UPN 21nov09 V20nov09

COALBED METHANE:
DALAM PERSPEKTIF INDUSTRI
Jogjakarta, 21 November 2009
Energy from Nature. For Nature

Agenda Seminar Coalbed Methane (CBM)
 Pendahuluan
 Overview
 CBM di dunia dan di Indonesia
 Tantangan Pengembangan CBM
 Kesimpulan
 Q&A
Pendahuluan
Introduction
Today CBM has become a commercially important energy source. In the US, CBM
production is now about 5.0 bcf/day, accounting for approximately 10% of the
domestic gas production and proven reserves. .
Both Canada and Australia have growing commercial CBM production. Other coal-rich
areas, such as China, India and Europe are evaluating CBM potential with the active
support of the local and central governments.
Globally, it is widely believed that around 1,000 tcf of coalbed methane is recoverable.
Canada, South East Asia, and the Russia/FSU region hold over two-thirds of the
resource potential. The US, Australia, and Europe also have significant potential.
In Indonesia, third party studies have conducted that there is an estimated 450 tcf of
CBM resources.
For reference, 1 tcf of gas is sufficient to meet Indonesia’s current domestic gas supply
needs for 250 days.
CBM RESOURCES – THE SLEEPING GIANT
17 TCF
o Brunei N. TARAKAN Pacific Ocean

5 N BASIN
Medan Plate
52 TCF Duri
Steamflood 80 TCF BERAU
CENTRAL KUTEI BASIN
SUMATRA BASIN 8 TCF
BASIN Singapore
SU
Pakanbaru
0o KALIMANTAN
MA
OMBILIN 102 TCF Balikpapan

0.5 BASIN
T
BARITO
RA
TCF
BASIN SULAWESI
Palembang
SOUTH SUMATRA
BASIN Banjarmasin SOUTHWEST
Ujung
o
5 S 183 TCF PASIR AND Pandang SULAWESI
Jakarta ASEM ASEM 2 TCF
BENGKULU BASINS
BASIN 3 TCF
4 TCF JAVA
0 Kilometers 1000
JATIBARANG
BASIN
1 TCF
I N D O N E S I A
Indian Ocean Plate Total Resources
A U Indonesia
S T R A L I450
A TCF
Active Volcano Subduction Zone Strike-Slip Fault Relative Plate Motion
JAF01836.CDR
TECHNICAL SHARED SERVICES
Coalbed Methane Business Opportunity in Indonesia
Preliminary Basin Ranking By ARI
CBM Resources
Basin Overall
Province Complet- Concen-
tration Rank
able
b 2
(Tcf) (Bcf/mi ) Rank
S. Sumatra Sumatra 183.0 24.9 3.7
Barito Kal 101.6 16.0 3.1
High
Kutei Kal 80.4 13.2 3.1
C. Sumatra Sumatra 52.5 10.2 3.0
N. Tarakan Kal 17.5 6.4 2.3
Berau Kal 8.4 10.8 2.2
Ombilin Sumatra 0.5 10.7 2.0 Mod
Pasir/Asem Kal 3.0 7.9 2.0
NW Java Java 0.8 7.6 2.0
Sulawesi Sulawesi 2.0 4.0 1.5
Low
Bengkulu Sumatra 3.6 4.7 1.1
Total 453.3 15.0

CBM Resource Estimate By ARI
CBM
PROSPECTIVE RESOURCES
PROVINCE BASIN
AREA (KM2) (Tcf)
Kalimantan Barito 15,000 75
Berau 2,000 10
Kutei 10,000 50
N. Tarakan 6,500 20
Pasir/Asem Asem 1,000 3
Sumatra Central Sumatra 15,000 50
South Sumatra 20,000 120
Bengkulu 3,000 5
Ombilin 130 1
Java Jatibarang 500 1
Sulawesi Sengkang 1,000 2
Total 74,000 337
*Potentially accessible by a 3-frac well completion.
Advanced Resources International, Inc.

