brand, as well as the Minister was Usman Aminuddin, a 25 year professionalism of the ESDM officers (Pak Shell veteran. President Musharraff had a Energy Equity also had another project, Purnomo) and the DGEED (Pak Moeljadi high work ethic and demanded the same which was the Lematang PSC. I was Oetji). Some of the expats from Energy from his cabinet (similar to Fidel Ramos familiar with Lematang because I had Equity (they were fine young engineers at when he was president in the Philippines). worked in South Sumatra a lot and I knew the time) such as Kevin Moore (now with Interestingly, President Musharraf asked the original people who got the block Husky) and John Grant (Mitra) are still in all his Ministers to travel in economy (Enim Oil) that was originally run by Jakarta. class domestically! The improvement in Larry Barker, who was one of the original the upstream sector was fantastic because partners of IIAPCO. The Indonesian When I joined BHP, they were trying to the industry brought on one BCF a day counterpart was a guy named Ismet Akil. expand in the power business (like many gas production within four years. We He should be a lot better known than he other major oil companies), and of course participated in three of these projects. One is, because without him, probably IIAPCO oil and gas. BHP had two oil and gas was Zamzama, another one was called Bhit and ARCO may have never started. I was discoveries in the Timor Gap. One was (both about 3000 mmscfd), and another told that he was the first geologist to join the big LNG project called Bayu-Undan, one called Kadanwari. We also increased the predecessor of Pertamina back in together with Phillip Petroleum. Another production in a field called Qadirpur, about 1957. The anecdotal story was that one was called Elang-Kakatua. It was in the which was increased to 700 mmscfd. he was on a trip in Billings Montana, and disputed area (ZOCA) between Indonesia Unfortunately, my young daughter was he met these guys (Todd, Barker, Donohue, and Australia. starting high school, and Pakistan was Dodge), and that became IIAPCO, with getting a bit more dangerous. We loved great support from Pak Ibnu Sutowo. What Again we had good people from the the place and people were fantastic. I was we did in Lematang was really interesting, Government side. At the time in charge Chairperson of the SPE in Pakistan, and as we had a field that was declining. The of that joint body was Pak Djek Zahar, Vice Chairman of PPEPCA (similar to previous company that had it had run into who was not only a fine diplomat but an IPA). financial problems and were in liquidation. extremely good engineer - detailed and We bought it from the liquidator in Hong honest. Then we had a guy called Dr. Bona I then went to Singapore and joined Kong. The other 50% was owned by a Situmorang (who unfortunately passed Premier Oil. We had two operations; one in property magnate by the name of Bapak away in 2007) He had a PhD in structural Indonesia and one in Myanmar. I was more Jan Darmadi. We bought that from him geology from the Royal Holloway, and did involved in finding new projects. Our effort because it really wasn’t his business. He a fine job Director of the Joint Authority, in the Ragay Gulf in the Philippines didn’t didn’t really understand the oil and gas and then Iin Arifin Takhyan. Of course work out but Vietnam has been extremely risks. We did a little bit of engineering and Pak Iin became Director-General of Migas, successful – over 100 million barrels of

1717 SPE Java . Oct - Dec ‘14 oil reserves I think. This was initiated by Anadarko in 1994 following their sub-salt history of Indonesia in the last generation: reviewing an undeveloped discovery - Shell drilling in the Gulf of Mexico. one is the IIAPCO-ARCO SES and ONWJ had drilled a well in 1975 but pulled out PSC. That wouldn’t have happened without because of the war, thus knew there was I think we need to be a bit more creative the push of someone like Ibnu Sutowo. a petroleum system there. A few of the with stratigraphic (and “non-structural”) This is an area which was thought to be key guys involved in this successful project plays. For example, we have quite a few geologically barren, just north of Jakarta. were Wayne Spencer (a long term South fractured “basement” fields in Indonesia, Back in those days, it was thought to be not East Asian geologist), Dr. Chris Kenyon, such as Suban, Tanjung, Jatibarang, and very productive. They had to go find money, Mike Pillow and Phil Maclaurin (who had many more – but they were mostly found running around the world. Just think about worked with me in Pakistan). by accident. We have seen from Soco it, in 1965-66 the country was in bad shape. in Vietnam and Hurrican in the North There was a change of government, there I tried to semi retire in 2005. I went onto Sea that fractured basement and meta were great political risks, no contracts, the a few different boards around the world. I sediment exploration can be successful geology was unknown, and they got a deal was a founder and director of a company as an exploration objective. We have also done in months. People like Pak Mahmud in Kuwait, called Kuwait Energy, who have seen the significant success of Total in were directly involved with that. He was the mostly concentrated in Iraq and Egypt. SW Peciko and Tunu (East Kalimantan) young lawyer involved with that first PSC That was a great success because we did with hydrodynamically trapped gas fields and was involved with the whole process. not have any government shareholders. I with little structural trapping. Let’s just be His (and others) advice should be listened was involved with a similar company in creative and look at non-structural traps. to. Required reading should be his book on India where we got into some old fields We know that there is oil being generated PSCs. I wonder why it’s not in everyone’s in Gujarat and tried to increase production. in the Indonesian mature basins and that bookshelves. Then in 2007 into the coal bed methane petroleum systems exist. (CBM) world. I was a director for a CBM The other thing is LNG. Here in the early company in China for a while, then I was On the pure exploration side - the 70s, it’s the end of the world. Then you had the chairman of a CBM company for four unexplored basins, I can’t comment too this small cap company called Huffington years, called Blue Energy, in Queensland. much, because that’s not really my game. that made a gas discovery (Huffco). Then I then ran a company who produced Historically you’ve had some really good you had other companies. You had a gas from coal in France (European Gas proponents of that. Pak Nayoan, for French company called TOTAL, then you Limited). When I gave a luncheon talk on example. One of the things he tried to had an independent company called Union CBM at IPA in 2008, I was on the board promote was Tangguh, and that has worked of California, then you had a new Japanese of an Australian company who has drilled a very well. company called INPEX, who is a non few wells in South Sumatra for CBM. operating partner of all of them. When Some of the exploration risk takers the gas was found, there was no market. I was also Chairman of a US listed like UNOCAL, HESS, and Murphy are So they put together an LNG project company that had production in Sharjah, spending big money. When they are not (Bontang) which became the biggest LNG and was on the Board of Advisors with a finding, people feel uncertain regarding project of the world. They had to get those company specializing in rejuvenating old the future. Because of that, no other 3 companies to work together. Huffco was fields in Southern California. company dares to spend another operating the pipeline. Pertamina went quarter billion dollars. broke in 1976, right in the middle of this Nowadays I spend my time teaching courses LNG project. The project was done in 5-6 on Oil and Gas Reserves, Bypassed Pay, Yes and no. You have to put this in context. years from discovery to first delivery! This Reservoir Engineering for Geoscientists If you find something, how quickly can you is a fantastic story, and a lot of that came and Risk (I was an SPE Distinguished get back your investment? In some other about because you empowered people Lecture on Risk in 2004-5) countries, you can fast track this. If you to make decisions and implement. It’s a find something, you can do your appraisals, fantastic story, and that should be in every People think the heyday of oil in go through your POD, development plan, oil and gas guy’s history books, because that Indonesia has finished, what do you or even a module of the development plan, puts Indonesia on the modern post-war think? which is a much more sensible to do, in a map in the gas business as a pre-eminent hurry. If you make a discovery in Thailand, LNG player in the world. Because you I am a bit old fashioned – I still think you you can be on production in 2 years. The empower good people to work together can only find oil by drilling. It is a bit like time value of money for investors is very with foreign companies, in this project football, the more shots at goal, the higher important, and the current Indonesian you had Japanese, French, Americans, your chance to score. Thus we need to have regulatory system affects these bottom line and Indonesians. Could you do that a regulatory environment that encourages economics. today? Unlikely! The problems with giving drilling, not only exploration wells, but bureaucrats authority, is that they are often appraisal wells as well. What about the history on how things not trying to find solutions, sometimes worked in the past that led Indonesia to they are trying to find ways to impose their Remember “Omnia bona quoad perfora” – its peak production? will. That’s not just in Indonesia - that is a which is loosely translated as “All prospects feature of bureaucrats all around the world. look good until drilled” – a motto used by There are two forgotten parts of the So I think there are some really great

