INDONESIA - Central Sumatra - Chevron.

PT Caltex Pacific Indonesia (CPI) is the local unit of Caltex which in October 2001 was renamed ChevronTaxaco Asia, Middle East, Africa Refining and Marketing (ChevronTexaco AMEA). But the Indonesian unit's original name, CPI, has remained. CPI operates the main oil province under the jungles of Central Sumatra. Caltex, originally created as a 50-50 Chevron-Texaco JV operating in various parts of the world with emphasis on Asia, is fully owned by Chevron which has taken over Texaco. Indonesia is its main oil production zone.

CPI, which has the largest operation of any IOC in Indonesia, has undertook an expensive steam injection project at the Duri oilfield, but has experienced a drop in production mostly attributed to natural depletion.

CPI's onshore oilfields are within the Riau Province, where their production now averages less than 500,000 b/d, down from 550,000 b/d in early 2003, 660,000 b/d in early 2001 and 785,000 b/d in early 1997, and still accounts for more than half of Indonesia's total oil output. CPI's main PSC has been renewed until 2021. In late 1996, CPI got better tax terms from the state, whereby it was allowed to charge interest on loans associated with its oil producing fields and EOR system as an operating cost. As a result, CPI raised its output in 1997 to 785,000 b/d, from 760,000 b/d in 1996, and raised spending in that year to $400m. But production in the subsequent years fell steadily and CPI's E&P spending has been cut since 2000.

CPI has expanded the steamflood system at Duri which boosted output in 2003 from 23,000 b/d. Output at its Minas field has been stabilised at over 100,000 b/d. CPI produces from many small oilfields. Its production fall is partly due to its loss in 2002 of the Central Plains Pekanbaru (CPP) production sharing contract.

CPI in August 2002 had to transfer CPP to a JV of Pertamina and the local Riau government called Bumi Siak Pusako (BSP). But the JV lacked the expertise or funds to maintain CPP's EOR system which CPI used. Output in the CPP block has fallen from 50,000 b/d to less than 20,000 b/d - down from 35,000 b/d in early 2003. Theft of equipment and sporadic disputes have hampered CPP operations. At one time in August 2002 output fell to 6,000 b/d. BSP, which took over the CPP block on Aug.9 of that year after CPI had spent 31 years at the helm, said production had fallen due to frequent power supply interruptions. Brownouts have been commonplace in Indonesia. In 1996 Caltex re-organised its Asia-Pacific operations after it withdrew from Japan. In March 1997 it adopted a new strategy to reduce costs and raise profitability. In its global system, the refining, terminal and trading units stopped offering the group preferential prices; they invoiced affiliates with the best price possible. The change affected CPI (see background in Vol. 56, No. 10 & Vol. 60, No. 10).

CPI now is a unit of PT Chevron Pacific Indonesia (see OMT). CPI's first major oilfield, Duri, was found in 1941 and put on stream in 1958. Its bigger giant, Minas, was found in 1944 and came on stream in the 1950s as well. More than 100 smaller oilfields have been discovered in this area and put into production. At their peak in 1973, these fields' production averaged nearly 1m b/d. But CPI's output has gradually fallen below 500,000 b/d. CPI has small gas fields, from which the output serves its production system and EOR units in the oilfields. Most of the hydrocarbons in CPI's area are reservoired in deltaic sandstones contained in anticlinal structures.

Minas, the largest field in Asia with oil in place exceeding 4 bn barrels, was found at a depth of 2,600 ft. Its export crude, known as Minas or Sumatran Light, is 35[degrees] API with 0.1% sulphur, suitable for direct burning by power plants in Japan and other markets. It is exported from the Dumai terminal together with the other CPI crudes. Minas is waxy. Its recovery is difficult. CPI has invested on EOR, including a steam-flooding system installed in 1995 serving the field's 13 zones.