Regulatory Requirement for CBM Development in Indonesia
CBM potential is simply indicated by the distribution
of coal mines
PT Berau Lati
KPC Bengalan
Melawan
Pinang
Vietnam North
Thailand Kitadin Embalut
Taniti H. Sebulu
PT Multi - Busang
Harapan
Malaysia
Serawak
Sumatra
PTBA Meulaboh Kalimantan Sulawesi

PT Allied- Prambahan
Indo Coal Irian Jaya
PTBA Ombilin
Batang Tiyu
Musiwaras
Suban Jeriji Java
Banjarsari Semen - Tondong
Muaratiga Tonasa
S.Arahan PT Kideco Samaranggau
Kulingkang Susubang
W.Bangko PT Utah - Bindu
Bangko Indo
Suban PT Arutmin Senakin
Airlaya Saronggan
PT Andaro Tutupan
Presented to MIGAS, Jakarta 19 July 05_K.Sani

Overview:
CBM dan Gas Konvensional
Coal seams
Cycle of Coal Development
Coalbed Methane Generation
Coalbed Methane is pipeline quality (950 to 1,050 BTU/cf) natural

gas, generated as by-product of coalification. CO2 removal,
dehydration and compression may be required.
By-Products
• Water
• Methane
• Carbon Dioxide
Pressure
Organic Debris
• Peat
Residual Products
• Coal
• Methane
Heat
TIme
Presented to MIGAS, Jakarta 19 July 05_K.Sani Advanced Resources International, Inc.

Mekanisme Pembentukan CBM
(www.epa.gov/coalbed)
CBM dapat terbentuk dari aktifitas bakteri metanogenik.

Basic CBM concepts
• Coal is a source, seal

and reservoir rock
• Gas is sorbed on the coal

surface
• Gas is delivered through

the cleat system
• Coal gas is typically over 90%

methane with some ethane and
carbon dioxide
• Coal gas produced by

desorption of gas from the
matrix followed by Darcy flow in
the cleats (dual permeability
system)
CBM - Depth Ranges

Generally, coal mining and CBM development take place at
completely different depth ranges, so there is rarely direct conflict between
the two activities. In fact, CBM development can be beneficial by lowering the
methane level in adjacent coal mines, enhancing safety and productivity.
Surface
Economic range for
COAL MINING. Coal
rights holder has priority
for CBM Venting/
utilization.
+/- 300
m Economic range for CBM
PRODUCTION. Gas rights
holder generally has
priority for CBM
development.
+/- 1,000 m
Kedalaman Sumur CBM vs. Gas Bumi
CH4
Best >300 -
Coal Seam <1,000m
(CBM)
Natural Gas
(Oil Gas Reserves)
Oil
Natural Gas 3,000~
(Gas Reserves) 6,000m
Presented to MIGAS, Jakarta 19 July 05_K.Sani (After Lemigas, 2005)

DIAGRAM OF A CBM WELL

• The natural gas in a coal reservoir is stored and held in the coal
by pressure. Removing water or Lowering reservoir pressure
releases the held (sorbed) methane.
• Coalbed methane is developed and produced with standard oil

field rigs, tubulars and pumps.
7-5/8 in. Surface Casing
4-1/2 in. Production Casing
2-3/8 in. Tubing

Gas
Water
Coalbed
Pump
Slotted liner

Konsep Eksplorasi Pengembangan

Lapangan CBM umumnya unik.
5 Spot pilot Production

Simulation
4 Dewatering Wells
1 Central gas
Production well
Presented to MIGAS, Jakarta 19 July 05_K.Sani (After Lemigas, 2005)

GAS IN PLACE
Conventional vs. Coalbed
Conventional Gas In Place

Gas filled
porosity
Function of P,T,
Porosity, and
Sand Grain
Gas Properties
*100% Free Gas
Coalbed
Butt Cleat
Gas In Place
Absorbed in Coal
Micropores;
Function of Coal
adsorption capacity
Matrix Blocks Containing Micropores
*Little or No Free Gas
GAS RECOVERY
Slow initial desorption and relative permeability effects create a “negative
gas decline curve.” CBM gas production peaks in year 4-6 as the coal is
dewatered (depressurized).
Conventional Conventional
Gas filled
porosity
Sand Grain Gas

