GAS TECH 2002

BONTANG LNG PLANT EXTENSION :

TRAIN-I PROJECT

BY : I NYOMAN WINTEN PERTAMINANANANG UNTUNG PERTAMINA (SPEAKER)GEORGES RAIMONDEAU TOTALFINAELF E&P INDONESIECHRIS THOMAS TOTALFINAELF E&P INDONESIE

CONTENTS :

1. INTRODUCTION

2. EAST KALIMANTAN GAS RESERVES

3. GAS DEMAND

4. BONTANG LNG PLANT

5. BONTANG LNG PLANT EXTENSION : TRAIN-I

6. CONCLUSIONS

Untung 1

1. INTRODUCTION

East Kalimantan, in the Republic of Indonesia has stood for some 25 years as a major gas producingprovince providing about 30% of Japanese LNG requirement. Since its start-up in 1977, the BontangLNG Plant has exported well over 4,000 cargoes of LNG. It can export up to 22.25 Mt (Millions tonsper annum) LNG/year from 8 trains.Currently, one third of the certified reserves (some 18.5 TCf of proven + probable reserves) are stilluncommitted. Additional discoveries of hydrocarbons in the Makassar Strait will boost this figureeven higher.Local gas requirements (Fertilizers, Methanol, Ammonia) will be easily met in the future, leavingvery large reserves untapped ready to be utilized for additional LNG exports.

Large remaining reserves associated to the projected future gas market demand in the Pacific Rim,have motivated Pertamina and it’s East Kalimantan Production Sharing Contractors (TotalFinaElfE&P Indonesie and Unocal Indonesia) to launch a ninth LNG train (Train-I Project).

This paper gives an update of East Kalimantan’s certified gas reserves and it’s potential growth fromMakassar Strait discoveries, a brief outlook at the latest gas demand (domestic and LNG export) and astatus of Train-I project.

2. EAST KALIMANTAN GAS RESERVES

The table 1 summarises the gas reserves of East Kalimantan split between the three ProductionSharing Contractors.

CERTIFIED RESERVES

Table-1

• Cut-off date of certification: Jan. 1st, 1999

• Most likely reserves : 51.8 Tcf

In TcfOPERATOR PROVEN

TOTALFINAELF/INPEX

UNOCAL

VICO

24.4

4.0

14.5

PROBABLE

6.7

0.7

1.6

TOTAL 42.8 9.0

PROVEN +PROBABLE

31.0

4.7

16.0

51.8

Untung 2

The sales commitment volume including all the domestic extensions adds up to 33.3 Tcf as indicated inTable 2 with a balance of certified reserves = 18.5 Tcf.

CERTIFIED RESERVES BALANCE

Table-2

In addition to the uncommitted certified reserves available for additional sales, new gas discoveries inMakassar Strait deep water blocks by Unocal add potential gas reserves in the range of 6 to 9 Tcf. Thesefields are still under appraisal (see figure 1) and additional data suggest an even larger potential gasreserves. Hence the range of potential reserves of East Kalimantan, including Deep Makassar discoveriesare in the 24.5/27.5 Tcf range.

GAS DISCOVERIES IN MAKASSAR STRAITS DEEP WATER

Figure-1

Sales & Commitment (East Kalimantandomestic extensions and projects included)

33.3

Uncommitted Certified Reserves(available for additional sales)

18.5

Certified Reserves (Proven + Probable) 51.8

Tcf

Bangka Channel» 300 - 600 BCF

Ranggas» under

appraisal

» 1 - 2 TCFGada

Gula» 2 - 3 TCF

GandangGendalo

» 3 - 4 TCF

SenipahTerminal

SantanTerminal

BontangLNG

SERANG

M&K

SANTANATTAKA

PECIKO

GANAL

RAPAK

MAK

MAK

Courtesy of Unocal

• 6 - 9 tcf of new gas

• 78 wells drilled

• 6 discoveries since 2000

Untung 3

In December 2001, TotalFinaElf (Operator) and Inpex were awarded the Donggala Block.This deep water block is located North of the Makassar Strait 75 km from the production facilities ofthe Tunu Field (TotalFinaElf Operator).A 3D seismic study has already been carried-out and drilling operations are due to begin this year.Overall, East Kalimantan holds the largest gas reserves in Indonesia and one of the largest reserves ofPacific Rim.

3. GAS DEMAND

CURRENT GAS DEMANDEast Kalimantan gas is both consumed locally and exported.• Kaltim Industrial estate located North of Bontang LNG Plant with fertilizers plants (3 + 1 future),

one methanol plant and 2 Amonia plants will require some 455 MMScfd at the end of 2002).• The Bontang LNG Plant exports gas to Japan, Korea and Taiwan. Its demand during the winter

season peaks at 3.77 Bcf/day.

Both demands can be met by the existing pipelines network between the Badak manifold and theBontang LNG Plant.

The Pacific Rim LNG trade in 2000 added up to 72.5 Mt as summarized in Figure-2.

ASIA PACIFIC LNG TRADE IN 2000

Figure - 2

27.1

15.2

9.07.2 6.4

4.8

1.6 1.2

0

5

10

15

20

25

30

INDONESIA MALAYSIA QATAR AUSTRALIA BRUNEI ABU DHABI OMAN USA (Alaska)

EXPORTERS

Mill

ion

To

nes

JAPAN KOREA TAIWAN

JAPAN74%

KOREA20%

TAIWAN6%

TOTAL ASIA PACIFIC LNG MARKET DISTRIBUTIONSource: Cedigaz First Estimates, March 28, 2001 and Pertamina

Untung 4

FUTURE GAS DEMAND

- The domestic demand is foreseen to increase moderately- Recent forecast of the Pacific region’s LNG demand in 2010 ranges between 90 and 110 Mtpa

wich required additional capacities in the 10/20 Mtpa range.- Because of the deregulation in the traditional markets (Japan, Korea, Taiwan), there will be in

the near future more actors and smaller contracts.- The buyers will request short terms and more flexible contracts (price, seasonality, ...)- Today’s market is a “buyers” market with associated pressure on LNG pricing and commercial

terms with a strong preference for reliable and proven sources,- The competition between countries (Australia, Malaysia, Qatar, Oman, Indonesia, ...) is fierce

and based on a low cost expansions of existing plants.