Duri near Minas, a smaller field found at a depth of 770 ft, produces a heavy and highly viscous oil, 21.2[degrees] API, which cannot be pumped by conventional means. Resting in fine sand, it is like honey taken out of a refrigerator and will not pour easily until it warms up. Thus, it is the site of the world's most expensive steamflood project on which CPI has spent heavily. The system, with high-pressure steam pumped into the field's wells, covers 6,600 hectares. It involves 400 steam generators and 4,445 new wells (in addition to the 725 old wells) - 1,270 wells for injecting the steam and 3,175 for extracting the oil - plus 2,000 miles of pipelines connecting the wells and processing plants. The field is divided into hexagonal patterns with one steam-injection well placed inside a ring of production wells. The system floods the wells continuously with steam to make the oil flow to the surrounding wells. CPI had experimented with gas injection and various other types of EOR, including water injection, before starting the steamflood system in 1984. By then, Duri's unassisted production had fallen below 30,000 b/d compared to 65,000 b/d in 1965.

High-pressure steam is generated by electricity from natural gas. The field's capacity, including production by primary means, rose to almost 325,000 b/d - a peak reached in late 1994 - but now this and other fields in the Duri area produce less than 200,000 b/d, compared to 300,000 b/d in early 1999. Output includes oil produced at a nearby offshore field (see below).

Suwito Anggoro, president director of PT Chevron Pacific Indonesia in October 2006 told reporters the company was to spend $1 bn over three to four years to rise output and maintain it at 200,000 b/d.

The production cost at Duri averages $9.00/b. The cost of producing from the other CPI fields averages about $5/b. CPI buys the gas from a group led by a Gulf Indonesia (a Canadian unit of ConocoPhillips) operating Corridor Block (Grissik) in South Sumatra. The gas, coming by a 300 MCF/d pipeline from Grissik on stream since late 1998, has replaced 50,000 b/d of crude which used to be burned for Duri's EOR system. The gas volume was raised to 390 MCF/d in 2002 and reached about 480 MCF/d from mid-2003, under a 20-year agreement signed in late 2000, with Gulf getting paid in Duri crude. Increased gas deliveries helped CPI boost the recovery rate at Duri, whose potential oil in place has been put at more than 6 bn barrels. To tap this reserve until the field is abandoned later on in this century, total investment would probably reach $40 bn.

CPI operates the offshore Rokan Block, under a separate PSC, where a small field was found in 1996. The first well, 35 km north-west of Minas, reached 5,010 ft and tested 702 b/d of oil. The second well closer to Duri reached 5,159 ft and measured 496 b/d.

CPI operates five blocks in Riau province: the onshore Siak and MFL tracts, and the offshore Nias, Rokan and Sibolgan areas. Nias is off West Sumatra. Sibolgan is off North-West Sumatra just north of Nias. Sibolgan and Nias are gas-prone areas. The PSC for Sibolgan was signed in mid-1996. (See background of CPI's operations in Vol. 56, No. 10).

Santos Operations In Sumatra & E. Java, an independent Australian firm, operates the adjacent gas/condensate PSC blocks of Bentu and Korinci-Baru south-east of Riau's capital Pekanbaru in Central Sumatra. Their three fields, Bentu, Segat and Seng, have been developed. Bentu gas produces 120 MCF/d and is supplied to CPI.

The three fields, rich in very dry gas, are 45 km south-east of Minas. The existing Duri-bound pipeline of state-owned gas transmission company, Perusahaan Gas Negara (PGN), crosses the two blocks. Santos in 1998 took over the Bentu block from Apache Corp. of US which confirmed the Bentu discovery in 1993. The US firm discovered Seng in late September 1994 (see background in Vol. 56, Gas Market Trends No. 10). Santos operates gas-rich offshore blocks east of Java (see below).

Santos in early October 2006 began gas production from the offshore Maleo field in the Madura Offshore PSC in the Madura Strait, 140 km east of the city of Surabaya in East Java. This gas is delivered to the state-controlled gas utility PGN under a contract signed in May 2005. The field is said to contain 240 BCF of proven and probable reserves which was set to produce over a field life of 8 to 12 years. Gas was to be supplied at a plateau rate of up to 110 MCF/d and was expected to operate at plateau for about five years. First production has been achieved on schedule, only four years from first discovery, and within the original budget estimate.