1818 SPE Java . Oct - Dec ‘14 analogies in the Indonesian oil and gas cores should be available for a period from international. business, and you should be very proud of the time you drill a well. Not 30 years later that heritage. when the PSC is finished. They should be In 2007, Nassim Taleb published The available now. Then people can work out Black Swan: The Impact of the Highly What about the subsurface standpoint? new plays, creative plays, and if an external Improbable”. He coined the term “Black company wants data, then they can then Swan Event” for surprising, high-impact, What you need to do now, you need the apply for it (or even better, download from hard-to-predict events. The Black Swan is creativity of people. You need creative a free site). We have so much data in this a statement of impossibility from the 16th people who are rewarded fairly. In this country. The industry is 120 years old now. century. Black Swans were believed not to world when a geologist finds an oilfield, There is a lot of data, in various different exist until 1697 when one was found in he or she doesn’t get much of a bonus, physical places, and the format is not all Australia. whereas a banker who does a deal gets digital. If that was accessible, you will have millions of dollars. There’s something more creative thoughts, local creative ideas. Taleb says that Black Swan events have wrong here. People are not being rewarded That’s within the power of the Ministry to three features, for being creative in the subsurface as do that. Don’t worry about the short term • they are outliers – they lie outside the individuals. They are rewarded for not benefits of selling data, but the long term realm of normal expectations making mistakes. When you have 80% benefits of finding oil. We also need to cut • they carry extreme impact. chance of failure in exploration wells, you out the “black” market that exists for data. • they have retrospective predictability – are going to make mistakes. It seems that Oil consumption is now 1.6 million barrels they appear explainable and predictable the people who climb in the organizations a day. So we need to find almost 500 million after the fact. are the ones who don’t make decisions. barrels a year just to break even. We need So reward for creativity, that’s something another Cepu every year, without delaying We need this sort of thinking – where are we need to think about. That’s probably the project like in Cepu. And this is just Indonesia’s “black swans”? something that organizations like SPE, to break even. IAGI, IPA can help with, because that’s a I think we need to get back to the question matter of exposure to new ideas. The last oil giant was Cepu (Banyu of “is there any oil left” in the discovered Urip) – wasn’t this found in 1992 areas. Back in the late 80s I wrote a paper It brings to mind Parke Dickey’s famous or thereabouts?. We haven’t found on EOR with guys from Husky. What 1958 quote: “Several times in the past anything (that size) since. Now the we did in the study was, we looked at all we thought we were running out of oil, average discovery is around 3 million. the Indonesian fields, and looked at their whereas actually we were only running out current recovery factor. They were below of ideas.” As I said, we’ve not entered the “non- the worldwide average by a lot. There are structural” phase of exploration yet, all sorts of reasons for that. We came up The other problem is availability of data. because I don’t think the technical in this paper with how much oil is being A friend of mine came to me a few weeks environment allows that. How hard will it left behind with current technology. It ago. He’s about my age -really old - in his be to get approval to drill a non-structural gets to billions of barrels. Has my opinion early 60s. He lives in New Zealand. What play exploration well? Very difficult I think! changed on how much bypassed pay is in he’s been doing is looking at some old data, Because the regulator doesn’t have that Indonesia? Not much. including the seismic lines, which has all the experience. He’s never been exposed to this navigation data, etc. And he gets that for stuff. He wants to see closing contours. The director of E&P at that time was Pak free, from the public domain. He said he’s What if there are no closing contours? G.A.S. Nayoan. He was very enthusiastic found 60 Bcf of prospects (“bypassed” What if we have a fractured basement play? on EOR/IOR. He tried to get better pay). The reason he can do that is, it doesn’t We can’t get an approval, because some commercial terms for the contractors, but cost him anything. He sits at home, and bureaucrat has never seen how that works. unfortunately he wasn’t able to do that. generates geological concepts with this So now these sorts of new plays are usually data. So now, what he wants to do, he will discovered by accident, by serendipity. Nowadays I have to change my opinion go to the operator and say I want to re-drill on EOR, because in this country, not this, because the well has been abandoned. Bureaucrats stifle creativity. Why is that? I many of these EOR projects have worked. You can’t do that here. You don’t have the think you can go back to the PSC. People There’s only a handful of good secondary data available. like Pak Mahmud can explain this better and tertiary recovery projects. One of the than me, but the main idea is that the reasons for that is that there’s no fiscal So when we want to start looking at new contractors are risking their own money incentives to inject anything. The other ideas, how do we get the data? The archives to test these ideas. We get hung up on cost one is geological, you guys have seen this, are pretty poor, aren’t they? Commercial recovery -maybe we should forget cost the more wells you drill in the field in this data cost a lot of money, doesn’t it? recovery. The majority of exploration wells part of the world where you have active So have all the operators hand over all their are failures anyway. So don’t bother about tectonics, the more complex the fields get. data, immediately after it is acquired. They it. Just take it out of the equation. You can It’s interesting. The first couple of wells should be enforced to do that. In other still have a PSC. You just have to change you drill, you have beautiful contours. Then countries, when you cut a core, you give half the fiscal terms accordingly, to make it after another hundred wells you get faults to the government. I recommend that the attractive for investors, both domestic and going everywhere. You try to inject in those

1919 SPE Java . Oct - Dec ‘14 fault blocks, and you don’t know where the takes a little bit of creative thinking. Simple I am impressed with some of the creative fluid is going I think the structural geology mechanical issues, such as scale buildup, ideas of Cairn India in western India. in Indonesia is very complex. For a young can also be a problem (or an opportunity Cairn has applied the concept of pad guy to learn on Indonesian geology from for the bypassed pay specialist). drilling using custom built Rapid Rigs that the structural side, is very difficult. So allow fast and efficient drilling operations injecting fluids is a bit of a lottery because How do you map faults? Software doesn’t on multi-slot well pads (up to 28 wells on a you don’t know where the fluid’s going. handle that very well. I many oil companies single pad). Cairn built special purpose rigs you don’t see people looking at the with wheels for quicker movement for rig One of the problems we have in every structural complexity of a field. That’s moves for example (less than 12 hours for organization in every industry, is that when part of the problem here. Our fields in rig moves). They have drilled in excess of we get into production we have different Indonesia are usually quite structurally 300 wells this way. KPIs. Production guys are not judged complex, and I think we’re leaving isolated not whether they can produce from a one oil behind. We don’t need high technology Type 4 Bypassed Pay Category is projects foot sand. They are judged on keeping for this. which had been stopped for external the stock inventory low, and making sure reasons. Wars, commercial reasons, like the the operating costs are low. It’s more of Maybe we look at cheap seismic, non- Dutch wells and fields in many parts of a cost control exercise rather than an oil explosive seismic in the fields to have Indonesia for example. recovery exercise. Talking about sands, we a better picture. Maybe we run cased- have often got commingled sands. Do we hole logs and downhole video. Maybe we The problem is access to data. But the data know where the water is coming from? No! should look more critically at the cement is not available. The current contracts, These guys have got some new fancy tools jobs. But it’s such an important process - whether it’s a PSC or KSO, doesn’t really nowadays. The NMR you can use in fresh the formation damage, the restriction to allow that. waters. Analytical methodologies don’t flow, all this sort of stuff. It’s boring and always suite the problems we have here. mechanical to the normal geoscientist!. It’s I’ll give you an example. It’s not in One of the problems we have here, we usually put in the hands of Halliburton or Indonesia, but it happened last month. I have freshwater. Freshwater really screws other cementing company, who have got a was giving a lecture about bypassed pay and up your log analysis. So much that even pretty different mindset. A cementer is not missed pay. New oil in old areas, near-field the underlying formula, Archie equation really concerned about the reservoir. He is exploration, etc. might not even work. (SPE: But we have concerned about getting his cement down the Indonesian Formula). If you look at the the hole. So after the talk was completed a guy history, the Indonesian (Poupon – Leveaux) came up to me and said they were doing formula is based on very few wells. What I’m saying is, I think we can look at a reservoir simulation of an old field that some of these existing fields. To me, this is on production at about 400 barrels a day. Let’s talk about so called bypassed pay. I’m is the “low hanging” reserves in Indonesia! They asked me to review the simulation. not talking about in Indonesia, I’m talking So we go to their office. They have a about in general. I think there are 4 types. Think about new technology, your phones. workover rig in operation. They have a Type 1 is stuff that we knew about, but we What do you have in your mobile phones? simple cased hole logging tool gamma don’t (or didn’t) have the technology or Wireless and long life batteries. Let’s say we ray basically. I said why don’t you just run commercial ability to recover it. Shale gas, want to acquire some more seismic, you your cased-hole log, just to see where the for example. We didn’t have the technology, want a better reservoir definition. Wireless sands were? It turns out that they were off- the horizontal wells, the fracking in lateral geophones are more commonly used now. depth, the perforations were in the wrong wells, we didn’t have that till recently. Type Why don’t we run wireless logs (i.e. with place! That’s why they were not getting 2 is the oil and gas we just missed, we didn’t a battery rather than a cable)? I know you optimal production. The driller’s depth was know enough, or we didn’t have appropriate guys don’t like that because you want to sell different from the geophysicist’s depth. technology. Type 3 is the result of dynamic your cable. Why don’t you run your logs on information after production. A good a battery? Maybe we can run our logs on a I said we can now see the sands, why don’t example of this is Apache’s takeover of the slickline and save time and money. we just go back and re-perforate? They mature Forties Field in the North Sea from told me - that’s not scientific, we need to BP, where with additional mapping and I was with a guy all day, and he’s got a well do simulation. However, they agreed to further high definition seismic. Another design for a well that goes down for 1500 reperforate and they increased production example is if perforated a 40 ft sand meters. And I say what’s your best chance over 100 bopd almost immediately! interval, but you are not producing from for this? Maybe 1000 barrels a day. So I the whole 40 ft. Where is the production asked him why is he running 7 inch casing I think one of the things that we don’t coming from? The best permeability sand across the proposed reservoir? Why don’t do very well here is look at the data, we has been drained which is is now producing you drill with a slim hole rig? Because you should be going back to this. What about water. So you’re probably leaving some oil can produce 1000 barrels a day through a navigation coordinates? Many companies behind in the other lower-permeability 3 inches wellbore. So why don’t you run use different navigation systems. I have sands. Maybe you can just go back and a slim hole rig? You don’t need as much seen examples where well locations are off reperforate? Or do a squeeze job, and cement, as much mud, as much footprint, by a kilometer, for this simple reason. Let’s isolate the higher-permeability sand. It just as many loads. tie all that back together, then worry about

