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INDONESIA - North Sumatra/Aceh - ExxonMobil & Arun LNG.

The gas-rich Aceh province was badly affected by a giant earthquake and ensuring tsunami in December 2004. Combined with continuing unrest by separatists in the province, despite a lifting of martial law in the spring of 2004, the operations of ExxonMobil in the Arun field and LNG complex have been affected. A decline in production has caused Pertamina to reduce LNG exports from Arun as well as delay many shipments.

ExxonMobil's production capacity at Arun and nearby areas is 1,500 MCF/d (15.5 BCM/y) of natural gas, down from 1,700 MCF/d in early 2003 and 25,000 b/d of condensate. The six-train LNG complex at Arun, run by Pertamina, and ExxonMobil's assets in Aceh - which include several gas fields - are guarded by thousands of Indonesian troops.

The Dec. 9, 2002 accord signed in Geneva by the government and the rebel Free Aceh Movement (GAM) aimed at ending two decades of war in this Northern Sumatra province. It called for a ceasefire to be monitored by GAM, Jakarta and foreign representatives, a new regional autonomy law giving Aceh a provincial government with 70% of the net income from its natural resources, and elections. Before the presidential elections in 2004 martial law in Aceh was replaced by a state of civil emergency

North Sumatra, including its offshore, is mainly a gas zone, with oil produced primarily from Tertiary clastics in small sized fields. Most of the hydrocarbons in this region are located onshore. But large gas deposits have been found in reefs offshore similar to that of Arun, in Aceh Province which is the northernmost part of Sumatra. Arun has been one of the world's largest suppliers of LNG, but now it is depleting. It was found in November 1971 by Mobil Oil Indonesia (now part of ExxonMobil), then with more than 14 TCF of gas and 750m barrels of condensates. Its development began in late 1973 after Mobil and Pertamina secured long-term LNG sales contracts with Japanese buyers. The field lies in Mobil's Aceh Block offshore about 20 miles from the Arun LNG terminal and about 150 miles north of Medan, the third largest city in Indonesia. The field covers about 35 sq miles and has had a thickness of 1,100 ft. It is reservoired in a pinnacle limestone reef. To mark its 20th anniversary on Nov. 18, 1991, Mobil raised Arun output to a peak of almost 1,100 MCF/d and more than 120,000 b/d of condensates. Since early 1992 production has declined. The depletion was evident with the fall in Arun's condensate yield, which in 1994 reached 80,000 b/d and fell to less than 50,000 b/d in 2000 and 25,000 b/d now. The field's gas output could last until 2010 (see background in Vol. 60, Gas Market Trends No. 10).

After much bargaining, ExxonMobil's Aceh PSC was renewed until 2018. The terms were encouraging enough for the US major to embark on a massive gas exploration programme. By mid-1993, Mobil had made four major gas/condensate discoveries on its Aceh block with recoverable reserves proven at 1.8 TCF. Since then, discoveries have raised the proven reserves there to almost 4 TCF. The fields have been developed. Two of these, with 2 TCF of reserves, including the Pase A, went on stream in 1998 and the gas has feed the Arun LNG complex. Pase was shut down for rehabilitation in 2001 and production was restrated on March 4, 2002. The third field, offshore NSO-A 101 km from Arun, went on stream in mid-1999 and is now producing 450 MCF/d. But NSO-A's gas is not as clean as in the Arun field and other structures. So the operating costs at NSO-A are higher than in the other fields. The gas is being supplied to the LNG complex. NSO-A, found in 1972, lies in 350 metres of water. A 7,000-ton production platform over the field supports output from nine wells and has facilities to cool and dehydrate the gas. The platform is remote-controlled, with personnel visiting it every other day. A 101-km subsea pipeline links the platform to onshore treatment, compression and sulphur-recovery facilities installed at the LNG complex. Offshore South Lhoksukon has been developed as well.

ExxonMobil, with Exxon having acquired Mobil in early 1999, owns 30% of the 13.8m t/y complex, PT Arun NGL, with 55% held by Pertamina and the rest held by Japan-Indonesia LNG Co. (Jilco). Because of Arun field's depletion, two of the complex's six trains were closed in February and March 2000 bringing total operating capacity to 9.8m t/y.

In July 1994, Mobil took a 50% interest from Inpex (Indonesia Petroleum of Japan) in the North Aceh Block, off the northern tip of Sumatra island and adjacent to Mobil's Aceh tract. This is rich in gas and condensates, with its output added to ExxonMobil's production system (see Vol. 56, No. 10).
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Publication:APS Review Gas Market Trends
Geographic Code:9INDO
Date:Mar 7, 2005
Words:828
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