Rate
Payback
Producing Time
Coalbed
Butt Cleat
Coalbed
Gas
Rate
Payback
Matrix Blocks Containing Micropores Producing Time

Mechanism of released methane out of coal
CBM production requires dewatering the coal formations. When the pressure is
reduced, gases are desorbed from the coal surface and flow to the wellbore via a
natural network of fractures, called cleats. After the CBM arrives at the wellbore, it is
produced utilizing conventional hydrocarbon gas extraction technology
Tahapan Produksi Sumur CBM

Peningkatan Puncak Produksi
Puncak Penurunan
Penurunan
Produksi Produksi Produksi
Produksi
Jumlah Produksi
Air
Tahap Dewatering
Waktu

Unique production characteristics of CBM result
in low but inclining initial gas production,
peaking around year 5.
Sorption Isotherm Relative Permeability

Gas Content ft /ton
1. Saturated Kwater
3
Permeability
2. Undersaturated
Kgas
0% 100%
Pressure (psi) Water Saturation
Inclining Gas Production

Production Rate
Gas
Water
JAF01835.CDR
5 10 15
Years
The three stages of CBM production
Stage 1, Stage 2, Stage 3,

De-watering Mid Life Decline production
MCFD or BPD
Water Gas
Time
Comparison of CBM and Typical Dry Gas Reservoir
120
100
To get
% Gas in Place
80
50% of
Gas Out
60
Conventional Gas Reservoir
Depletes by 56%
40
20
CBM Reservoir Depletes by
78%
0
0 500 1000 1500 2000 2500
Reservoir Pressure (psi)

Comparison of CBM and Typical Dry Gas Reservoir
120
Deplete Reservoir by 75%
100
% Gas in Place
80
60
40
CBM Reservoir still
has over 50% of Gas
20 left behind !
0
0 500 1000 1500 2000 2500
Reservoir Pressure (psi)

There is potential for using CO2 and/or H2S for pressure
maintenance to enhance the rate of recovery of the methane and
potentially increase the ultimate recovery of methane.
CO2
Gas Content
Methane
Reservoir Pressure Psi

GAS IN PLACE CALCULATION

Potentially Completable Gas-In-Place can be estimated
volumetrically using the following formula:
GIP = H x (1- (a + m)) x GC x D x A

Where
H = Completable coal thickness
a = Ash content
m = Moisture content
GC = Gas content
D = Coal density
A = Drillable area
Tcf – Total resource

Bcf/mi2 – Resource concentration (related to well
reserves)

CBM Water Treatment and Disposal
Production of CBM requires withdrawing significant amounts of formation water
from the coal seams to reduce reservoir pressure and elicit gas production. Water
treatment and disposal can be a significant operating cost for large-scale CBM
development.
Water handling depends on the volume and composition of produced water, as
well as the capacity of the local environment. In the U.S., the following three
methods are used.
Penetration
Disposal Required TDS Costs in U.S. CBM
Method Treatment Range (ppm) ($/bbl) Industry
Surface Discharge Settling ponds to Low $0.05-0.10 20%

oxidize dissolved Fe <10,000
Underground Settling ponds and/ Moderate-High $0.50-1.00 75%

Injection or chemicals to 5,000-100,000+
oxidize Fe
Evaporation* None No Limit $0.05-0.15 5%
Reverse Osmosis/ Membrane No Limit $0.50-2.00+ 0%