2020 SPE Java . Oct - Dec ‘14 datums and depths. This is simple stuff, but shows. He was convinced they would flow connection. We invited Pak A.K. Soejoso, when you see a lot of data packages often oil although the logs showed little. We the head of Pertamina Litbang at the time. we don’t even have navigation data. tested it. It became a successful field, which I remember we had a meeting at the Hilton is still producing 20 years later. The next Executive Club and Pak Joso came along I remember a story back in south day, our big boss came from head office. He to support the SPE. No one knew him, Sumatra where they got different wanted to go to the field because this was because Pertamina in those days didn’t projection, they drilled it anyway and the first discovery for our company. It was mix much, particularly with foreigners found oil in the wrong place. Then they only few hundred barrels a day, onshore who were working for service companies. go back to the right location, drilled it, Thailand. We tested because I trusted the He was very highly regarded by his peers, and it’s a dry hole. wellsite guy, and because he’s closest to the and he became the President Director of raw data. If we had a young inexperienced PGN. I had to try to bridge that gap a Absolutely. All I’m saying is, I think most geologist there, he would not have done the little bit between the Indonesians and the people would agree that there is a lot of oil analysis, and we would not have tested. foreigners. After I was the chairman of in the ground that is not being tapped. The the section, I think the next Chairperson first time we did the Limau EOR project, What is the shale revolution giving was Frila Yaman, who was, I think, the first we looked for un-drained sands us? That we can now produce from Indonesian Chairperson. impermeable rocks, nano-darcy rocks. You mentioned complexity of reservoir Thus, maybe we need to review our net pay Our student members are very active, because of faults and tectonics. That determinmation methods? For example, and there are always student activities. adds complexity to the EOR effort. that are we learning from the geothermal The young professionals, when they Some believe because of our low RF world? Small footprint rigs. The way they get to the industry, it’s hard to get them factor, we are still in primary or most look at the importance of structure before active in SPE. Then you have the senior secondary, not tertiary yet. they drill. As an industry we don’t share ones like Pak Priyambodo, a strong this sort of information very much. Maybe supporter of SPE. It’s very hard to get I don’t think much about tertiary – maybe this is something that the associations can people come to luncheon talks, because in a very well defined field such as Minas, help with. SPE worldwide does that very of traffic in Jakarta. but not in other Indonesian fields. We well. get this primary/secondary/tertiary from How does the IPA handle luncheon talks, our textbooks - I don’t believe those I’ll go back to multiple hypotheses for why does IPA get full house? textbooks work here. I think we should exploration projects. Different teams be looking at reperforating, relogging, working with the same data will come up Full house only when they get a new recompleting, remapping, etc. before we with different maps. Three geophysicists SKK Migas chairman for example. think about those fancy tertiary recovery. working with the same data will come up The beauty of a bypassed pay focus is, as it with 4 different maps, and they can justify I suppose I’m biased, since the talks I’ve is in existing fields, we don’t need difficult all of them. People are cheap, compared to gone to for the last few years are the environmental approvals, we don’t have drilling dry holes. ones I’ve given. So the IPA has the same land acquisition issues - they are already problem? done. Infrastructure is usually in place. I was a SPE Distinguished Lecturer on If you find something, it’s quickly on risk. I went around the world, giving the Yes, but SPE Java has this TDG, there production. You don’t have to wait 5 years. same talk. I was part of the SPE Reserves are more people coming to TDG, 30-40 The question we have is, how do you Committee worldwide from 1992 to people. Lunch and place are sponsored. rejuvenate abandoned wells? The first thing 1997 (the first Asia Pacific guy to be in you want do is have access to information, this committee). I have been teaching a Do any big bosses come? to come up with a fancy idea; remapping, course on reserves since the late 80s and re-perforating, do more seismic. You can’t have noticed that the major uncertainty is Not anymore. do that before you have all the information. reservoir mapping. I am a great believer in multiple hypotheses, where different I was sitting this morning with John Grant, It’s an important issue when you talk geoscientist teams work on the same he’s been here for 20+ years. He was a well about openness of data. In IAGI we data. Unfortunately the current system of tester for BP, many years ago, a very good talk about data, openness, but the approved organization charts restricts this. one. He was complaining about “nowadays government has a strong hold of this I don’t test wells” (he is a big boss!). I said data. Open data means loss of revenue. SPE in Indonesia is divided into why don’t you get up and tell some stories 3 sections, Sumatra is based in and explain what a good test is or what a What’s the revenue from selling data? Do Pekanbaru, Java section covers the bad test is?. There is knowledge around, but an NPV of selling data versus the drilling whole of Java, about 8 Student chapters, these guys are not motivated to participate one successful well. It doesn’t compute. and Kalimantan is based in Balikpapan. and pass on their experience I think that is One example. We were in Thailand. I was an opportunity for the SPE in Indonesia – the country manager. We drilled a well in The first time they opened SPE in Jakarta, to tap the knowledge of these experienced meta-sediments, volcanic. We had a well- it was mainly a bunch of expatriates. I engineers. site geologist who has a PhD. He saw some was trying to look for a more Indonesian

2121 SPE Java . Oct - Dec ‘14 Interview with going anywhere, and now they call us to hit the ground running. We also need to handle 12-15 expiring concessions in 2017. We are also going after overseas opportunities. Sigit Rahardjo We are pretty successful in Algeria at the moment, producing around 23,000 bpd. VP Upstream Technology Center PT. Pertamina (Persero) We shipped around 300,000 barrels recently to Indonesia in our first shipment. This is the first production abroad for Indonesia from our own operation. We are working on a proposal to increase production to 28,000 bpd.

How does UTC help with M&A? The M&A process is lengthy. However, “Fighting without to simplify we can divide the process to three parts: Pre, Current, and Post. UTC end, patience is involved from Pre to Current, which is the decision time to (or to not) buy (or without limits..” sell). During Pre, we judge and assess from materials in the data room. We are the think hanks for your time Pak Sigit. In our technical disciplines, we have S1 tank. On subsurface, we handle geophysics, In this edition, we are going to (Bachelor’s degree) up to S3 (PhD’s). We geology and reservoir. On the surface, we showcase local power. Pertamina have new energy and green technology handle production, facilities and drilling. Tis the flagship of Indonesia, and for experts also with S1 to S3 profiles. Pertamina UTC has 9 departments, studying the technology, the leader in Pertamina is preparing all this. Even though it is not block from A to Z, from exploration until is your Upstream Technology Centre yet powerful, this is ongoing. To fulfill the operations. For example, before we bought (UTC). What is the plan going forward? requirement for 2025 in terms of human ONWJ, we assessed everything. Once the In a company or in a country, there must resources competency, we need to increase deal was done, we handed ONWJ to PHE. be an engineering team or science team the number of resources in UTC by 50- Later, during operations, we play the role of or think tank. If the think tank is weak, 60%. For PhD’s, currently we have about 7, advisor. As an example, during development automatically the business is not strong. with 2-3 prospective talents, making a total of fields GG and YY, we are involved. When Therefore, we are not only talking about of 10. The earlier ones included Pak Alam, PHE submits a POD, we conduct a process NOW, but also about the FUTURE. The Pak Andriansyah and Pak Salis. We are called funneling. We review everything future of Pertamina is already planned for preparing to send more staff to universities. from subsurface to surface, to the location the year 2025; we are aiming to be the Asian It is the duty of UTC to develop people of the proposed wells. After approval by Energy Champion. This is very strategic, according to their competency. It is not easy, SKKMIGAS, the POD will be executed since now almost all national oil companies because we have very high standards. We by PHE, and we are not involved. We are are talking about energy, not just oil and gas. are targeting 3 universities: Tulsa University, different than Pertamina’s assets, in that Energy has more opportunities, for example the Colorado School of Mines, and Texas UTC is a research center, although we are in PT Bukit Asam (a coal mining company), A&M. not fully a research company. We conduct their vision is not to be the biggest coal research and assess technology. Then the producer, but an environmentally friendly We are very fond of Pak Trijana Operations implement. company. I know the Director very well. In Kartoatmodjo, who collected close to my opinion, this vision is thinking out of 1200 well samples, from which an equation During operations, does UTC monitor the box. Industry, especially mining, has was found (Kartoatmodjo and Schmidt / as well as advise? traditionally been anti-environment, but KS correlation). Today, we have 18 staff Yes. We monitor operations on a monthly now it’s the contrary. Pertamina wants to studying. Six of them are PhD candidates, basis. We provide human resources, the be something like that. We are not going and the rest are Masters candidates. Some experts to guide the process. For example, to copy that kind of perspective, however, of our Masters candidates are taking their we have an expert in drilling. So when we want Pertamina to be the backbone of degree in ITB and UI. We are hoping that we have a drilling problem, we advise the country. Going forward, the backbone they will support our initiative for 2025, to do this or that. If the mud weight is will not just be oil and gas, although it is for since we have a great challenge going inappropriate and risks damaging the the moment, since that is our main product forward. reservoir, we have reservoir experts who and we are the biggest in Indonesia. We are can quickly advise them that it is incorrect. hoping that moving forward, Pertamina is We are currently preparing for the Mahakam We always invite our assets to discuss not only about oil and gas. We are aiming to PSC handover from Total to Pertamina. technical issues, for example when the be the energy company. Next, we will receive the East Natuna PSC, mud weight is overbalanced in a depleted where I am also a Director. We can say that reservoir, causing plugging of the reservoir. What about UTC? We are preparing the the administration is moving ahead full We are currently helping EP to select human resources to support this initiative. speed. Since 1997, Natuna has not been the technology to build a platform. They

