Home / News / Challenges remain for Indonesian oil industry, but so do opportunities

Indonesia’s Minister of Energy and Mineral Resources H.E. Purnomo Yusgiantoro opened the 2008 IADC/SPE Asia Pacific Drilling Technology Conference & Exhibition on 25 August in Jakarta. In his remarks during the opening session, the Minister reminded the audience of more than 400 delegates that, despite the country’s 130-year history of oil production, many challenges remain.  

“Technology is the key to unlocking our energy reserves,” he remarked, noting that most of the country’s oil production comes from aging fields with declining production. The government’s strategy is aimed at extending the life of existing fields while exploring new frontiers in deepwater areas.

Challenges remain for Indonesian oil industry, but so do opportunities

The opening session also included remarks from conference chairman Dr Bagus Sudaryanto, senior vice president of operations for PT PERTAMINA EP. He set the stage by elaborating on the conference theme, “Drilling Technology to Address Future Energy Demand and Environmental Challenges.”  Echoing the Minister’s views, Dr Sudaryanto pointed out that “the growing demand for energy in this high-price environment has made it more important than ever to ensure we find steady and reliable sources while maximizing our recovery.”

Indonesia’s present situation was described in more detail by Abdul Muin, vice chairman of the Government Executive Agency for Upstream Oil and Gas Business Activities, BPMIGAS. Dr Muin presented data showing that the country’s production has been steadily declining since 1995. Despite increases resulting from recovery optimization and accelerated in-fill drilling, as well as the introduction of 96 new fields, total production has continued to trend downward.

Prospects are not all bad, however. The country’s production declines have led to the emergence of “a new breed of mature field operator.” Often smaller companies, these new operators have identified previously untapped areas of existing fields. They have slowed decline rates by applying existing technology in new and innovative ways. They also tend to have lower operating costs, thereby further extending field life.

The industry’s more substantial players have been able to focus on the larger targets. Techniques include extensive EOR projects in existing fields coupled with new exploration in deepwater areas. Unconventional sources of energy, including tight gas, CBM and even geothermal resources, are also being evaluated. These efforts are driving the accelerated development and application of new and innovative technology.

In the end, the leaders of Indonesia’s oil and gas industry remain bullish on their country’s energy future. Slowing, and even reversing, declining production will be possible. Dr Muin summed it up by saying, “The prospects are there… it is a function of money and technology, commitment and better partnering.”

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