Electrodialysis**
* Arid climate only

** Experimental only
Core Sample Gas Desorption - Field Gas Desorption - Lab
Analysis Drilling & Completion

450
400 Residual
Residual Gas
350 Gas
Analysis
Gas Content, (SCF/Ton, Air-Dry)
300
250 Measured Gas
200
150
100
50
0 Lost Gas
-50
-100 Long term
-150 desorption
-200 terminated
-250 ; sample
Lost Gas Gas Composition Analysis crushed to
Lost Time –60 mesh
Gas 0.0 0.5 1.0 1.5 2.0 2.5 3.0 40.0 40.5
Analysis Square Root Elapsed Time, ( Hours)
Compression
Production
Gas and coal Analysis
 Desorption Test:
 Measured gas content
 Calculated lost gas & measured residual gas
 Calculated total gas content (SCF/Ton)
 Gas compositional data
 Adsorption / Isotherm Test:
 Measure maximum gas content (SCF/Ton)
 Adsorption / isotherm with methane or CO2
 Adsorption / isotherm at Reservoir Pressure & Temperature
 Calculate position of Reservoir on desorption curve
 Calculate critical pressure when reservoir starts to drain
 Coal analysis - proximate, ultimate, coal petrography:
 Moisture content
 Ash & Volatile Matter
 Fixed Carbon content
 Hydrogen, Oxygen, Sulfur & Nitrogen content
 Vitrinite reflectance
 Coal maceral content
Manfaat CBM & Reservoir Batubara

Dijual
Energi langsung
Lokal
Ekspor Industri; BBG;
Rumah Tangga
CH4
Nilai +
Metanol
Pupuk
CO2 Sequestration
Carbon Trading

Develop Low-CO2 CBM Jointly with High-CO2 Conventional Gas
PIPELINE
! Blend Low-CO2 CBM With High-CO 2
Conventional Gas Stream
CBM
CONVENTIONAL CO2 PRODUCTION LOCAL
GAS WELL INJECTION WELL NICHE
CH4 WELL MARKETS
CH+
4 CO2 CO2 CO2
REMOVAL
0
CO2 CH4
! Test CBM Reservoir CBM CO2 CH4

Properties TARGETS
5,000 FT
CH+ CO2
! CO2 Disposal
4
! Enhanced CH4 Recovery
CONVENTIONAL GAS TARGETS 10,000 FT

JAF01850.CDR

CO2 Sequestration
CO2 Capture
CO2
technology Injection
from fuel gas CH4
Wel
Wel
l
Recovery lwell
Power
Plant CH4
CO2
Utilize
Of CH4
Use of Coal mine

Equipment abolished
Coal Seam
Presented to MIGAS, Jakarta 19 July 05_K.Sani (Sumber: JCoal, 2004)

Konsep Energi Listrik Skala Kecil

Electric Power Option ＣＨ４ is replaced with ＣＯ２
Air
CO2 Separator
1～10 MW CO2 CH4
Methane Gas Engine CO2

Compressor
or Turbine
CO2 & NO2
ECBM
CH4
CH4
CO2:
Replacing
4
CO2
CH4 CH4 CH4
CO2 CO2
Coal 2
CH4 CH4
Seam H2
CO CO2 2
CO
CH4 2 4 CO2
2
CO2 Fixed
CH4
NO2:
Replace
Stripping
Presented to MIGAS, Jakarta 19 July 05_K.Sani (Sumber: Sojitz, 2003)

CBM versus Conventional Gas
Advantages of CBM Disadvantages of CBM
vs Conventional vs Conventional
 Often located in major markets  Potentially large footprint
 Increasing production initially  Dew atering during gas production
 Long life  Low pressure requires many w ells
 Onshore shallow w ells  Higher w ell completion costs
 Potential for carbon sequestration
Capex comparison: CBM basins in US (2003)
Vertical Well – Environmental & Financial Impact
A Visual Perspective
Vertical vs Horizontal Well –
Footprint Comparison
CBM di Luar Negeri

USA CBM Industry
20.5 Tcf Gas Reserves Have Been Booked, Out of 560 Tcf In Place
Powder River
Western Washington 30 Tcf
24 Tcf Illinois
21 Tcf Northern
Appalachian
Wind River 61 Tcf
2 Tcf
Greater
Green River
84 Tcf
Forest City
Uinta
10 Tcf
Cherokee Central
Appalachia
Piceance 5 Tcf
84 Tcf
San Juan
Fruitland Coal = 50 Tcf
Menefee Coal = 34 Tcf
Warrior
20 Tcf
Arkoma
Raton
4 Tcf
11 Tcf
Established CBM Basin Frontier CBM Basin

