INDONESIA - Oil and Gas Fields: Central Sumatra - PT Caltex Pacific Indonesia (CPI).

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, created as a 50-50 Chevron-Texaco company operating in various parts of the world with emphasis on Asia, is now fully owned by Chevron which has taken over Texaco. Indonesia is its main oil production zone.

CPI, which has the largest operation of any multinational oil company 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 about 530,000 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 almost 56% of Indonesia's total oil output of 950,000 b/d. 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 boosted its production 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 120,000 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 Aug. 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 the former operator 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's first major oilfield, Duri, was found in 1941 and put on stream in 1958. Its bigger giant, Minas, was discovered 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. CPI has also found 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 oil, known as Minas or Sumatran Light, is 35 deg. API with 0.1% sulphur, suitable for direct burning by power plants in Japan and other markets. The crude 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 $400m steamflooding 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 deg. 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 flood project, with high-pressure steam pumped into the field's wells, covers 6,600 hectares (16,309 acres). 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 total 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 about 260,000 b/d, compared to 300,000 b/d in early 1999. Output includes oil produced at a nearby offshore field (see below).

The production cost at Duri is averaging between $8.50-$9.00/b, down 50 cents/b from early 1995, thanks to the use of gas for the EOR system. The cost of producing from the other CPI fields is averaging between $4-5/b. CPI buys the gas from a consortium 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 oil 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 nearby offshore Rokan Block, under a separate PSC, where a small oilfield was found in early 1996. The first well, 35 km north-west of Minas, reached 5,010 ft (1,503 metres) and tested 702 b/d of oil. The second well, closer to Duri, reached 5,159 ft and measured 496 b/d, with Pertamina saying on Feb. 27, 1996: "This well is a significant stratigraphic test discovery which could open up new exploratory potential along the western flank of Duri field". Oil produced from this block is part of the Duri stream.

CPI is operating five blocks in Riau province: the onshore Siak and MFL tracts, and the offshore Nias, Rokan and Sibolgan blocks. Nias is off West Sumatra and is still being explored. Sibolgan is off North-West Sumatra just north of Nias. Both Sibolgan and Nias are gas-prone areas. After discovery and development, the gas from these blocks would be supplied to the Duri EOR system. The PSC for Sibolgan was signed in mid-1996. (See background of CPI's operations in Vol. 56, No. 10).

Santos, an independent Australian firm, operates the adjacent gas/condensate-rich PSC blocks of Bentu and Korinci-Baru south-east of Riau's capital Pekanbaru in Central Sumatra. Their three fields, Bentu, Segat and Seng, are being developed. The Bentu gas system is to produce 120 MCF/d from 2005 and the gas will be supplied to CPI for the latter's steamflood project at the Minas oilfield under a long-term contract.

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).