222 SPE Java . Oct - Dec ‘14 provide inputs to UTC, which we review. they taught morality, very disciplined. I went doctors. When I reached university, my only Some of our roles include Technology, to university in Yogya in 1981. A friend of aspiration was to finish my education. Monitoring, and Standardization.p Our my elder brother took me to UPN. I had subsidiaries can’t just use any technology no idea what geology was. However, I tried However, when I was finishing my degree, as they please. We provide SOP references. to enjoy it, and Alhamdulillah it was a good I realized the problems around me: drought The exception is for common technologies, fit for me. I finished the degree by end of in the provinces, underemployment, lagging such as gas lift, pumping unit, where we 1987. Out of 150 students, I was one of development. I tried to think on how to give them the prerogative since it is already only 25 students that graduated on time. change this situation. Since I was in geology, common. UTC is involved more in new My Rector asked me to join and teach at what can be utilized from the knowledge? technologies, supported by S2-S3 human the university. I spent 2 years teaching at my resources. We are currently aiming to be like almamater. Then I realized I was not suited When I was a docent, I was also a the Exxon and Chevron Research Centers. to continuing education. I complained to consultant working to increase income in We are building towards that, where UTC my boss and he was angry. I decided that the area. In Klaten at that time they have will be fully utilized as the think thank. I couldn’t continue. I needed to fulfill my “batu gamping” (limestone –red). That can When our assets/business units require, we obsession. I discussed with few seniors be good to make cement, so I thought that can provide advice/advisors for operations, about the option to take it or leave it, and I was a simple way to increase income for the technology, and management. Therefore, left it. I joined Pertamina in 1990. First I was community. At the end of the day it was we are working to develop our capability and placed in Pendopo, South Sumatra. Despite hard, since it had to be economical, and will competency. For example, we are working my background in geology, I was sent onsite not work otherwise. There is a lime factory on an Early Professional Development as reservoir / production engineer. I had no in Klaten, however the limestone material Program (EPDP). After BPS (Bimbingan idea even what was casing. I kept learning, is of poor quality, so it can’t make a good Profesi Sarjana / Graduate Professional and when I joined BPS, I did not fail any cement. Training), candidates will enter as fresh subject in petroleum. In Drilling, I was in engineers, and they will follow the EPDP a JOB as senior drilling engineer, reservoir What is developing now is the creative for 2-3 years. We currently have a program engineer, production geologist, PE industry, not based on natural resources. for reservoir, and are developing programs (petroleum engineer), field engineer. That’s These concepts should enter Pertamina. for geoscience, drilling, production, the way to do it, since we can experience Our basis used to be oil and gas, and now facilities, new energy, and green technology. everything. I designed gas lift, ESP, drilled we are heading towards geothermal. Our We are working with PCU (Pertamina with 2-joint stands. I have an obsession to be geothermal potential is 29 gigawatts - and we Corporate University). We provide content decent at what I do. I took a Master’s degree utilize less than 3%. Before I came to UTC, and experts, while PCU provides execution, on my own in Management, and another in I spent 1 year in geothermal as director of such as facility and logistics. During EPDP, geology. I’m currently finishing my doctoral operations. However it seems that we don’t the candidates will still be working in program in Padjadjaran University. I know have the “hidayah” yet. This is out of the their own functions. We have the syllabus about oil and gas, since I have experience box thinking. That is why it is important. for the entire 2-3 years. The program has in everything. Why do we import? Why can’t we switch been running for 2 years. We are mirroring from electricity from coal and hydrocarbon, programs from Shell and Exxon. We have 2 What about your children? requiring hundreds of trillions of Rupiah EPDP alumni, doing internships with Shell My first child just entered university in each year. Why can’t we use Geothermal? and Statoil. We also have an internship with Trisakti, taking management. He asked me Power from oil costs 30 cent/kwh. Power Petrofac in Aberdeen. We are working on if he can become a docent. I told him that from geothermal now costs 6-7 cents/kwh. more internships; 4 persons in reservoir and it’s ok, but he has to finish his degree in 3.5 Hopefully the new President will make the production, 2 for G&G, and 2 in drilling. years. The second child is in high school, switch. We are looking for cooperation, probably and the third one in the elementary school. in Algiers where we have established Hopefully Pak Sigit will drive change, operations. Earlier, do you aspire to be a docent? holding a very strategic position in My apiration always changes. When I was a UTC. We can see great potential, and Can you tell us more about your early kid, I have a neighbour working in a bank. Pak Sigit is an inspiration for our young days? My friend’s parents seem happy being readers. I was born in Wonogiri, 35 km south of Solo, a dry area. Around 1965 I moved to Klaten, 25 km out of Yogya. I spent elementary to high school in Klaten, although my parents came from Solo. They work here and there, and resided in Klaten. I spent my education at TK Aisyah (kindergarten – red), SD Ngepos (Elementary school –red), SMPN 2 (Junior high school –red), and SMA 1 Klaten (High school –red). One of the teachers for elementary school was my mother. I spent 2 weeks at SMA Santo Yosef Solo, where From left to right: Amin Hartoni, Servia Arben, Sigit Rahardjo, Mega, Hasbi Lubis and William Ongseputra

2323 SPE Java . Oct - Dec ‘14 Interview with Tumbur Parlindungan Chief Operation and Commercial Officer of PT Saka Energi Indonesia

CBM was booming at will come to distract and try to stop our the time. Vico had a projects. dream of CBM from Sanga Sanga to LNG as So usually we close an opportunity within a world first. Facilities less than 6 months. Sometimes our people were there, so they make wrong decision, because you need just needed to drill and to decide as soon as possible and think produce CBM gas. deeply later on. We still need to follow the bureaucracy as a state owned enterprise, Then three years ago, so we do this in parallel with evaluating PGN called me to run the opportunity. So when we are ready to commercial at Saka. sign for the opportunity, our Directors When I joined Saka the are also ready to sign. That’s the way. We dream was to develop are like other state owned enterprise such CBM. We talked with Pertamina, only smaller. many international operators including When you acquired Pangkah, you Origin Australia. They became a real operator for the first said it’s impossible for time. How did that change Saka? Indonesia. So we sold our CBM blocks we We didn’t want to become operator initially. focus on conventional We talked to Pertamina and offered them ak Tumbur, thank you for your business (non-CBM). It’s better for Pangkah in exchange for Natuna. But time. This interview is about Indonesia to move to shale gas instead Pertamina said no they wanted both. yourself, your background, of CBM, starting with Chevron in Puniversity and career. Sumatera because they have facilities and When we took over Pangkah from Hess, infrastructure already. 25% of Hess’s staff took the package I went to Trisakti University in Jakarta and quit. To maintain the spirit of the and majored in Geology. In 1992, I got Saka is young. You have people from remaining people, we explained what Saka my first job was as a Geologist in a TAC different cultures coming in. How to can do, and that we have good prospects. (Technical Assistant Contract). After get the team work? five years, I moved to Schlumberger and Hess staff are paid better than Saka stayed for seven years, working mainly I agree with you that’s the problem. Hess staff. How did you manage this? as a geoscience consultant and then in people have a different culture from Arco, economics. I have been commercial ever Shell, Total and others. So we make one Simple. We adjusted the salary of Saka since. I moved to the Netherlands and objective. Saka is an Indonesian company, staff to match ex-Hess. It was easy worked for Shell in upstream commercial all Indonesian except one expat. People are because Saka only had 40 people at that for 4 years. I lived in the Netherland but welcome to bring on their own workflows, time, compared to Hess with 250 people. my field was in Kazakhstan. Our job not so long as the spirit is lively, and the Everybody was happy. Some people got only involved the oil field, but also the projects are done right and with no hanky a 100% salary increase, others a 50% pipeline and how to ship oil to market. panky. That’s what we emphasize when we increase. have meetings. If you start hanky panky So coming back to Indonesia was easy. then you start to hide something, you Do you employ fresh graduates? When we came back from the Netherlands, don’t want to talk honestly, and then the Indonesia was growing, whereas Europe project goes downhill. Yes. We just hired 11 geologists and was dead at that time. petroleum engineers with 0-3 years We have managed to stay clean for the last experience, and we are developing them. I moved back to Jakarta and joined BP in 2.5 years. We tell our people that speed for We have a development plan for fresh upstream commercial for the Asia Pacific. finalizing the project and closing the deal graduates. We hire senior guys to train We covered both CBM and conventionals. is number one in Saka. Otherwise, people and develop them through projects. We

