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 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 very complex, dominated by several large tectonic plates. Seismic and volcanic activity indicates that these plates are still in motion to some extent. The deep Timor Trench, in the Timor Sea, is earthquake active. Indonesia and Australia in 1994 agreed on a joint exploitation of a hydrocarbon-rich area in the Timor Sea, as a follow up on an accord reached in 1989. In December 1995, they signed an Agreement on Maintaining Security. Although Australia was one of the few states in the world to recognise Indonesian rule over East Timor, until then Canberra considered Indonesia a military danger. Foreign oil firms are operating in the Timor Sea, where they have developed large gas and oil discoveries. 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. Until recently all the major discoveries 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. The Pre-Miocene rocks of South-East Asia and the potential for new oil and gas discoveries in these rocks are now the subject of wide interest in the industry. A number of major Pre-Miocene discoveries have been made during the past decade, 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 six 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. 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 Arco-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 fully 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 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 three main gas regions: East Kalimantan, Arun and Natuna. The main hydrocarbon provinces in Indonesia are the following: Sumatra, the biggest and longest island in Indonesia to the west, accounts for more than 60% of Indonesia's oil production. There, Caltex produces over 55% of Indonesia's oil. This is part of Riau province 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, however, with reserves in place of 10 TCF of gas and 750m barrels of condensate, is one of the world's largest suppliers of LNG and is reservoired in a pinnacle limestone reef. But Arun's proven reserves are depleting rapidly. Most of the hydrocarbons in this region are located onshore. Some potentially large gas deposits are in reefs offshore. Central Sumatra, mainly Riau province where Caltex operates, is primarily an oil zone with a small number of gas fields. Most of the hydrocarbons there are 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 oil accumulation whose reserves of primary recovery were estimated in the early 1990s to be 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 primarily an oil province, with hydrocarbons reservoired in both clastic and carbonate rocks. Field sizes are generally small. West Java and the adjacent Java Sea form an oil and gas province. Oilfields are reservoired in clastic and carbonate rocks and in fractured volcanics. Numerous oil and gas fields have been located offshore.