Drilling Solutions

What is your drilling expertise at PT Plumpang Raya Anugrah?

In the last five years, we have worked on the three largest drilling development geothermal projects with the highest operation and safety standards. One was with Pertamina Geothermal Energy in Lumut Balai, Ulu Belu, and Sungai Penuh field in South Sumatra, and another was with Sarulla Operation Limited (SOL), operating in Northern Sumatra. In March 2017, we also won a new project with Supreme Energy in Muara Laboh. We are experienced in oil and gas; however, our expertise includes the requirements for geothermal, which requires high-horsepower rigs. All our rigs are US-built, and currently two are deployed with Supreme and two with Halliburton. The other three are currently participating in tender processes in Sumatra as well as eastern Indonesia. We are now looking to participate in another project for Supreme Energy Rantau Dadap in South Sumatra, which might start in 1Q2018. Furthermore, we are eying a geothermal project with Medco Power in Central Java, Enel Green Power Optima Way Ratai in South Sumatra, and Simbolon Samosir Energy in North Sumatra. We are also experienced in integrated project management drilling solutions and handled this for Pertamina Geothermal Energy in several fields.

How would you assess private-public collaboration in the sector?

The problem in geothermal is the cost for exploration, and that includes the necessary infrastructure development. If these investments solely come from private companies, it becomes almost unfeasible, and thus, we need the government to step in. Fortunately, there is willingness on its side to collaborate, both on exploration and energy infrastructure. There is a handicap, however, which is the new pricing mechanism. Following the new governmental regulations, PLN has now issued a maximum price on the production cost, as opposed to the previous feed-in tariff, whereby it would be discussed with PLN after exploration of the potential. The new pricing mechanism impedes potential investment in the sector. It is possible that investments will continue in East Indonesia because of the price differences across the country; however, the price in Sumatra is now USD0.0928 per kilowatt/hour, which is unattractive for investors. A new model, similar to what is being used by another geothermal company, could be developed, and that is to build a small power plant in a location where it drilled three or four wells. Instead of building a large power plant, they built several small plants with capacities of three to 10MW. In this way, operations commenced much faster. This model could be the model for the future, given the current governmental regulations. We see opportunities there.

From your perspective, what is the potential for the future of the energy mix in Indonesia?

We see enormous prospects for geothermal. Government regulation requires 25% of all energy to come from renewable energy by 2025, of which 20% should be geothermal. In total, there are plans to add 35,000MW to the total power generation capacity. The revolving fund that the government has set up coordinated by PT SMI is a great idea as it could drive more investments in the exploration stage. We are pleased to be involved with these government-backed exploration drillings and will await our deployments.

Looking to the future, how is your organization gearing up for the projects in the pipeline?

Currently, there is a strong backlog of geothermal projects; not all drilling contractors can work on such projects because of the specifications of the drill. If oil prices remain low, there will be better opportunities for geothermal. We want to be the drilling expert of choice in this country, and in the private sector, we are already the leaders in onshore drilling. With seven rigs, we outnumber our direct competitors. In the next several years, we anticipate more projects, as there is strong public and private drive to develop geothermal.