Q&A with Shell Global Solutions: How to reshape Indonesia’s gas sector

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Colin Choong, Gas Processing Licensing Technical Manager, Projects & Technology, Shell Global Solutions
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Gastech News: What is Shell’s involvement in Indonesia’s gas sector?

Colin Choong: Gas is abundant and the cleanest burning hydrocarbon, but many gas reserves are complex, containing a myriad of contaminants that must be removed.  Speaking specifically for Shell Gas Processing, we have been very active in Indonesia for more than 7 years especially in providing gas processing and sulphur recovery technologies to Pertamina and other stakeholders in Indonesia for some of the key projects like Matindok Gas Development Project (MGDP) which consists of Donggi gas processing facilities and Matindok gas processing facilities in Central Sulawesi, Proyek Pegembangan Gas Java Timur (PPGJ) in East Java region, Banyu Urip and Jambaran Tiung-Biru. Some of these projects utilize Shell’s proprietary Sulfinol-X technology for the removal of a wide range of contaminants in the feed (e.g. H2S, CO2, COS, Mercaptan, BTX), and thus allowing a much simplified line-up to be employed. Shell has also licensed an innovative sulphur recovery technology called the Thiopaq O&G (a biological process for converting H2S to elemental sulphur). This technology is a very good fit for lean gas with low-to-medium sulphur tonnage, which otherwise could be a challenge for conventional sulphur recovery processes. Shell is committed to offer competitive Gas Processing technologies in the Indonesia market, to help our customers unlock difficult reserves affordably.

Gastech News: What are the main challenges you see in the Indonesian gas sector?

Colin Choong: While Indonesia is currently a net exporter of natural gas, the country is currently experiencing a decline in production, and a fast growing demand in the domestic market. Unless new reserves are developed, Indonesia will eventually become a net importer of natural gas. Three of the key challenges I see are as follows:

  1. Decline in Exploration and Production (E&P) activities due to challenging regulatory frameworks, long lead time from PSC signing to first gas and fiscal terms, amongst others.
  2. An increasing number of difficult reserves with very high CO2 content like “Natuna D Alpha Block” and a wide range of contaminants like in the onshore Cepu blocks
  3. Lack of infrastructure and natural gas pipeline network to connect the vast archipelago which comprises of over 17,000 islands. This lack of infrastructure and connectivity makes it challenging and expensive to develop stranded gas in remote areas in particular eastern Indonesia.

Gastech News: What are your main considerations to reshape Indonesia’s gas sector?

Colin Choong: In view of the challenges mentioned, reshaping the Indonesia gas sector may require the government to implement policies that would attract E&P activities in order to increase the reserve replacement ratio; for example by providing investment incentives and more clarity in terms of permitting and licensing approvals. I note that the Government via the Ministry of Energy and Mineral Resources has set up a National Exploration Committee to recommend measures to improve Exploration activities in Indonesia. That is a positive step.

Secondly, in order to develop and monetize difficult reserves in the most socially, environmentally, and economically responsible way, we need to leverage the full power of technology and innovation: the capacity for doing things differently and better than before. One of the quickest ways to do this is by partnering with reputable technology and innovation leaders in the market. Shell thrives on such challenges – we have been a technology pioneer for more than a century and we continue to find innovative ways to provide the energy people need.

Thirdly, for stranded gas reserves, modularized design could help overcome some of the challenges with lack of infrastructure and scarcity of resources (ie. skilled labour bulk material, equipment) by fabricating the units offsite. Floating design is another consideration for monetising gas reserves in remote offshore fields that cannot be connected to existing pipeline infrastructure and are too marginal to develop onshore.

Gastech News: What are you most looking forward to at this year’s Gas Indonesia Summit, and what is your final message to our readers?

Colin Choong: I am looking forward to hear what other reputable speakers from the Government, NOC, IOC and EPC have to say regarding the immediate and longer term outlook for the gas market in Indonesia including any new developments and regulatory updates. Finally, as we are currently living in one of the most challenging times in the O&G industry with the beaten down oil price, we have to remain agile, adaptive and constantly looking out for ways to eliminate waste in order to improve both our own and our customers’ project economics.

Colin Choong will be speaking at the upcoming Gas Indonesia Summit about technology and innovation in LNG infrastructure. View the programme.

The event will take place at the Shangri-La Jakarta, Indonesia from 15 to 17 March 2016.

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