Emerging CBM Basin
Karakteristik Cekungan CBM di USA

San Powder Warri
Kriteria Cekungan Juan Raton River ors Plains Central
900-
Depth (m) 1,980 1,200 750 1,200 300 - 900
3,000
Tebal coal (m) 2.4 – 4.6 0.5 - 2 1 - 30 6-9 5 - 15 2 - 11
Permeabilitas (mD) < 50 < 10 <1D < 30 0.1 - 10 0.1 - 2
CBM in place (Tcf) 84 10 39 20 350 350
Estimated
recoverable reserves 11.6 3.5 9.3 4.4 115 115
(Tcf)
Gas Content (scf/t) 430 300 50 350 64 - 128 256 - 480
# sumur produksi 3,100 220 1,400 3,000 0 0
Spasi (acres) 320 160 40 80 N/A N/A
Ave. cost/sumur 540k 485k 85k - 200k 300k
Presented to MIGAS, Jakarta 19 July 05_K.Sani (Sumber: Williams, 2001)

CBM reservoir characteristics
Coalbed Methane Production in the United States
5,000
4,500
4,000
3,500
3,000
MMCFD
2,500
2,000
1,500
1,000
500
0
1/1/86 1/1/90 1/1/94 1/1/98 1/1/02 1/1/06
All US CBM (EIA) Sum: SJB, PRB, Raton Basin San Juan Basin Powder River Basin Raton Basin
Highlight of CBM locations in Canada
Alberta
~450 Tcf
B.C.
~80 Tcf
Sask E. Coast
~22 Tcf
~15 Tcf
Highlight of CBM locations in Canada
Canadian Potential 530 – 620 tcf

Alberta; 450 tcf
British Columbia; 80 tcf
Saskatchewan; 15 tcf
Number of CBM Wells Drilled; >11,000
Number of Producing CBM Wells; >7,000
Current Production; +/- 300 MMcf/d
CBM di Indonesia
CBM is potentially important to Indonesia
 Completely new undeveloped natural gas resources

(but also untested)
 Large resource potential given Indonesia’s sizeable
coal base
 Location onshore may be more favorable for market
compared with LNG of Eastern Indonesia
 Potential for advantageous “Global Warming” credits
should market in tradable emission options develop
National Energy Mix Blue Print
5% Others
14% Coal Pres.Reg. no 5/2006
54% Oil
5% Geothermal
2% Coal Liq.
5% Biofuel
27% Gas
2005
2025
17% Others 20% Oil
A blue print to secure energy supply for domestic needs.
Reduce of oil consumption by 20% and encourage usage of
natural gas and coal for more than 30% and 33%
respectively in year 2025.
Promote usage of alternative energy sources upto 17%
including 5% biofuel, 5% geothermal and another 5% of new
and renewable energy sources.
CBM includes in the new and renewable energy sources. It 33% Coal
is expected to supply est. 1 – 2% from the total energy need 30% Gas
by year of 2025.
USA CBM, Gas Price Vs. Indonesia Gas Production
6.00
Production (Tcf/year) and Price ($/Mcf)
Indonesia Gas Prod (Tcf)

5.00
USA CBM Prod (Tcf)
4.00
USA Wellhead Price ($/Mcf)
3.00
2.00
1.00
0.00
1988 1990 1992 1994 1996 1998 2000 2002 2004
Tax Credit Expires
Konsumsi Energi Fosil Dunia

150
125
100
Juta BOED
Konsumsi
75
50
Oil
Gas
25
0
1980 1990 2000 2010 2020 2030
Year
(Sumber: www.shell.com)
Tantangan Global dijadikan sebagai Peluang

Nasional
Presented to MIGAS, Jakarta 19 July 05_K.Sani CBM: Energi Alternativ masa depan
Challenges
Kendala Umum
INDONESIA CBM - CONSTRAINT

 No comprehensive national geologic assessment of
CBM has yet been performed, so potential is unknown.
 Low rank of Indonesia coal is generally below optimal

CBM levels.
 The Industry needs more reference on Gas content of

Indonesia coalseams
 Permeability of coal seams has never been directly

tested in Indonesia.
 As with conventional gas resources, most CBM

potential appears to be outside of Java. More limited
markets.
Kendala Umum
TECHNICAL CHALLENGES
 Permeability remains essentially unknown and must be
measured by in-situ well testing.
 Gas content is partly constrained by inferential data but

must be confirmed by coring and
well-site desorption testing.
 Water Disposal could potentially be a major challenge.
 Requirement of costly Compressors.

