The Sarulla Geothermal Field is located in the Tapanuli Utara District, North Sumatra province, Indonesia (see Figure 1). The Sarulla Operation Limited (SOL), a consortium of Medco-Itochu-Kyushu-Ormat, has been granted the rights to utilize the Sarulla geothermal resource for power generation under the framework of a Joint Operating Contract (JOC) with PERTAMINA. Construction and development wells drilling for the 330 MW geothermal power development are currently underway, scheduled to be fully completed in 2019. The authors work for the well testing contractor, PT. Thermochem Indonesia and Thermochem, Inc. (USA).

The development of this large resource has been a long and interesting story, from the early exploration by PERTAMINA, resource discovery by Unocal, and the commercial and financing closure by SOL. The journey to the current field development program provides a unique learning experience worth capturing. This

paper outlines a brief history of the Sarulla geothermal field development highlighting regulatory, legal, technical, and commercial challenges the geothermal developers have faced over almost three decades.

A Brief History of the Sarulla Geothermal Field

Developmentby Novi Ganefianto1, Paul von Hirtz2, Elisabeth Easley1

1 PT. Thermochem Indonesia; 2 Thermochem, Inc.

Early ExplorationThe first systematic exploration studies of the

Sarulla geothermal field were conducted during the second half of the 1980s by PERTAMINA. The company was appointed by the Indonesian Government by Presidential Decree 22 of 1981, to have the right to conduct surveys, exploration, and exploitation of geothermal energy in Indonesia. PERTAMINA geothermal group began their activities in 1987 with the reconnaissance and exploration of prospects in Sumatra, and recognized the broad Sarulla area as one of the several attractive prospects for geothermal development.

A subsidiary of Unocal, together with PERTAMINA, undertook follow-up geochemical surveys in Sarulla in 1989-1990. The exploration program identified several high-temperature prospects in the greater Sarulla area, in a tectonic graben associated with strands of the Great Sumatra Fault Zone. Further geoscientific investigation identified four geothermal prospects in Sarulla, including (from north to south) Namora I Langit, Silangkitang, Donotasik and Sibualbuali (see Figure 2). The area was later referred to as the Sarulla Contract Area.

Figure 1. Location of the Sarulla Contract Area. courtesY oF unocal

Figure 2. Four geothermal prospects within the Sarulla Contract Area. courtesY oF unocal

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Resource DiscoveryMore extensive exploration of the Sarulla

prospect begun in early 1990s, immediately after the government issued Decree 45/1991, which provided more flexibility to PERTAMINA, along with the contractor, to develop geothermal energy in Indonesia and then sell it either in the form of steam or electricity to the State Electric Company, PLN. During this period, Unocal, after having established an operating geothermal field in Salak, negotiated a JOC and Energy Sales Contract (ESC) for Sarulla with PERTAMINA and with PLN, respectively.

In February of 1993 Unocal, PERTAMINA and PLN signed a JOC and ESC, enabling Unocal to explore and develop geothermal energy in the Sarulla Contract Area. The JOC gave Unocal the right to explore for, and produce geothermal power from, the Sarulla contract area as a contractor to PERTAMINA while the ESC states the terms under which the geothermal power is to be purchased by PLN. The contract area is approximately 15 by 63 km in dimension elongated in a NW-SE direction, located within the Sumatra volcanic arc and along the active Great Sumatra Fault System (GSF), covering four prospect areas.

Significant exploration of the Sarulla block began shortly after the signing of the contract, involving extensive field geologic and geophysics surveys in 1993 and 1994. The geologic mapping consisted of 8 months of fieldwork and analysis of 280 geochemistry samples, as well as geophysics data from 720 gravity stations, 500 Time-domain electromagnetic (TDEM) stations, and 240 Magnetotelluric (MT) stations.

Following these exploration surveys, Unocal drilled a total of 13 deep exploration wells in three of the prospects in Sarulla between 1994 and 1998 (Figure 2), discovering a total of 330 MW of commercial geothermal resources:

• 210 MW proven resource in the Namora-I-Langit field. Four (4) exploration wells have been drilled in this prospect.

• 100 MW proven resource in the Silangkitang field. Five (5) exploration wells have been drilled in this prospect.

