Overlooked Challenges in Indonesian Geothermal Development
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Overlooked Challenges in Indonesian
Geothermal Development
PT Supreme EnergyJune 5, 2014
IIGCE 2014Jakarta Convention Center
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The concessions are along the Great Sumatra Fault (GSF)
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PT Supreme Energy Muara LabohPPA signing March 2, 2012
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PPA for Muara Laboh and Rajabasa were signed on March 2, 2012 with electricity tariff of :- Muara Laboh : US$ 0.094 per kWh- Rajabasa : US$ 0.095 per kWh
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Muara Laboh Project
Construction of 14 km access road
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Muara Laboh Project
Preparation of drilling camp, Explosive bunker and Pipe casing storage
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Muara Laboh Project
Construction of Access road to the first Well Pad
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Muara Laboh Project
Drilling starts on September 2012
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Geothermal system was found in Muara Laboh, West Sumatra
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6(six) wells exploration program completed with resource found around 60 to 95 MW
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The concessions are along the Great Sumatra Fault (GSF)
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PT Supreme Energy Rantau DedapPPA signing November 12, 2012
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PPA for Rantau Dedap was signed on November 12, 2012 with electricity tarif of US$ 0.0886 per kWh
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Construction of about 34 km of access roads
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13Endikat River Ford
A road bridge has to be built across major river
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Stone bridge is built across major ravine -Mechanically stabilized earth (MSE) Wall
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Extensive earth work were performed to build an MSE Wall
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`river
Before After
~23m
2(two) Stone bridges across ravines were built to reach the first well pad
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Spud date for first well drilling commenced on February 3, 2014
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Drilling of 2(two) wells have been completed with 5(five) to 7(seven) wells exploration program
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The concessions are along the Great Sumatra Fault (GSF)
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Forestry permit issued on April 2014 in conjunction with forest for community program
2020
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Overlooked challenges in developing Geothermal Power plants in Indonesia
Standard challenges1. Electricity tariff – New tariff2. Government guarantee (BVGL) – MOF Template developed3. Forestry permit – New Geothermal Law4. Land Acquisition - 5. Community issues -
Overlooked challenges6. Project Management capability for infrastructure
development7. Other Permits and Licenses8. Subsurface engineering capabilities 9. Sufficient capital for exploration (Equity)
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Develop harmonious relation with all local stakeholders (formal & informal leaders, Directly Affected Villagers) and work closely with security
apparatus to utilize “soft power”
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Finding hot temperature system is related to well pad location
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+ + + + + + + + + + + + + + + + + + + + + + + + + + + + ++ + + + + + +
FumarolesH2O,CO2,H2S
Acid – SO4, Pools
Steaming Ground Na–HCO3– SO4,Springs
NaCl Springs
Magma Source H2O,CO2,SO2, HCl
dilution
Lateral outflow of NaCl brine
-4
-3
-2
-1
SL
+1
+2
km
200 oC250 oC
300 oC
Cap Rockvapor zone
upflow
Typical High Grade
Typical Marginal
Volcanic Arc Geothermal System
In many cases, higher elevation has better chance compared to low elevation
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Making access roads to reach high elevation pads is a civil engineering challenge
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Crossing ravines and valleys in remote jungles needs special engineering and construction feat
24Typical Mechanically Stabilized Earth (MSE) wall to cross deep ravines
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Near Geothermal system, there are possibilities of soft soil condition (Geothermally altered clay)
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Various technology to improve soil condition needs to be implemented such as the use of Geogrid, Geotextile, Lime stabilizer, Clean set cements
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Building infrastructure for exploration program needs experienced project management capabilities
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Overlooked challenges in developing Geothermal Power plants in Indonesia
Standard challenges1. Electricity tariff – New tariff2. Government guarantee (BVGL) – MOF Template developed3. Forestry permit – New Geothermal Law4. Land Acquisition - 5. Community issues -
Overlooked challenges6. Project Management capability for infrastructure
development7. Other Permits and Licenses8. Subsurface engineering capabilities 9. Sufficient capital for exploration (Equity)
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Develop harmonious relation with all local stakeholders (formal & informal leaders, Directly Affected Villagers) and work closely with security
apparatus to utilize “soft power”
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Number of Permits and Licenses for a Geothermal investment