2424 SPE Java . Oct - Dec ‘14 have 10 blocks right now. For Operations Did you look at LNG in Australia? bureaucracy. And the meetings are all experience, people go to Pangkah and around Indonesia and need to be present South Sesulu. Others learn as non- Yes, but it’s too expensive at $13.50. The in US once a while. Operators in deep water, shallow water or domestic slope is $12 from Bontang or onshore like in Salamander. We give them Tangguh. LNG from the USA is cheaper How aggressive are you? Would you projects on interpretation, then we send because there is no slope only Henry be happy to take 100% of expired them offshore to Pangkah. That’s the only Hub + 15% + shipment = $11.50. We PSC’s? way. can waive the tax because it’s energy. Plus the gas can go to PGN directly with no We will not take 100% and our goal is not Our facility in Pangkah is one of the best government allocation. That’s the reason to be operator in every block that we want in Indonesia, in terms of operations and we go to USA. A secondary reason is to acquire. We are happy to be part of the maintenance. It is over-capacity, huge. we want to learn about shale gas, so we consortium. We are not big. We just want Next year, we plan to build a commercial can copy how they operate. We plan in to work and learn together. But if we need training center inside the Pangkah 2018 to have our own shale gas operation to Operate, we can because we have the complex and offer a 3-month Operator over there by buying small companies. people and the capability. training course, covering LPG plants and Operations over there are very efficient offshore operations. We will retain the best as everything is handled by service How can you get into deepwater graduates for Saka. SKKMigas supports companies. The 2018 date is also when exploration? our plan. We have big facility and we try to the US will start exporting LNG. Better to utilize that. PGN is happy to invest in that. start with equity, to start to understand the We want to bring exploration companies market and how they operate. Later, you back to Indonesia, like Ophir and Tullow. You have shale gas in the USA. Do you can become an Operator. That’s the way We want a partnership where they do look elsewhere internationally? should be. You cannot charge into shale all the technical stuff, and we do the gas over night. It doesn’t work. That’s why Indonesian stuff, and we get minority Our philosophy is like this: if we can we don’t want to become operator here, interest. That’s the only way that can help bring gas molecules back to Indonesia, but there. In Indonesia, shale gas might Indonesia with exploration, otherwise we are interested. In our opinion, USA is work for Chevron, because they have nobody wants to do it. the best fit and it is a transparent country. infrastructure and pipelines. So we have invested in the USA. We Will Saka follow PGN and go public? could invest in Africa but it’s much more What are your hobbies? difficult. It is cheaper to get LNG from Yes, the objective is for Saka to go IPO as the USA than from Domestic LNG. From Running for 30-40 minutes or around 5km soon as possible, hopefully in 2016. Then Bloomberg, yesterday the US price was in the morning near my home. Sometimes we will be independent. $11.36 delivered to Indonesia, while from I cycle. I have no time for anything Tangguh it was at least $12. else. There are too many meetings and

From left to right: Amin Hartoni, Peter Adam, Tumbur Parlindungan, Thomas Schievenbusch, Firman Yaman and Mega

2525 SPE Java . Oct - Dec ‘14 MedcoEnergi: Decades of Growth

Donggi Senoro LNG plant, located in Central Sulawesi. Construction is completed, the plant is currently under a commissioning stage with target to produce LNG in mid 2015 bout PT Medco Energi energy-related assets through strategic commencement of the Donggi Senoro Internasional Tbk partnership. As an oil and gas company, Gas and LNG plant will be a turning point (“MedcoEnergi”) MedcoEnergi continues to focus intensively to establish itself as a major player in the AMedcoEnergi was founded on 9 June 1980 on how to secure the Company’s long term gas and LNG business, both upstream and by Arifin Panigoro, one of the Indonesia’s growth and sustainability. downstream. The commissioning of these leading oil and gas businessmen, as the first major development projects, starting with private national oil and gas drilling company. In 2013, MedcoEnergi made a major the Donggi Senoro Gas and LNG projects in MedcoEnergi is established under the laws change on the way it operated our fields. 2015, followed by the completion of Block of the Republic of Indonesia and became The operation organization has been A Gas project and Area 47 Libya oil project the public listed company in Indonesian moved from the headquarter-centric base both in 2017 and Cosmos/Yasmin project Stock Exchange on 12 October 1994. to a full field-based station. This change in Tunisia which is slated for its completion will have bring two major improvements, in 2019, will assure the Company’s near to Within over three decades MedcoEnergi namely increased agility and responsiveness medium-term growth prospects. In Area has significantly grown its business and of the operations team in responding to 47 Libya, MedcoEnergi has successfully built a solid fundamental of portfolios from issues and challenges at the fields/sites, discovered resources from 18 out of the all over the world, especially in Indonesia as well as a more streamlined headquarter 20 exploration wells drilled in four years, and Middle Eastern and North African structure, enabling better focus on planning and achieved an exploration success ratio countries. MedcoEnergi currently has over and strategic pursuits. of 90%, well above the average global 30 oil and gas blocks and is operating in success rate. In 2008, the discovery of Indonesia as well as in overseas, including Growth Plan 352 MMBOE contingent resources in Area Libya, Oman, Papua New Guinea, Tunisia, To support its growth agenda, MedcoEnergi 47 was successfully made. MedcoEnergi United States of America and Yemen. has kicked off several major development became the operator of Area 47 in 2010 projects. MedcoEnergi has been moving and since then increased gross contingent Focus of MedcoEnergi safely on track to sustain its operating to 588 MMBOE (up by 67% from the level Starting in 2011, MedcoEnergi has changed profitability over the next few years, at which in 2008) through the drilling and testing its business strategy, going back to the time MedcoEnergi will start to reap the of an additional three exploration wells. core business of oil-and-gas exploration benefits of our major oil and gas projects, During 2013 - 2014, MedcoEnergi has and production. MedcoEnergi’s business including the Donggi Senoro Gas and LNG successfully completed drilling of two more strategy has 4 folds, i.e. strengthening development, the largest upstream and exploration and three appraisal wells and producing asset portfolio, increasing downstream gas development project in one well testing. Repeating another success reserves life index, completing major Indonesia in recent memory. MedcoEnergi story, a further oil and gas discovery was projects and accelerating growth of other remains cautiously optimistic that the made. MedcoEnergi and its partners are