• 20 MW proven resource in the Eastern Sibualbuali field. Four (4) exploration wells were drilled in this area.

The four wells drilled in the Namora-I-Langit field were all highly productive, encountering a large, high permeability geothermal system. The wells all produced fluids with temperatures in excess of 260°C, with a maximum measured temperature of 276°C. Three of the wells produced neutral Na-Cl brine, but the fourth produced a low-pH Na-Cl-SO4 fluid. The permeability of the Namora-I-Langit system appears to be widely distributed and is not directly controlled by the Great Sumatra Fault.

Two out of five wells drilled in the Silangkitang field encountered a strong upflow zone with fluid temperatures in excess of 310°C. A large-diameter well drilled in this zone is capable of producing fluid sufficient for 50 MW equivalent of generation, and has a maximum flowing wellhead pressure of more than 60 bar. Unlike at Namora I Langit, the permeability of the Silangkitang system appears to be strongly controlled by the Great Sumatra Fault.

Four wells drilled in the Eastern Sibualbuali geothermal field were all productive, finding a geothermal system whose temperature and permeability structure is strongly controlled by the Great Sumatra Fault. The maximum temperature measured in the Eastern Sibualbuali wells is 267°C, but production zone temperatures are in the 218-248°C range. Volumetric and reservoir modelling evaluation of the drilled portion of the Eastern Sibualbuali geothermal system suggests reserves of sufficient energy to generate 20 MW of electricity for 30 years.

Significant additional potential remains in the Sarulla block in the undrilled portions of the Sibualbuali and Namora-I-Langit fields as well as in the undrilled Donotasik prospect.

Figure 3. Exploration drilling activities in Sarulla between 1994 and 1998. courtesY oF unocal

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Commercial RenegotiationsAfter exploration confirmed a resource of

330 MW, planning for the construction was underway in 1998, when the government, through Presidential Decree 05/1998, postponed the Sarulla project following the Asian financial crisis that hit Indonesia. Nevertheless, during this difficult period, Unocal continued to complete the resource feasibility study, and submitted a Notification of Reserve Confirmation to PERTAMINA in 2000.

In 2002, the government issued Presidential Decree 15/2002 effectively rescinding the postponement of the project. After re-negotiation with PERTAMINA and PLN, Unocal finally agreed to pull out from the Sarulla project in the third quarter of 2003, and sold its interests and rights to develop to PLN for $60 million.

In 2004, after a law to promote private sector participation in the geothermal sector was signed, PLN opened an Independent Power Producers (IPP) bidding process for the Sarulla development rights, and in 2006 the Medco-Ormat-Itochu Consortium won the tender to develop the project. In 2007 Kyushu Electric Power Co Inc. joined the consortium.

An Indonesian special purpose company, Sarulla Operation Limited (SOL), was then established by the consortium members, acting as the operating company for steam resource development, and construction and operation of plant facilities under the framework of a Joint Operating Contract (JOC) with the concession holder, PERTAMINA Geothermal Energy (PGE), a subsidiary of PT PERTAMINA.

After a long process of renegotiations, in April 2013 SOL signed a Joint Operating Contract (JOC) with PT PERTAMINA Geothermal Energy (PGE), which grants SOL the rights to use the geothermal field. An Energy Sales Contract (ESC) for the 330 MW Sarulla geothermal power project was signed in the same month with PT PLN, which will off-take the energy produced by the geothermal power plant for 30 years.

On March 28, 2014, the Consortium signed the financing agreements with a syndicate comprised of the Japanese Bank for International Cooperation (JBIC) and the Asian Development Bank (ADB), acting as Lead Structuring Banks (ADB acting both in its own capacity, as well as an implementing agency for the Clean Technology Fund and for the Canadian Climate Fund), plus six commercial lenders: Sumitomo Mitsui Banking Corporation

(SMBC), Société Générale (SG), National Australian Bank (NAB), Bank of Tokyo Mitsubishi UFJ (BTMU), Mizuho and ING. JBIC also provides political risk guaranty for the portion of the loan provided by commercial lenders, under an EPRG policy (Figure 4).

