INDONESIA - The Geology.

The Indonesian archipelago includes some of the world's largest islands and the smallest coral islets. The main islands of Sumatra and Java contain high mountain ranges and active volcanoes. Mountainous terrain also persists into Papua (West Irian), the Indonesian portion of the island of New Guinea in the east, and in the central parts of Kalimantan on the island of Borneo and in Sulawesi. Elsewhere the land is low, lying either with forest cover much of which has been subsequently cleared for agriculture, or comprises swamps and marshes associated with the deltaic mouths of rivers or on coastal islands.

About half of the territories is covered by sea with large areas of relatively shallow water in the South China, Java, and Arafura Seas and the Straits of Malacca. There are deep waters in the south of the archipelago, the north in the Celebes Sea and the western Pacific Ocean.

Indonesian geology is complex, dominated by large tectonic plates. Seismic and volcanic activity indicates these plates are still in motion to some extent. The deep Timor Trench, in the Timor Sea, is earthquake active.

Indonesia is located at the meeting point of the Australian, Pacific and South-East Asian plates. The Indian Plate passed close to Sumatra before colliding with Eurasia. As a result, the Indonesian archipelago comprises a number of Middle to Late Tertiary-aged back arc basins strung out parallel to the main chain of mountains which has been thrown up by the collision of the tectonic plates.

The back arc basins have been filled with deltaic clastics mostly shed off adjacent shield areas. Invasion later by the sea resulted in deposition of platform carbonates and the build up of reefal limestones. Source rocks for these basins are frequently anoxic shales deposited in restricted lagoonal conditions in Early Tertiary grabens under the back arcs.

Most major finds in Indonesia were associated with Tertiary sediments or, locally, with either basement or Tertiary volcanics. The oil and gas in the latter two are said to be sourced from Tertiary sediments. But since the mid-1980s, big discoveries have been made in Pre-Tertiary prospects.

The Pre-Miocene rocks of South-East Asia and the potential for new oil and gas discoveries in these rocks are the subject of wide interest in the industry. A number of major Pre-Miocene discoveries have been made during the past two decades, including the Bach Ho (White Tiger) off south-eastern Vietnam. The field has about 200m barrels of oil in fractured and altered granitic basement. But the Pre-Miocene section is still relatively under-explored in much of South-East Asia. Discoveries in this section during the past ten years have served to stimulate interest in it. In Pre-Miocene reservoirs on the Chinese side, for example, there are "buried hills" of prime importance to geologists.

Major gas reserves have been found in Pre-Tertiary formations in South Sumatra, where Gulf Resources of Canada has discovered almost 4 TCF. In October 2000 it reported test results in appraisal Suban-4 well confirming a major gas/condensate field in a 2,715-3,200 metre interval in fractured Pre-Tertiary granites. The well yielded 24 MCF/day of gas and 156 b/d of condensates. Other firms have made discoveries from the same horizon in South Sumatra and elsewhere in Indonesia.

In Indonesia, where the western regions are mature while the east is largely unexplored, Eocene sandstones serving as a main reservoir have proved to contain large reserves of natural gas. A case in point is the BP-operated Pagerungan field in the East Java Sea, which has major gas deposits in Eocene sandstones.

Indonesia has 60 sedimentary basins, of which 36 in the mature west have been well explored and 14 of them are now producing oil and gas. In the under-explored east, 39 Tertiary and Pre-Tertiary basins could be rich in hydrocarbons. But the eastern regions are remote, mountainous and jungle-clad, and lack infrastructure. A wildcat in Papua (Irian Jaya), a frontier region, can cost up to $40m, and in many cases helicopters are required to transport equipment and supplies.

About 75% of exploration is located in producing concessions in western Indonesia. There are four oil producing regions: Sumatra, the Java Sea, East Kalimantan and Natuna. There are four main gas producing regions: East Kalimantan, Arun (North Sumatra), South Sumatra and Natuna. The main petroleum provinces in Indonesia are the following:

Sumatra, the biggest and longest island in Indonesia to the west, accounts for about 60% of Indonesia's oil production. There, Caltex produces almost half of Indonesia's oil. The Caltex area of operation is part of Riau province, in West Sumatra, which also oversees the administration of Natuna islands.

North Sumatra, in Aceh province, is an oil and gas producing region, with oil primarily in Tertiary clastics and mostly in small sized fields. Arun, once one of the world's largest gas/condensate fields, lies in a pinnacle limestone reef. Arun is depleeting. Most of the petroleum in this region is onshore. Some potentially large gas deposits are in reefs offshore.

Central Sumatra, mainly Riau province where Caltex operates, is primarily an oil zone but with the number of gas fields discovered increasing rapidly since the mid-1990s. Most of the petroleum there is reservoired in deltaic sandstones contained in anticlinal structures. The province has Indonesia's two largest oilfields, both operated by Caltex: Minas, with oil reserves in place in excess of 4 bn barrels; and Duri, a shallow field whose reserves for primary recovery were estimated in the early 1990s at about 600m barrels. Duri is the site of one of the world's largest steam flood projects and ultimate recovery could exceed 3 bn barrels.

South Sumatra is an oil and gas province, with petroleum reservoired in both clastic and carbonate rocks. Oilfield sizes are generally small, but some of the gas fields discovered in recent years are large. Java, the most populated island in Indonesia, is by far the biggest oil and gas consuming part of this country. Parts of the island and the adjacent Java Sea form an oil and gas province. Numerous oil and gas fields have been located offshore.

West Java's oilfields are reservoired in clastic and carbonate rocks and in fractured volcanics. Recent gas discoveries have resulted from active exploration for this clean source of energy to satisfy Java's rapidly growing demand.

In Central Java, ExxonMobil has been testing what the industry press says may turn out to be Indonesia's biggest oil discovery in a decade. The US super-major has drilled the first deep well on reef structure called Kujung formation. The well, Banyu-Urip-3 drilled in late 2000, is a re-entry of a shallow probe abandoned by the previous operator.