Presented by:

John Bowers Petroleum Development Consultants, UK

Shangri-La Hotel, Jakarta

21 June 2012

Gas Development Master Plan Gas Infrastructure Development

2

Contents

• Key objectives

• Key technical issues

• Transportation Systems Transmission pipelines

Distribution systems

LNG

CNG Ships

• Gas Utilisation

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Key objectives

• Gas Development Master Plan will focus on:

– Gas demand-supply projections

– Optimum gas field development to meet growing demand

– Substitution of export gas with domestic supply

– Optimizing flow patterns from existing fields to demand centres

– Optimizing the expansion of gas supply and transmission infrastructure

– Recommending policy, legal, regulatory and institutional framework

To produce:

A proposed investment timeline through 2025 along with potential projects that need to be financed - including identification of the least cost and most optimal gas-based solutions for Indonesia

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Transmission & Distribution Plan

• There is an existing plan for gas transmission & distribution development which we will analyse.

• The supply & demand basis for that plan is not completely clear on initial review.

• There is also another study prepared on behalf of ADB which we will take into account.

• Our GDMP will also determine the interconnectivity requirements essential for load management and security of supply.

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Key technical issues

• Supply

• Location and volume of gas available for local/ domestic market;

• Spare LNG capacity after export commitments;

• Demand

• Location of major consumers;

• Appropriate markets/ utilisation;

• Load duration & load factor

• Transportation systems

• Appropriate to circumstances;

• Load factors and load management;

• Security of supply;

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Key technical issue - 1

• Distances are the key issue for transportation?

Gas supply locations

Principal ‘domestic’ demand

Pipelines exist

700 km

1800 km

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Gas Transportation Systems

• Comparative relationship between transport systems

• Pipelines

Short/ medium distance

High capacity

• LNG

Long distances

High capacity

• CNG

Medium/ long distance

Small capacity

Pipelines LNG

CNG

Stranded

Gas V

olu

me

Distance to Market

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Key technical issue - 2

• Load Profile

• Daily (diurnal), see example

• Annual (seasonal swing)

• For Indonesia, daily profile most important

• Load duration curve

• Relationship between generating capacity requirements and capacity utilization.

• Flat line means high utilisation.

• Also applies to gas pipeline

• Load factor (%)

• = Average load/ Peak load

• High LF vital for efficient power generation

• Low LF requires larger diameter pipelines for higher flow rates plus storage capacity to meet peak flows

0%

20%

40%

60%

80%

100%

0 3 6 9 12 15 18 21 24

POW

ER D

EMA

ND

HOUR OF DAY

0%

20%

40%

60%

80%

100%

BASE LOAD

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Pipeline Transmission systems

• Reasonable capital cost depending on:

• Distances between supply points and demand centres

• ease of construction – topography/ terrain

• Operating pressure

• Low operating costs:

• Low maintenance, high reliability

• Long life

• Inherent linepack storage for load management

• Interconnection gives high security of supply

• Less flexible if location of demand changes

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Distribution systems

• High capital cost & low capacity depending on:

• Pipe length & diameter

• Restricted operating pressures - safety

• Urban conditions, ease of construction, traffic,

• No inherent storage – designed to meet peak load

• Low operating costs:

• Low maintenance, good reliability

• Long life

• Long term investment

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LNG Systems

• High capital cost

• Need spare liquefaction capacity to be viable

• Onshore re-gas terminal or FSRU

• Ships

• High operating costs

• Shipping costs

• Cryogenic materials, expensive to replace

• High maintenance but generally reliable

• Medium life

• Inherent storage for load management

• Flexible location (FSRUs)

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CNG Shipping

• Reasonable capital cost depending on;

• Compression requirements

• Capacity

• Reasonable operating costs, but

• Reliability?

• Maintenance?

• Medium life?

• Low capacity,

• Inherent storage but delivery scheduling critical without fixed storage

• Relatively unproven concept

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Gas Utilisation

Power generation, base load or peak shaving

Fertilisers, feedstock, cement;

Energy intensive industrial developments

• Households & commercial premises

? Only for cooking, water heating

? High investment, low revenue

• Vehicle fuel (CNG) dependent on:

? Availability of filling stations

? Cost of conversion