Going Forward – New Era of Geothermal Energy Converter Technology in Indonesia

The Sarulla Operations Limited (SOL) has formally given notice of its intention to develop a geothermal power plant of approximately 330 MW capacity in the Sarulla Contract Area. Following the financing closure, the project construction and development well drilling are currently underway at Sarulla. The project will develop two geothermal resources, Namora-I-Langit (NIL) and Silangkitang (SIL), for a total of 330 MW generation. PT. Halliburton Logging Indonesia is the drilling contractor and Integrated Process Management (IPM) contractor to SOL. PT. Thermochem Indonesia is the well testing subcontractor to Halliburton for all well testing services, reservoir engineering and geochemical consulting, and well test equipment supply (LECM, piping, PTS tools, cap tubing, instrumentation).

Due to the large size of development, the project will be constructed in three phases of 110 MW each, starting with the 110 MW Silangkitang Plant development, scheduled to be completed by the end of 2016. The subsequent NIL I and NIL II Plant at the Namora-I-Langit field are scheduled to follow approximately 12 and 18 months after, respectively.

Following a comprehensive evaluation of the Silangkitang and Namora-I-Langit resource thermodynamics and fluid characteristics, the plant

Figure 4. Sarulla Project Structure source: PFi asian Best Practice rePort

26 GRC Bulletin l www.geothermal.org

will use Ormat's Integrated Geothermal Combined Cycle Power Plant (IGCC) technology which is more efficient than conventional steam power plants (see Figure 5). These will be the first plants of this type in Indonesia, although the technology is well established at other high-enthalpy geothermal fields worldwide.

The IGCC consists of a back pressure steam turbine and Ormat Energy Converters (OEC Vaporizers) heated by the low pressure steam exiting the topping steam turbine (combined cycle). The steam exits the turbine and enters the OEC vaporizer at just above atmospheric pressure. The brine OEC units utilize the brine as it leaves the separation station (conventional brine binary units).

This technology allows nearly 100% injection of the geothermal fluid back into the reservoir, maintaining the sustainability of the geothermal resource thus increasing power. A portion of the noncondensable gas (NCG) will also be injected with the brine and condensate.

The steam in the IGCC is condensed at a pressure slightly higher than atmospheric pressure, allowing the NCG to be removed from the condenser (OEC) without an expensive, power consuming vacuum pumping system or steam consuming ejectors. Another significant advantage of the back-pressure is that the NCG does not contain oxygen which is always present in conventional vacuum-condensing plants, which suffer from air in-leakage.

The IGCC technology utilizes separated brine, producing more power from the same amount of fluid extracted from the reservoir than conventional flash plants. The cooled brine is mixed with the condensed steam and a portion of the NCG, providing pH-modification that is inherent to the process, without the need for costly sulphuric or hydrochloric acid to reduce the potential for silica

scaling. Thermochem Inc. has performed chemical process design services for Ormat on the plants and is conducting pilot testing for SOL to validate this process during the well testing phase.

The power from Silangkitang will be transmitted to a substation at Namora-I via a 20km long, 150kV transmission line. This will be the interface point where PLN will construct a new transmission line to transmit power to the national grid.

Game changer for geothermal development in Indonesia

The Sarulla Geothermal Power Project will be the largest geothermal construction project in Indonesia, double the previous Salak 165 MW expansion project constructed more than 15 years ago. From a regulation stand point, the project is unique in the way that its underlying contract is under the old generation geothermal legislation framework, but it is the first geothermal project in Indonesia to benefit from Indonesian Government support in the form of a Business Viability Guarantee Letter under regulation 139, which was previously not available. This new form of government support is crucial for any limited recourse financing project going forward in Indonesia.

The Sarulla Project is the first Greenfield geothermal power project in Indonesia in a long time to have closed with limited-recourse project financing since the Unit 1 Wayang Windu Project in 1997. The Sarulla Project took an alternative approach by financing all three separate power generating units as an integrated whole, different from many other geothermal projects that are typically financed on a unit-by-unit basis due to the need to “prove up” the project’s reserves. The integrated nature of the project financing for the Sarulla project meant that the bankability depended on a detailed reserve analysis and thorough due diligence reports provided by lenders’ independent consultants. n

Figure 5. Schematic diagram of the Geothermal combined cycle schematic diagram source: ormat technoloGies inc.

Figure 6. The first new well tested at Namora-I-Langit, shown flowing through Thermochem LECM well test facility in February, 2015.

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