Kendala Umum
BUSINESS CHALLENGES
 Mod - High Risked Ventures.
 High Capital Investment, Long-term economic.
Not easy to get buy-in from management.
 Long-term Commitment.
 Markets have to compete with those of conventional,
unless regulations/government take aside.
 Need Preferential terms like those of the USA.
 Any company is to take the challenges..?

Opportunity
CBM AS NEW ENERGY RESOURCES

Global Changes in Energy Resources Causes
CBM Becomes More Attractive
 Oil & Gas Prices Trend

 Horizontal / Radial drilling technology courses CBM
exploitation cheaper and more certain
 EOR Technology can be used to exploit CBM
(Nitrogen Injection can increase Methane recovery
50 %)
 Processing Technology allows “Insitu Gasification”
 Cryogenic Method (LNG) in gas transportation will
solve high cost in high compression of CBM as a
consequence of Low Producing Pressure
Opportunity
Reducing CO2 Emissions

Kyoto - Technology Options
 Reduce energy use
 Improved energy efficiency
 Switch to different fuels
 Natural gas in place of coal
 Renewable energy - e.g. wind, biomass
Deep Reductions
 Sequestration of CO2
 Capture and storage of CO2
Project Concept
Strategic Process
Pre-feasibility Study
Collect Current Data
Field-wide Core-holes
CBM Reserves and Permeability Testing
Productivity Testing
Feasibility Study
Reservoir Modeling and Economic Analysis
Pilot Project
Design of small scale Pilot Project
Drilling, completion, construction and testing of Pilot
Commercial Development
CBM Analysis
Data Requirements
Seismic
Mapping and Well Logs
Hydrological and Petrophysical Data
Coal Gas Data
Reservoir pressure, temperature and over-burden data
Infrastructure; pipelines and natural gas facilities
Current natural gas pricing and operating costs
Subsurface issues:
 Reservoir analysis:
coal as a reservoir, permeability, porosity, gas flow, reserve analysis (gas in
place, decline curves), well spacing & drainage area, possibility of enhanced
recovery (CO2, bacteria, etc)
 Well Construction:
drilling (bits, fluids), cementing (foam, lightweight additives), vertical vs.
horizontal, cost
 Formation evaluation:
borehole environment, tool measurement response in coal (gamma ray, SP,
resistivity, micro-resistivity, nuclear, acoustic, magnetic resonance, electrical
imaging), wireline log evaluation of CBM wells (coal identification, coal tonnage,
proximate analysis, gas content), gas in place calculation, recovery factor,
drainage area calculation, natural fracturing & stress orientation, mechanical rock
properties.
 Completions:
open hole vs. cased hole, single vs. multizone completions
 Hydraulic Fracturing of Coalseams:
Is it necessary?, problems in fracturing coals (fines, fluid damage, excessive
testing pressure, leakoff), type of fracturing fluids for coal (gel, water, foam,
proppant), in-situ conditions (rock properties, stress value)
Supporting issues:
 Water Production and Disposal:
Water production rate (initial rate, water decline rate, anomalous water
production rate), chemical content, environmental regulations (local and
national), water disposal techniques (surface-stream disposal, injection wells)
 Supply Chain techniques and strategy:
Massive land clearance, contracting strategy, services & materials procurement
techniques (drilling rig & accessories, well head, pump, flow lines, compressor)
 Data integration and management:
data gathered from many wells, data communication, data integration, CBM
simulation software
 Synergies with oil/gas facilities:
cost allocation calculation, cost recovery from GoI, SHE and environment
responsibility
 Local security issues:
Many wells, many supporting facilities (pumps, compressors), data gathered
instruments
 Economics of coalbed recovery:
taxation, costs structure (drilling & completion, water disposal, finding costs),
Sensitivity (gas content, permeability, spacing, fracture length)
Technical Evaluation Flow Diagram
Geology Completion
- Gross Coal - Hydraulic Frac
thickness Height Growth
Completeable
- Seam Geometry - Feasible Frac Well
Coal Corporate
- Seam Depth Number Tests Potential
Thickness Reserve
- Faulting - Stress/Depth Reserves
- Intrusions Profile Hurdles
Corrections Analysis
- Ash - Depth Engineering
Accessible
- Gas Gas - Rank Gas Costs
Composition Content - Ash Resources
- Depth Measurements - Area
- Trip Time Indo
nesia
(Not Available)
Corporate CBM
Type Fiscal
ROI
Well Enviro
Hurdles nment
Simulation
- Compare with Structural
- Sample gas content Analysis of
selection Sorption
Permeability
- Quality Isotherm
Measurements - Select/adjust for
Control average Gas Market/
conditions Prices
CBM
CBM RESOURCE PRODUCIBILITY ECONOMIC
ANALYSIS ANALYSIS ANALYSIS
Presented to MIGAS, Jakarta 19 July 05_K.Sani Advanced Resources International, Inc