Santos farmed into the Madura offshore PSC after the Oyong oil and gas find made in the adjoining Sampang PSC offshore East Java in August 2001. Maleo found by Santos led to a JV in June 2002. Partners in Madura PSC are Santos as operator with 67.5%; PC Madura Ltd (a unit of Petronas of Malaysia) with 22.5%; PT Pantai Madura with 10%.

Santos in September 2006 said its Wortel-2 well was being drilling after the success of Wortel-1 exploration well which intersected a 141 metre gas column in the target reservoir. Wortel-1 flowed at 8.5 MCF/d through a 56/64" choke. Condensate was produced at four to five barrels per MCF. The well is in the Sampang PSC in 42 metres of water, about 1 km south-east of Wortel-1 and 6 km west of the Oyong oil and gas field. Wortel-2, a vertical well to appraise the Wortel find, was being drilled to about 1,400 metres subsea and was expected to take 18 days. Partners in the Sampang PSC are Santos (Sampang) Pty Ltd as operator with 40.5%; Singapore Petroleum Sampang Ltd with 36%; Cue Sampang Pty Ltd with 13.5% and PT Petrogas Oyong Jatim with 10%.

Santos in January 2007 was reported in the media as being liable for a IDR3.8 tn claim by the government over an environmental disaster near a drilling site in East Java. Following a May 2006 accident, hot mud had been spewing from around Banjar Panji at a rate of about 150,000 CM/d, swallowing entire villages and leaving thousands homeless. The Adelaide-based company, holding an 18% interest in the project, then said it was seeking an official clarification.

PT Caltex Pacific Indonesia (CPI) is the local unit of Caltex which in October 2001 was renamed ChevronTaxaco Asia, Middle East, Africa Refining and Marketing (ChevronTexaco AMEA). But the Indonesian unit's original name, CPI, has remained. CPI operates the main oil province under the jungles of Central Sumatra. Caltex, originally created as a 50-50 Chevron-Texaco JV operating in various parts of the world with emphasis on Asia, is fully owned by Chevron which has taken over Texaco. Indonesia is its main oil production zone.

CPI, which has the largest operation of any IOC in Indonesia, has undertook an expensive steam injection project at the Duri oilfield, but has experienced a drop in production mostly attributed to natural depletion.

CPI's onshore oilfields are within the Riau Province, where their production now averages less than 500,000 b/d, down from 550,000 b/d in early 2003, 660,000 b/d in early 2001 and 785,000 b/d in early 1997, and still accounts for more than half of Indonesia's total oil output. CPI's main PSC has been renewed until 2021. In late 1996, CPI got better tax terms from the state, whereby it was allowed to charge interest on loans associated with its oil producing fields and EOR system as an operating cost. As a result, CPI raised its output in 1997 to 785,000 b/d, from 760,000 b/d in 1996, and raised spending in that year to $400m. But production in the subsequent years fell steadily and CPI's E&P spending has been cut since 2000.

CPI has expanded the steamflood system at Duri which boosted output in 2003 from 23,000 b/d. Output at its Minas field has been stabilised at over 100,000 b/d. CPI produces from many small oilfields. Its production fall is partly due to its loss in 2002 of the Central Plains Pekanbaru (CPP) production sharing contract.

CPI in August 2002 had to transfer CPP to a JV of Pertamina and the local Riau government called Bumi Siak Pusako (BSP). But the JV lacked the expertise or funds to maintain CPP's EOR system which CPI used. Output in the CPP block has fallen from 50,000 b/d to less than 20,000 b/d - down from 35,000 b/d in early 2003. Theft of equipment and sporadic disputes have hampered CPP operations. At one time in August 2002 output fell to 6,000 b/d. BSP, which took over the CPP block on Aug.9 of that year after CPI had spent 31 years at the helm, said production had fallen due to frequent power supply interruptions. Brownouts have been commonplace in Indonesia.