Indonesia - Future Prospects.

Indonesia has enjoyed one of the highest success rates in exploration drilling activity for natural gas, not only in the number of discoveries made but also in the volumes added per new well drilled. New gas volumes have been added at an average of about 2 TCF per annum. It is reasonable to suppose that these levels could continue for some time to come since exploration in many of the petroliferous basins remains far from maturity. Deeper drilling in established areas has revealed new discoveries. However, the rate of oil discoveries has been low in recent years. There is not likely to be a major change for the better unless the government improves E&P incentives to foreign companies. Exploration in frontier areas, like Irian Jaya, is hindered by lack of infrastructure and mountainous, jungle-clad terrain. Several parts of the Indonesian archipelago, especially in Central Sumatra, are areas of high geothermal gradient. Thermal destruction of hydrocarbons may occur at relatively shallow depths. Nevertheless, there should be scope for investigating deeper objectives in many of the established basins. So far as is known, the main targets in most of Indonesia have been either structural or reefal plays, i.e. targets clearly defined by four-way closures. There would appear to be potential for more subtle stratigraphic plays which have had low priority in the past. With the advent of 3D seismic it is to be expected that more arcane traps may be targeted. The types of deltaic sand bodies which form so many of the reservoirs in Indonesian fields are likely to be fruitful targets for providing additional reserves that can be accessed with modern drilling technology. Exploration Background: Oil exploration in this archipelago began in the past century. Crude oil had been produced since 1893, when the islands were ruled by the Dutch. An independent republic of Indonesia was first proclaimed in 1945 and the war for independence from Dutch rule ended in 1949, when Indonesia finally assumed control over vast resources. Pertamina, the state concern set up after the war, took over all the fields and in the 1960s began making its own discoveries. It offered many of its marginal fields to foreign companies and some local firms for EOR operations and further development. It also offered large unexplored areas to foreign oil companies. Caltex was one of the foreign companies which had explored for oil in Central Sumatra before independence. It discovered the Duri giant in 1941 and Minas, a bigger giant, in 1944. Now Caltex accounts for more than 55% of Indonesia's total oil production. Mobil was the first US major to explore for gas in this country and in 1971 discovered a gas super-giant, Arun, in Northern Sumatra which became the source for the world's second largest LNG complex. Two years later Agip found another gas super-giant in the Natuna sea, but the Italian company relinquished that acreage subsequently. Many major oil and gas discoveries were made in the 1970s and 1980s by foreign companies. Total discovered the Bekapai oil and gas field in East Kalimantan in 1972 and in 1974 it found the Handil oil and gas field. Since then it has made impressive discoveries and now Total is the fourth largest oil producer in Indonesia (see profiles of fields and operators in next week's Review). Indonesia enjoyed one of the world's highest success rates in exploration drilling in the 1960s and 1970s, not only in the number of discoveries made but also in the volumes added per new wildcat drilled. But the success rates for oil in the 1980s and the 1990s were not as impressive and exploration slackened, because E&P terms were no longer attractive to foreign companies. By the beginning of 1999, a total of 18,592 wells had been drilled in Indonesia in 171 valid concessions. A total of 1,369 surveys had been made.