2626 SPE Java . Oct - Dec ‘14 undertaking the development, operation and maintenance six out of 16 oil and gas fields that MedcoEnergi has found from the 18 discovered wells. MedcoEnergi aims to build a production facility for 50,000 BOPD of oil and 90 MMSCFD of gas which is slated for its first production by 2017 (Phase-1). The remaining ten oil and gas fields are currently being appraised and will be followed by Phase-2 development. In addition MedcoEnergi continues to seek for growth opportunities through the acquisition of producing oil and gas assets, especially in the regions of the Middle East, North Africa and Asia Pacific. In 2012 and 2014, MedcoEnergi has successfully added one producing block in Yemen and 8 blocks in Tunisia respectively. MedcoEnergi is set to double its current production rate to Oil Producing Facilities at Kaji Oil Field. Medco has successfully implemented a pilot over 100,000 BOPD by 2019 by delivering project of EOR in this field successful major projects, growing its reserves organically through high-graded Senoro-Toili. Discovered oil field in discoveries. Launched pilot project exploration activities and successful Soka, South Sumatra. for Enhanced Oil Recovery (EOR) acquisition programs. in Rimau Block. Commenced 2002 Acquired 25% working interest the development of Senoro in Tuban block. Awarded a “B+” Gas and LNG Projects through Success stories of MedcoEnergi (“the corporate credit rating with stable establishment of a joint venture Company”) 1992 The Company expanded its outlook by Standard & Poor’s in of PT Donggi- Senoro LNG operations into oil and gas February 2002, above Indonesia’s (DSLNG). exploration and production by sovereign credit rating. taking over a Technical Assistance 2008 Signed a Production Sharing Contract (TAC) now operated 2003 Signed Gas Supply Agreement Agreement with the Government by PT Exspan Kalimantan and with PLN (Indonesian state-owned of Yemen for Block 82 and a Production Sharing Contract electricity company) for gas supply 83. Completed the sale of the (PSC) now operated by PT Exspan from South & Central Sumatra PSC. Company’s drilling subsidiary, PT Tarakan. Apexindo Pratama Duta Tbk. 2004 Acquired 100% shares of Signed the first Coal Bed Methane 1994 The Company successfully Novus Petroleum Ltd, marking (CBM) PSC in Indonesia to develop conducted an Initial Public the Company’s expansion into CBM in Musi , Offering. The first energy company international oil and gas arena. South Sumatra. Completed drilling to be listed on the Jakarta Stock Inaugurated the Company’s first 20 exploration wells in Area Exchange. gas-fired power plant in Batam 47, Libya. 18 out 20 wells were Island, Panaran I. discovered oil and gas (exploration 1995 Acquired 100% shares of PT success rate of 90%). Stanvac Indonesia from Exxon and 2005 Awarded Oil & Gas Exploration Mobil which held three oil and gas and Production Sharing Agreement 2009 Entered into coal mining business blocks in South Sumatra: South of Area 47 from the Government by acquiring two mining concession & Central Sumatra, Rimau and of Libya. Acquired Langsa block rights in Nunukan, North Pasemah. and Sembakung block in Indonesia. Kalimantan. Signed Operation & Maintenance 1996 Discovered the giant oil field, Kaji Agreement with PLN for Tanjung 2010 Secured operatorship and and Semoga, Rimau Block, South Jati B coal power plant of 2 x 660 successfully made three discoveries Sumatra. MW from three exploration wells in Area 47 in Libya. Obtained 20 – year 1997 Entered into the downstream 2006 Won a tender and awarded for extensions for three PSC working business to operate Pertamina’s Service Contract for Karim Fields, areas: South & Central Sumatra, methanol plant at Bunyu Island. Oman Block A and Bawean.

2000 Acquired three new working areas: 2007 Drilled exploration wells in Area 2011 Completed the sale of Anaguid Simenggaris, Western Madura and 47 in Libya and made six oil Block in Tunisia. Invited PT

2727 SPE Java . Oct - Dec ‘14 Saratoga Power to become a shareholder of PT Medco Power MedcoEnergi at a glance Indonesia. Secured Commerciality Operates Electricity Oil and Gas Operating Rejuvenation on Power Gereration (GW) declaration of Area 47, Libya. Assets Countries Mature Oil Fileds 2012 Acquired 25% of Block 9 Malik, 38 7 250% 1.6 Yemen. Inaugurated maiden major Project Capex Spending in Next 3 Gross Managed shipment of 38,000 tons of coal Progressing Years (US$ billion, gross) Production (MBOEPD) to China. Earned PROPER Gold for Rimau Block for second year running (2011 and 2012). Signed 7 4.1 73 a strategic partnership with Puma Petro-Technical Businrss Professionals Partners * Energy LLC for PT Medco Sarana Kali Baru, fuel oil distribution & storage business unit. 300+ 20+

2013 Secured project financing for Senoro for US$ 260 million. Received Gold *Among others: Calvalley, DNO, ENI, ETAP, Itochu Corporation, Hodd Oil, JAPEX, KOGAS, Kuwait Energy, Kyushu PROPER Award for Rimau Block Electric, Libya Investment Auothority, Lundin, Mitsubishi Corporation, NOC Libya, Oman Oil Company, OMV, Ormat for third consecutive year (2011, Technology, Pertamina, Premier Oil, PDO Shell, SKKMIGAS. 2012, and 2013). Completion asset swap with Salamander for Bangkanai with Simenggaris and Area 47. Steadily increased the acquisition of Storm Venture Bengara. Establishment of a average gas sales price to reach International (Barbados) Ltd. Joint Operating Company (JOC) over US$ 6/MMBTU for domestic Secured the 2nd Commerciality of Nafusah Oil Operations B.V markets. declaration of Area 47 Libya for (Nafusah) with NOC Libya and the additional three fields. Won Libyan Investment Authority. JOC 2014 Acquired eight oil and gas working a tender and acquired Block 56 in Nafusah will develop and operate areas in Tunisia, through an Oman.

Risk Analysis, Prospect Evaluation & Exploration Economics Our popular “Flagship” course offerings in Asia-Pacific

Our flagship course covers all phases of exploration decision-making, and has been presented hundreds of times worldwide over the past ten years. During this time, the course has become a favorite for both engineers and geoscientists.

In the first half of 2015, you can register for this course in one of the following Asia-Pacific locations:

Kuala Lumpur January 26-30 Perth March 9-13 Bali June 8-12

With a strong practical orientation and abundant use of realistic exercises, the course illustrates the applications and mechanics of the various concepts and analytical procedures involved in the evaluation and investment analysis of exploration prospects, though the methodology can also effectively be used for development projects. Several team exercises bring the key messages all together in a fun and learning manner that prepares the participants to immediately apply their new skills to their next evaluation.

For more information or to register online, please go to our website at www.roseassoc.com or send an email to [email protected]. Transferring E & P Risk Assessment Expertise Instruction Software Tools Practical Consultation

2828 SPE Java . Oct - Dec ‘14 PETROLEUM & MANAGEMENT PROGRAMS FOR JANUARY - JUNE, 2015 • TNA and Evaluating The Results Jamin Djuang, PE, M.Sc., MBA Jan. 21 - 23* • Effective Negotiation Skills LDI Instructor Feb. 16 - 18* • Basic Petroleum Operations Jamin Djuang, PE, M.Sc., MBA Feb. 26 - 27* • Public and Human Relations Skills LDI Instructor Mar. 4 - 6* • Managing Conflict and Handling Difficult People LDI Instructor Mar. 4 - 6* • Pedoman Tata Kerja (PTK 007) Dr. Ir. Antarikso A., MBA, CPIM Mar. 11 - 13* • Report Writing in English Jamin Djuang, PE, M.Sc., MBA Mar. 11 - 13* • Petroleum Economics, Risk and Fiscal Analysis Guy Allinson Mar. 16 - 20* •Modern Office Management and Electronic Filing Systems Ir. Rudianto Prabowo, MSIS Mar. 18 - 20** • Training of Trainers Drs. Totok Krisdianto, MM Mar. 25 - 27* • Effective Presentation Skills LDI Instructor Mar. 25 - 27* • Reliability Centered Maintenance Dr. Ir. Rachmat K. Bachrun Mar. 30 - Apr. 2* • Understanding The PSC Concept Dr. A. Rinto Pudyantoro & Team Mar. 31 - Apr. 2* • Planning and Scheduling Skills of Oil & Gas Projects Ir. Pulung Susilo Rahardjo Mar. 31 - Apr. 2* • Managing The Human Capital Johannes W. Karundeng, M.Sc. April 8 - 10* • Effective Supervisory Skills LDI Instructor April 8 - 10* • Management and Teamwork Skills LDI Instructor April 8 - 10* • Corrosion Control in The Oil and Gas Industry Ir. Deden Supriyatman, MBA April 13 - 17* • Problem Solving and Decision Making LDI Instructor April 15 - 17* • Fundamental of Coiled Tubing Jerry L. Collin April 20 - 24* • Taxation, Legal and Financial Aspect of PSC Dr. A. Rinto Pudyantoro & Team April 22 - 24* • Effective Communication and Interpersonal Skills LDI Instructor April 22 - 24* • Oil and Gas Project Management Ir. Pulung Susilo Rahardjo April 27 - 30* • Integrated Maintenance Management Dr. I Wayan Suweca April 27 - 30* • Time Management and Personal Effectiveness LDI Instructor April 28 - 30* • Plant Piping and Pipeline Systems Dr. Maurice Stewart, PE, CSP May 4 - 8* • Coiled Tubing and Nitrogen Diego Londono May 4 - 8* • AFE Budget Preparation Skills of Oil and Gas Project Ir. Pulung Susilo Rahardjo May 11 - 13* • Maintenance Planning and Scheduling LDI Instructor May 11 - 13* • Developing Your Potential For Success Johannes W. Karundeng, M.Sc. May 11 - 13* • Well Completion and Workovers Dennis Gaudet, PE May 18 - 22* • Production Safety Systems Dr. Maurice Stewart, PE, CSP May 18 - 22 • PSC Budgeting: WP&B, AFE and POD Dr. A. Rinto Pudyantoro & Team May 20 - 22* • Uncertainty Analysis of Reservoir Models Dr. Asnul Bahar May 25 - 29** • Oil and Gas Processing Plant Dr. Maurice Stewart, PE, CSP May 25 - 29 • Assertiveness and Influencing Skills LDI Instructor May 27 - 29** • Cost Estimating and Project Control Dr. Maurice Stewart, PE, CSP June 3 - 5 • The Art and Science of Negotiation Ir. Joko Margono, MM, MBA June 3 - 5*

