ECONOMY SCALE OF COAL BED METHANE (CBM) DEVELOPMENT

Unggul Setyatmoko Country Manager Dart Energy Indonesia Palembang, 6 July 2011

What is Coal Bed Methane (CBM)?

Coal Bed Methane Conventional Gas

Methane 94-98% Traces of: carbon dioxide ethane nitrogen

Methane 70-90% ethane propane butane pentane trace carbon dioxide 0-8% nitrogen 0-5% hydrogen sulfide 0-5% Typical calorific value of 1,040BTU/scf
Heating Value can be spiked via LPG or blending

Typical calorific value of 1,005BTU/scf

CBM Production Mechanism

Methane gas adsorbed into coal seams that can hold 5 times as much gas as an equivalent volume of sandstone Gas held in coals by hydrostatic water pressure By drawing down hydrostatic pressure (dewater) gas diffuses from the micro pores into cleats and fractures. As water flow rates go down gas production initially increases. Result is high volumes of upfront water, slowly building gas production and longer times to payback

CBM and Water Production
200 180 160 MC F of C B M / D ay 140 120 100 80 60 40 20 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 10 9 Gallons of Water / Minute 8

CBM

7 6 5

Water

4 3 2 1 0

Years of Operation

In Comparison with Conventional Gas

Pore space

Producing Rate

Sandstone (Oil and Gas)

Sand grain

Gas free in pore space

Butt cleat

Producing Time

Producing Rate

Coal (CBM)
Face cleat

Gas adsorbed in matrix

Producing Time

Pressure

Pressure

Gas Water

World CBM Potential

Russia 600 4,000 Tcf

Canada 600 2,700 Tcf US 700 Tcf

UK 70 Tcf

Poland 100 Tcf

Germany 100 Tcf Ukraine 70 Tcf China 1,300 Tcf India 300 Tcf

Indonesia 450 Tcf South Africa 70 Tcf Australia 350 Tcf

Indonesias has the 5th largest potential CBM resources in the world. CBM Industry is only developed in North America and Australia to date..
Source: Tri-Zen presentation to CSG 2010, Brisbane Conference March 2010

CBM Resources in Indonesia

Indonesias potential CBM resources : 453 TCF 32 CBM Blocks have been awarded by Government to date
Source: MIGAS

In Comparison with Conventional Gas

ACEH (NAD)

5.72
NORTH SUMATRA NATUNA

1.27

52.59
CENTRAL SUMATRA EAST BORNEO PAPUA SOUTH SUMATRA

8.15

24.96

28.00
WEST JAVA

3.18
CELEBES MOLUCCAS

24.21

4.16 5.08
EAST JAVA

13.65

(Advance Resources Interational, Inc., 2003 processed)

Conventional Gas Reserves : 170 TCF (112 Proven + 58 Potential) CBM Resources : 453 TCF..
Source: MIGAS

Indonesia Suppy & Demand Overview

EXPORT

Domestic Supply Shortage: 75 MMSCFD in 2011 - 2014

Domestic Supply Shortage: 50 MMSCFD in 2011 200 MMSCFD in 2025

Supply Shortage: 100 MMSCFD Now 350 MMSCFD in 2025

Limited Domestic Demand Large Supply Sources for Java Domestic Supply Shortage in 2016 in Order to Fulfill Export Commitment

Shortage by 450 MMSCFD in 2016 3300 MMSCFD in 2025 (Existing & Future Supplies from SS Accounted)

Longer & Experimental Appraisal Program

Ramp-up Risk & Length

Number of Wells

CBM Economics

CBM : Margin Business - Manufacturing

Development Parameters Luas (Km2) Luas Sweet Spot (Km2) OGIP (BCF) Maximum Jumlah Sumur (120 Acres) Produksi (BCF) Harga Gas ($/MMBTU + 2% eskalasi) Capex (Juta $) Opex (Juta $) Total Investasi (Juta $) NORMAL DEVELOPMENT SCHEDULE IRR Kontraktor (%) NPV Kontraktor (Juta $) Gov Tak e (Juta $) ACCELERATED DEVELOPMENT IRR Kontraktor (%) NPV Kontraktor (Juta $) Gov Tak e (Juta $) 1000 350 900 480 265 6 517 424 941

10.7 8.5 561

15.2 50.4 618

Fast, Low Cost, Low Risk Exploration

CBM Rig
This Not This

Logging Unit

This

Not This

Drilling Cost Comparison

Description Indonesia (USD) 600,000 800,000 India (USD) 280,000 350,000 China (USD) 320,000 500,000 Australia (USD) 350,000 650,000

Core Well Exploratory Wells

Production Wells

900,000

600,000

650,000

750,000

Land & Construction/m2

26.5 - 30

27 - 30

3.5 - 35

18 - 28

CBM Polycarbonate Pipeline

Ability to Commercialize Small Volume

Innovation in Early Pilot and Development Options

No Technology Magic Bullet

Three Basins Three Reservoirs Three Techniques

Each coal bed is different and requires different completions and reservoir management techniques
Source: IndoCBM Conference

Contribution to Environmental Agenda

CBM & Coal Mining Cooperation

CBM will normally overlap with coal exploration and coal production

tenures everywhere. Therefore, CBM company relationship with coal companies is critical.
CBM companies work together with coal mining companies by

generating CBM development plan which takes into account coal mining long term planning to maximise the value proposition for both parties.
Produced CBM can be commercially negotiated with the coal mining

company for its usage (power, CNG vehicles, etc.)

There are a lot more cooperation with underground coal mining

which benefit both parties.

Dart Energy Indonesia

They Say..
the majority of successes in the CBM business have been at the hands of focused, energetic, low cost independents. Dart Energy is already establishing itself as a clear leader in that field.
(Nick Davies, Chairman - Dart Energy Limited)

dari pengalaman bertahun-tahun di dalam industri migas, pemboran sumur migas yang sangat kompleks selalu dapat diatasi melalui aplikasi teknologi. Akan tetapi, pemboran sumur CBM di Indonesia sangat sulit..karena dituntut untuk dikerjakan dengan biaya rendah untuk menjaga keekonomian proyek CBM.
(Pudjo Suwarno, Direktur Medco CBM)

Terima Kasih