Typical CBM Economics

Economic evaluation of CBM projects follows the same
methodology as for conventional oil and gas, although the
input variables can differ significantly.
Conventional CBM CBM

Oil & Gas Nominal $ Real $
Sales Sales
+ Revenues + Revenues + Sales Revenues
- - -
Drilling
Compression
Drilling Gathering Drilling
Investment Compression
Gathering
CBM economics are particularly affected by the time value of money

(revenue delays) due to dewatering process, longer time for reaching
peak gas production and low gas rate for each one CBM well compared to
conventional gas
Kesimpulan
Strategic and Tactical Plan
Why the risk/reward profile for Summary – CBM Risk management

CBM is different: Approach:
 Relatively low cost and low risk  Acquire large land holdings to mitigate
exploration permeability risks
 Longer, higher cost, experimental  Develop multiple fields at the same time
appraisal program to allow supply substitution
 Ramp-up risk, ramp-up length and  Negotiate soft front-end of gas contracts
number of wells to mitigate ramp-up risk
 Potentially high development and  Perform in-depth, up-front technical

operating unit costs analysis
 Dewatering and slower gas ramp up  Gain expertise in multiple completion

leads to longer payback and more techniques – not just one
challenging economics than
conventional gas  Keep the CBM business very low cost
 Selectively sell gas to users who can pay

higher prices or will share upsides
© MEDCO E&P 2008 All Information are Confidential 28 April 2008
CBM life cycle: Risks assessment
$ Critical Decision Full Development stages
YEAR
5 mio – 2–4
15 mio
Dewatering stages
500 k – 1–2
5 mio
 Exploration stages
 Pilot stages
RISKS
 CBM is kept in  Costs & risks can be  Huge investment in
continuously coal seam small/huge, depends on supporting equipments,
reservoir, it is different dewatering period & facilities, wells, system
compared to oil/gas play water quality information & data
 Gathered data by  Drilled additional wells integration
optimizing less through out CBM  Huge works in massive
expensive cored holes, prospects across area land clearances, supply
minimizing more  It should considers chains, logistics, local
expensive new expl. existing facilities and security, etc
wells & measuring gas surrounding  It requires a best fit
availability & environment to minimize strategy to develop in a
deliverability cost very economics scenario
Tactical Plan
Approaches:
 Initial Areal Assessment:
• Review existing data from existing wells (well logs, seismic lines, regional geology) to
produce coal seam maps
• Outcome: indicative gas-in-place
 Areal / prospect wide exploration
• Taking core samples by drilling core holes
• Location selection based on: geology (seam thickness, depth), previous reported gas
shows, geographic spread, access
• Reservoir character data types: desorption, matrix permeability, gas quality, coal
type/rank, geochemistry
• Outcome: Gas volume, quality & water quality
 Appraisal Wells (Pilot wells)
• Drill one or some five closely spaced wells to test the permeability (reservoir character),
to determine completion methodology, to establish gas flow profiles, to review possibility
of fracture stimulation
• Outcome: Flow rates (gas & water), completion technologies, permeability
 Field Development