Note : Courses are in Jakarta except those marked with (*) are in Bandung, (**) in Yogyakarta and (***) in Bali

Harmoni Plaza B-16, Jalan Suryopranoto 2, Jakarta - Indonesia Telp. (62)(21) 6326911, 6313556 Fax (62)(21) 6330212, 6305074 E-mail : [email protected] - Website : www.Lditraining.com

2929 SPE Java . Oct - Dec ‘14 Utilization ofUtilization Aerated Technique of Aerated in Technique in

Drilling Sub-Pressure Well Drilling Sub-Pressure Well By Ashadi, Drilling Engineer ABSTRACT Obtaining drilling fluid and cuttingEducation returns : while drilling in a subnormalfaults or fractures pressure are regiintersected,me is lossesstill a conceptbig challenge can be applied in thein Oil dril & Gasling well on 2001-2004 : B.Sc. Electrical Engineering, will occur as the drilling fluid will enter which subnormal pressure regime occurs. industry. Aerated drilling has been introduced University ofas Indonesia one of the solution.the fracture Aerated zone Drilling rather than is flowing a technique to where compressed air in combination with the drilling fluid is used(Cum to Laude)reduce the effective densitysurface. Someof the of fluidthe cutting column may enterin the the wellbore. AERATED The DRILLING main objec TECHNIQUEtive is 2010-2012 : M.Sc. Energy Management, to enhance the chance of having circulat ion University during of Indonesia drilling by reducingencountered the Equivalent fracture zone Circulatingbut some may stay Density Aerated (ECD) Drilling in theis wellbora techniquee. where (Cum Laude) in the annulus and accumulate. This cutting compressed air in combination with the One of the biggest challenges inExperience drilling : a subnormal pressure regiaccumulationme is loss will circulation. result in torque This increase also mainlydrilling fluidoccurs is usedwhen to reducedrillin theg aeffective geothermal well. In geothermal field,2005-2009 th e: Drilling well & targets Measurement typically Engineer arethat faults, will limit fractures the capability or fissures to drill deeperthat have density high of permeabilitythe fluid column and in the are wellbore. 2012- Now : Drilling Engineer and it will also increase the risk of stuck pipe The main objective is to enhance the chance connected with the geothermal reservoir which has subnormal pressure.due to cutting When pack these off. The fau cuttinglts or entering fractures of arehaving intersected, circulation lossesduring drillingwill by occur as the drilling fluid will enter theBSTRACT fracture zone rather than flowingformation to also surface. becomes Some a later problemof the ascutting it reducing may theenter Equivalent the enco Circulatinguntered Density fracture zone but some may stay in theObtaining annulus drilling and fluid accumulate. and cutting Thismay reduce cutting the permeabilityaccumulation of the will fracture result (ECD) in torque in the wellbore increase (Hole that 2006). wi ll limit the capability to drill deeper andreturns it willwhile drillingalso increasein a subnormal the riskand thusof stuckthe production pipe due of theto well.cutting Being pack off. The cutting entering pressureA regime is still a big challenge in the able to manage circulation is very crucial as Injecting compressed air into the mud formation also becomes a later problem as it may reduce the permeability of the fracture and thus the production of the well. Being drilling industry. Aerated drilling has been it will reduce the drilling risk, increase the circulating system to combat circulation able to manage circulation is veryintroduced crucial as oneas itof will the solution.reduce Aeratedthe drilling drilling risk, efficiency, increase enable the drilling better geologicalefficiency, losses enablewhile drilling better for geologicaloil was first carried control & formation evaluation Drillingfrom cuttingis a technique samples, where compressed and minimize air control formation & formation damage. evaluation from cutting out by Phillips Petroleum in Utah, USA in in combination with the drilling fluid is used samples, and minimize formation damage. 1941. During the early 1970’s, air or ‘Dust Aerated drilling has been utilizedto reduceto solve the effectivethis problem. density of The the inte fluidnt is to manage the ECD that will allowDrilling’ a full was or partialintroduced cir culationat the Geysers despite subnormal pressure zonecolumn has in been the wellbore. penetrated, The main withoutobjective is neAeratedglecting drilling the has well been control utilized to aspectsolve this of geothermalthe well. field Understanding in California, USA. the Aerated ECD under various air/mud ratiosto enhance and understanding the chance of having the circulation field form problem.ation pressure The intent areis to essentialmanage the forECD the drillingsuccessful of geothermal application wells ofwas the initially during drilling by reducing the Equivalent that will allow a full or partial circulation developed by Geothermal Energy New technology. Circulating Density (ECD) in the wellbore. despite subnormal pressure zone has been Zealand Ltd. (GENZL) during the period Despite the article will focus more on the aerated utilization in geothermalpenetrated, field,without similar neglecting concept the well can be1978 applied to 1982 in while Oil &involved Gas wellin drilling on which subnormal pressure regimeOne of occurs.the biggest challenges in drilling a control aspect of the well. Understanding projects at the Olkaria Geothermal field subnormal pressure regime is loss circulation. the ECD under various air/mud ratios and in Kenya, and at the Kakkonda field in This also mainly occurs when drilling a understanding the field formation pressure Honshu, Japan; and during the latter part AERATED DRILLING TECHNIQUEgeothermal well. In geothermal field, the are essential for the successful application of of this period GENZL developed its DOS well targets typically are faults, fractures or the technology. based Air Drilling Simulation (Hole 2006). Aerated Drilling is a technique fissureswhere thatcompressed have high permeabilityair in combinati and are on with the drilling fluid is used to reduce the effective density of the fluid column in the wellbore.connected The main with objectivethe geothermal is to reservoir enhance Despite the chance the article of havingwill focus circulation more on the duringPREDICTING drilling byAND reducing CONTROLLING the Equivalent Circulating Density which(ECD) has insubnormal the wellbore pressure. (Hole When these2006). aerated utilization in geothermal field, similar THE ECD Estimating/calculating the ECD in an aerated environment require different formulation as if in a normal mud environment. The air will get compressed as it flows down through the drill pipe due to the hydro pressure from the mud above it. The volume of air at the bit will be different from the volume of air injected at surface due to this compression. Therefore the ECD at the bottom hole is very dynamic.

While there are some commercial software available to model this ECD, the author have instead been utilizing some scientific formula from two different group of scientist. They are formula developed by Guo-Ghalambor and formula developed by Al-Ajmi. The author has tried both formulas and both were giving quite similar result and trend. Once both formulas are considered valid to be used, one can use it for planning as well as Fig 1. Aerated Process review purpose. (Figure taken from : Hole, H., 2006: Aerated Fluids For Drilling of Geothermal Wells. Fig 1.UNU-GTP, Aerated Iceland) Process (Figure taken from : Hole, H., 2006: Aerated Fluids For Drilling of Geothermal Wells. UNU-GTP, Iceland) 3030 SPE Java . Oct - Dec ‘14 Injecting compressed air into the mud circulating system to combat circulation losses while drilling for oil was first carried out by Phillips Petroleum in Utah, USA in 1941. During the early 1970’s, air or ‘Dust Drilling’ was introduced at the Geysers geothermal field in California, USA. Aerated drilling of geothermal wells was initially developed by Geothermal Energy New Zealand Ltd. (GENZL) during the period 1978 to 1982 while involved in drilling projects at the Olkaria Geothermal field in Kenya, and at the Kakkonda field in Honshu, Japan; and during the latter part of this period GENZL developed its DOS based Air Drilling Simulation (Hole 2006).

PREDICTING AND CONTROLLING THE ECD

Estimating/calculating the ECD in an aerated environment require different formulation as if in a normal mud environment. The air will get compressed as it flows down through the drill pipe due to the hydro pressure from the mud above it. The volume of air at the bit will be different from the volume of air injected at surface due to this compression. Therefore the ECD at the bottom hole is very dynamic.

1 Ashadi and Dumrongthai

While there are some commercial software available to model this ECD, the author have instead been utilizing some scientific formula from two different group of scientist. They are formula developed by Guo-Ghalambor and formula developed by Al-Ajmi. The author has tried both formulas and both were giving quite similar result and trend. Once both formulas are considered valid to be used, one can use it for planning as well as review purpose.

aspect. While above discussion has focused mainly on the pressure aspect of the wellbore, other aspect has to be reviewed in order to generate a holistic approach. Impacts of aerated to the motor performance, bit performance, and drill cutting circulations are to name a few.