• General corporate : 14 • Operational : 15• Land related : 3• Environmental related : 6• Manpower related : 6• Safety related : 12 Total : 56
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Current environmental regulation implements similar treatment as Oil & Gas drilling cuttings
Need coordination help between between Ministry of Energy and Mineral resources (Director General of EBTKE) with Ministry of Environment to
differentiate between Oil & Gas drilling cuttings and Geothermal drilling cuttings
Burn
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The needs of EBTKE certification for ALL earth moving equipment
To develop exploration drilling infrastructure needs about 50 to 70 Earth moving equipment. Each equipment currently has to be certified by Director General of EBTKE. Crane, Drilling rig and equipment certification are accepted but earth
moving equipment needs reconsideration on the necessity of certification
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Develop harmonious relation with all local stakeholders (formal & informal leaders, Directly Affected Villagers) and work closely with security
apparatus to utilize “soft power”
Overlooked challenges in developing Geothermal Power plants in Indonesia
Standard challenges1. Electricity tariff – New tariff2. Government guarantee (BVGL) – MOF Template developed3. Forestry permit – New Geothermal Law4. Land Acquisition - 5. Community issues -
Overlooked challenges6. Project Management capability for infrastructure
development7. Other Permits and Licenses8. Subsurface engineering capabilities 9. Sufficient capital for exploration (Equity)
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Requirement for Subsurface and drilling engineers in a Geothermal development
Requirement for 1(one) exploration area for 24-hour continous drilling campaign :• Geologist, Geochemist, Geophysicist – 3 to 5 engineers• Numerical Modeler – 1 to 2 modeler• Well testing engineers – 2 to 3 engineers• Drilling managers & engineers – 3 to 5 engineers
Experienced engineers salary :• Subsurface engineers – US $ 5.000 to US $ 15.000 per
month with transfer fee amounting to US $ 100.000• Drilling engineers – US $ 20.000 to US $ 25.000 per month
Limited engineers resulting in hijacking of employees
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Cooperation between Government, Industry, and University
• Develop of a geothermal education capacity expansion roadmap
• Provide grants for Masters and PhD Students• Conduct field trips• Offer “Distance Learning Courses”• Conduct monthly seminars on Geothermal energy • Develop short courses and workshops• Establish a technical program exchange
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Proposed future cooperation program
1. Generic engineers accelerated program (max 1 year) - for 1 to 5 years experienced engineers - Geologist, Numerical modeler, Well testing engineers, Drilling engineers2. Specialist engineers accelerated program (max 2 years) - for 5 to 10 years experienced engineers - Geophysicist, Geologist, Geochemist, Numerical modeler
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Overlooked challenges in developing Geothermal Power plants in Indonesia
Standard challenges1. Electricity tariff – New tariff2. Government guarantee (BVGL) – MOF Template developed3. Forestry permit – New Geothermal Law4. Land Acquisition - 5. Community issues -
Overlooked challenges6. Project Management capability for infrastructure
development7. Other Permits and Licenses8. Subsurface engineering capabilities 9. Sufficient capital for exploration (Equity)
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Develop harmonious relation with all local stakeholders (formal & informal leaders, Directly Affected Villagers) and work closely with security
apparatus to utilize “soft power”
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Histogram of capacities of worldwide productive wells from 869 wells – GeothermEx data
Better economics
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0 10 20 30 40 50 60 70 80 900.0
50.0
100.0
150.0
200.0
250.0
300.0
350.0
400.0
Number of Wells Drilled
Cum
ulati
ve W
ell C
apac
ity (M
W)
Average 4.9 MW per well
Kamojang Field, West Java, Indonesia (after Sanyal and Morrow, 2011)
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Required equity for Geothermal explorationis about US $ 1 million per MW target
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For 60 MW Power plant Project financing :• Lender would need at least 50 % steam at well head• 30 MW steam means about 6(six) wells each at 5 MW• Exploration drilling for 6 wells x US $ 7 million $ 42 million• Civil infrastructure cost $ 20 million• Drilling casings, Master valves, Pump and Pipings $ 5 million• Required equity at least US $ 70 million
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Clean Technology Fund Solutionto be implemented for Rantau Dedap
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US $ 50 million
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Summary of challengesRecent solutions and also Proposed solutions
Standard challenges1. Electricity tariff – New tariff2. Government guarantee (BVGL) – MOF Template developed3. Forestry permit – New Geothermal Law4. Land Acquisition - 5. Community issues -
Overlooked challenges6. Project Management capability for infrastructure development
– Prepare and recruit experienced Project management team7. Other Permits and Licenses – Simplify un-necessary permits8. Subsurface engineering capabilities – Accelerated education9. Sufficient capital for exploration (Equity) – CTF fund
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Develop harmonious relation with all local stakeholders (formal & informal leaders, Directly Affected Villagers) and work closely with security
apparatus to utilize “soft power”
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Thank you for your attention