Summary
1. Very encouraging potential, given recent trend towards

low-rank settings. Shallow test wells needed to confirm
reservoir quality
2. Technical Challenges include to prove the presence of
required permeability, gas content & saturation, and
suitable AMDAL related water disposal.
3. Develop jointly with deeper conventional gas to reduce
costs and to leverage financial support/buy-in.
4. Small scale projects targeting local markets may be
feasible.
5. Preferential terms and progressive efforts of the
administrator is necessary to jump-start CBM.
What it takes …….
It takes more than…

• A piece of pipe
• A valve
• A piece of coal
It takes…
• The right piece of coal
• In the right place
• With the right history
Developing the right

piece of coal takes…
• The right people
• Doing the right things
• from beginning to end
Thank you
bramastra.lalean@medcoenergi.com

UPN 21nov09 V20nov09

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COALBED METHANE:

DALAM PERSPEKTIF INDUSTRI

Jogjakarta, 21 November 2009

Energy from Nature. For Nature

 CBM di dunia dan di Indonesia

 Tantangan Pengembangan CBM

o Brunei N. TARAKAN Pacific Ocean

OMBILIN 102 TCF Balikpapan

Total 453.3 15.0

*Potentially accessible by a 3-frac well completion.

Advanced Resources International, Inc.

PTBA Meulaboh Kalimantan Sulawesi

Presented to MIGAS, Jakarta 19 July 05_K.Sani

Coalbed Methane Generation

Coalbed Methane is pipeline quality (950 to 1,050 BTU/cf) natural

Presented to MIGAS, Jakarta 19 July 05_K.Sani Advanced Resources International, Inc.

Mekanisme Pembentukan CBM

Presented to MIGAS, Jakarta 19 July 05_K.Sani

• Coal is a source, seal

• Gas is sorbed on the coal

• Gas is delivered through

• Coal gas is typically over 90%

• Coal gas produced by

CBM - Depth Ranges

Kedalaman Sumur CBM vs. Gas Bumi

Presented to MIGAS, Jakarta 19 July 05_K.Sani (After Lemigas, 2005)

DIAGRAM OF A CBM WELL

• Coalbed methane is developed and produced with standard oil

7-5/8 in. Surface Casing

4-1/2 in. Production Casing

2-3/8 in. Tubing

Presented to MIGAS, Jakarta 19 July 05_K.Sani

Konsep Eksplorasi Pengembangan

5 Spot pilot Production

Presented to MIGAS, Jakarta 19 July 05_K.Sani (After Lemigas, 2005)

Conventional Gas In Place

Sand Grain Gas

Matrix Blocks Containing Micropores Producing Time

Presented to MIGAS, Jakarta 19 July 05_K.Sani Advanced Resources International, Inc.

Tahapan Produksi Sumur CBM

Presented to MIGAS, Jakarta 19 July 05_K.Sani

Sorption Isotherm Relative Permeability

Inclining Gas Production

Stage 1, Stage 2, Stage 3,

Reservoir Pressure (psi)

Reservoir Pressure (psi)

Reservoir Pressure Psi

GAS IN PLACE CALCULATION

GIP = H x (1- (a + m)) x GC x D x A

Tcf – Total resource

Presented to MIGAS, Jakarta 19 July 05_K.Sani Advanced Resources International, Inc.

Surface Discharge Settling ponds to Low $0.05-0.10 20%

Underground Settling ponds and/ Moderate-High $0.50-1.00 75%

Evaporation* None No Limit $0.05-0.15 5%

Reverse Osmosis/ Membrane No Limit $0.50-2.00+ 0%

* Arid climate only

Analysis Drilling & Completion

Manfaat CBM & Reservoir Batubara

Presented to MIGAS, Jakarta 19 July 05_K.Sani

! Blend Low-CO2 CBM With High-CO 2

Conventional Gas Stream

! Test CBM Reservoir CBM CO2 CH4

CONVENTIONAL GAS TARGETS 10,000 FT