At the end, main goal of having a holistic hydraulic design is to fine tune the optimum drilling parameters. At any drilling situation, there will always be a trade-off for changing any drilling parameter. Therefore, the goal is not to achieve best parameter but rather optimum parameter at any particular Fig 2. Various Type of Pressure Profile situation to achieve a certain goal. Fig 2. Various Type of Pressure Profile (Figure taken from : Hole, H., 2006: Aerated Fluids For Drilling of Geothermal Wells. (Figure taken from : Hole, H., 2006: AeratedUNU-GTP, Fluids For Iceland) Drilling of Geothermal Wells. UNU-GTP, Iceland) CONCLUSION Being able to manage fluid circulation in There are two main factors that contribute of losses can be predicted too. In a mature drilling a subnormal pressure or geothermal There are totwo drillingmain factors losses. that contributeThey are to drilling the pressurelosses. They arefield the pressure with difference many (formation wells pressurehave beenversus drilled ECD) well and will bring significant benefit for the the formation permeability or injectivity index as for geothermal case. Having said that, there are certainly two ways to control the drilling lossesdifference i.e by controlling (formation the pressurepressure difference versus and/orECD) controlling (information the permeability/II is richly (for available), the rest of thearticle, II IIfor will bedrilling, used reservoir, and geologist group. instead ofand permeability). the formation permeability or injectivity any future nearby wells can be predicted with Better hole cleaning for drilling, adequate index as for geothermal case. Having said In a simple approach, rate of losses as a function of Injectivity Indexa and higher Delta degree Pressure of can accuracy. be formulated Since as: formation formation evaluation for earth scientist, and that, there are certainly two ways to control pressure is well known, BHP during drilling better production for reservoir are the main theFluid drilling Loss (psi )losses i.e =by controllingInjectivity the Index with(kph/psi air/mud) x Delta can Pressure be modelled (kph) and hence the benefits. That means,pressure the smaller difference the delta pressure,and/or thecontrolling lesser drilling the fluid lossesdelta willpressure be, at similaris known. Injectivity This Index. concept Since mayII is formation dependentpermeability/II and not to be reduced (for obviously,the rest of pressure article, difference II will is bewhat more the drilling difficult team tocan apply control in i.e. a bynew controlling or even the TheECD. main concept in managing circulation Aerated drillingbe used is utilizedinstead to of control permeability). this ECD. The more air addedexploration into the system, field, the lesser but the again ECD is.in Theoretically, a developed ifhas ECD always been the same i.e. rate of fluid was less over-balance to formation pressure then fluid can more likely be circulated to surface. This is the whole concept of utilizing aerated drilling to mitigate losses in drilling subnormal pressuredfield, well. this would be much more feasible to loss is the product of Injectivity Index and In a simple approach, rate of losses as a be done. By knowing in advance on what the Delta Pressure. Aerated Drilling has been PREDICTINGfunction THE ofRATE Injectivity OF LOSSES Index AND INJECTIVITYand Delta INDEXdrilling would expect (Return/PLC/TLC), utilized mainly to manage the delta pressure There are Pressureseveral key can information be formulated can be obtained as: by understandingthe all team this pressure can manage models the during plan drilling, in advance. based on the simpland ehence controlling the rate of loss. By physic formula as shown above . While the physic law has always remained the same; it is our understanding that is getting better and better. understanding the whole pressure profile Fluid Loss (psi) = Injectivity Index (kph/ Secondly, especially for geothermal reservoir (BHP, pore and fracture pressure) with the If the II ofpsi the)x well Delta is known, Pressure delta pressure(kph) can be predicted / modelled,group, then the the team rate ofwould losses becan ablebe predicted to calculate too. In a maturehelp of available resources (software, sensor, field with many wells have been drilled (information is richly available), the II for any future nearby wells can be predicted with a higher degree of accuracy. Since formation pressure is well knownthe, BHP II duringprior drillingto fluid with damage air/mud (thecan beoriginal modelled II). and tools),hence the implementation of aerated drilling the delta Thatpressure means, is known. the Thissmaller concept the maydelta be pressure,more difficult Still to apply using in thea new same or evenformula, exploration rate field,of losses but again to in mitigate a this issue can get better and better. developedthe field, lesser this would drilling be much fluid more losses feasible will to be be,done. at atBy any knowing delta inpressure advance oncan what tell theus drillingthe II wouldof expect (Return/PLC/TLC), the team can manage the plan in advance. similar Injectivity Index. Since II is formation wellbore. Reordering above formula: REFERENCES Secondly,dependent especially for and geothermal not to reservoibe reducedr group, obviously, the team would be able to calculate the II prior to fluid damage (the origHole,inal H., 2006: Aerated Fluids For Drilling II). Still usingpressure the same difference formula, rate is whatof losses the at drilling any delta team pressure canInjectivity tell us the IndexII of wellbore. (kph/psi Reordering) = above formula: of Geothermal Wells. UNU-GTP, Iceland. canInjectivity control Index i.e. (kph/psi by )controlling = Deltathe PressureECD. (kphDelta) / Fluid Pressure Loss (psi ()kph ) / Fluid Loss (psi) Hole, H., 2006: Lectures on geothermal Aerated drilling is utilized to control this drilling and direct uses. UNU-GTP, Iceland, WheneverECD. any feed The zone more is encountered air added (in into geothermal the system, field) an d TLC/PLCWhenever occurs, any recordfeed zonethe rate is of encountered losses and delta (in pressure at that particular moment. That will tell the II of that feed zone prior to any mud damage. The II obtained after well is completereportly 3, 32 pp. drilled is athe mud-damaged lesser the II.ECD Knowing is. Theoretically, both II during andif ECDafter drilling geothermal will tell how field)badly the feedand zone TLC/PLCis damaged and occurs, therefo Guo,re it B., Sun, K., and Ghalambor, A.: “An can give guidancewas less if over-balance the well is good to candidateformation for pressurefuture work- overrecord or not. the Certainly rate of lossesfurther caandlculation/conversion delta pressure at need Analyticalto be Solution for Aerated Mud and then fluid can more likely be circulated that particular moment. That will tell the II Foam Drilling Hydraulics in Deviated Holes” to surface. This is the whole concept of 2 of that feed zone prior to any mud damage. paper SPE 2003-032. utilizing aerated drilling to mitigate losses in The II obtained after well is completely Russel, M.A.C., 1987: The use of aerated drilling subnormal pressured well. drilled is a mud-damaged II. Knowing both fluids in geothermal drilling. Proceedings of II during and after drilling will tell how badly 9th New Zealand Geothermal Workshop, PREDICTING THE RATE OF the feed zone is damaged and therefore it can Auckland University, NZ, 153-157. LOSSES AND INJECTIVITY INDEX give guidance if the well is good candidate Thórhallsson, S., 2008: Geothermal drilling There are several key information can be for future work-over or not. Certainly further technology. UNU-GTP, Iceland, unpubl. obtained by understanding all this pressure calculation/conversion need to be done since lecture notes. models during drilling, based on the simple II is a function of fluid properties. II for physic formula as shown above . While the drilling fluid is obviously different from II Disclaimer: physic law has always remained the same; it is for geothermal production fluid, so further This article reflects personal opinion, it our understanding that is getting better and calculation/conversion still need to be done. does not relate to any company or legal better. entity-(ies). All data presented are publicly FUTURE STUDY available in their respective literatures as If the II of the well is known, delta pressure Addition of air into the drilling fluid system referenced in the article. No confidential data is being used as reference. can be predicted / modelled, then the rate will certainly have an impact to other drilling

3131 SPE Java . Oct - Dec ‘14 © 2014 Schlumberger. All rights reserved. Reproductions without permission are strictly prohibited.

3232 SPE Java . Oct - Dec ‘14 © 2014 Schlumberger. All rights reserved. Reproductions without permission are strictly prohibited.

333 SPE Java . Oct - Dec ‘14 © 2014 Schlumberger. All rights reserved. Reproductions without permission are strictly prohibited.

3434 SPE Java . Oct - Dec ‘14 © 2014 Schlumberger. All rights reserved. Reproductions without permission are strictly prohibited.

3535 SPE Java . Oct - Dec ‘14 © 2014 Schlumberger. All rights reserved. Reproductions without permission are strictly prohibited.

3636 SPE Java . Oct - Dec ‘14 © 2014 Schlumberger. All rights reserved. Reproductions without permission are strictly prohibited.

3737 SPE Java . Oct - Dec ‘14 © 2014 Schlumberger. All rights reserved. Reproductions without permission are strictly prohibited.

3838 SPE Java . Oct - Dec ‘14 © 2014 Schlumberger. All rights reserved. Reproductions without permission are strictly prohibited.

3939 SPE Java . Oct - Dec ‘14