4. BONTANG LNG PLANT

The Bontang LNG Plant consists of eight steam turbine driven, water cooled liquefaction trains usingthe APCI propane pre-cooled. MR liquefaction process.The first two trains started production in 1977. The eighth train was commissioned in 1999.The existing trains have undergone various stages of up-grading and debottlenecking since theircommissioning. The present capacity of the Bontang LNG Plant amounts to 22.25 Mtpa, 1 Mtpa ofLPG and 10 MMbbl/y of condensates.Mid 2002, the Bontang LNG Plant completed the upgrade of the Emergency Shut Down and ControlSystem of the first four trains. Additional fire water pumping facilities have also been added. BothESD system and additional fire water upgrading projects were launched following therecommendation from a comprehensive Quantitative Risk Assessment (QRA) commissioned byPertamina to enhance the safety at Bontang in line with world top standards.In 2001, during the temporary shutdown of Arun LNG Plant, Bontang has been able to deliver some23 standard cargoes (or +1.2 Mtpa) above the yearly Bontang lifting program.With the yearly variation of the gas demand (maximum in winter) and the requirement for regularoverhaul of the LNG Train, it would be difficult to deliver more than 22.25 Mtpa per year.Further debottlenecking of existing trains could add only limited LNG capacity for export (max 1Mtpa).

Additional flexibility and extra LNG sales calls for a further expansion of Bontang LNG Plant.

5. BONTANG LNG PLANT EXTENSION – TRAIN-I

TRAIN-I SCOPE :Early pre-project study has selected a duplication of the latest Train-H for the following reasons :- Reasonable size for future market demand (2.95 Mtpa),- Steam drivers taking advantage of the existing spare capacity of boilers and provide high

turndown capability.- Operational experience of Pertamina.- Less Engineering, shorter project schedule and bump-less start-up,- Lower project cost than gas turbine for a LNG Train of similar size

The Train-I Project Scope includes :

Untung 5

- A single process train duplicate of Train-H (capacity 2.95 Mtpa) with some improvement in theAcid Gas Removal Unit and the refrigeration compression

- The additional utilities and off sites integrated with the existing facilities.- No additional LNG storage and loading facilities- No additional gas pipeline from the producing fields- One additional pipe to export condensate to Unocal Santan Terminal offloading facilities

SAFETY :From a safety point of view, the QRA commissioned by Pertamina showed that an additional trainwould not significantly impact the risk levels of the Bontang LNG Plant, provided that the additionalfacilities be located within safe distances from existing facilities. The lay-out selected during theFEED complies with this requirement ( see figure-3 ).

TRAIN-I LOCATION

Figure 3

OPTIMISATION OF THE UTILITIES

564321

Dock-1

Dock-2Dock-3

HGFE

A

DB

C

LPG Tanks

LNGBADAK

TRAIN-I PROJECT

Untung 6

One of the areas of optimization for the project was the integration of the utilities in order tominimize the number of additional boilers and power generators. The project team applied theeffectiveness approach developed by TOTALFINAELF (1). In past projects, each new process unitwould come with a fixed number of utility packages irrespective of existing spare capacities and thetarget availability of the Plant.The effectiveness approach replaces the “old concept” of additive spare units by an integratedoptimized approach.The potential for cost reductions resulting from effectiveness simulation is higher for a large plantwith complex interactions, which is the case for the Bontang LNG Plant. For example, Bontang LNGPlant is supported by two utility modules (Steam and Electricity) with 21 boilers and 14 powergenerators overall.

The description of the methodology used is described in the paper in reference (1). As a result, theproject team was able to shave off up to 40 M$ (saving 7% of the Project Total Installed Cost)

PROJECT STATUS :The FEED for Train-I was completed by the end of 2001. An independent project cost estimateperformed by Purvin & Gertz early 2002 confirmed that a technical project cost range 160-170$/t ofyear capacity was realistic.

The EPC Technical Tenders were received in August 2002 from three pre-qualified bidders, namely :- IKPT, CHIYODA, TECHNIP-COFLEXIP- KELLOGG OC, BROWN & ROOT, REKAYASA- JGC, TRIPATRA, PERTAFINIKKI

Technical and subsequent commercial assessments of the tenders have been performed during thethird quarter of 2002 with an award expected late 2002.All tenderers have responded very positively. The only long lead item to be purchased by Pertaminais the Main Heat Exchanger manufactured by APCI and discussions with the licensor are welladvanced.

The EPC schedule from contract award to mechanical completion is 32 months and first drop isexpected during the second quarter of 2005.

6. CONCLUSIONS :

Train-I unique features are:- Very competitive technical and construction cost, which makes the project economical even at

low sales volume.- Fast track project.- Low risk project and with the proven successful project and operation management by

Pertamina.- Safe and reliable source of LNG from the Bontang LNG Plant.- Low “political” risk.- Short distance from Buyers and hence low shipping cost.

When adding to these unmatched features, the dedication of Pertamina’s management to meet thefuture demand, the willingness of its East Kalimantan PSC’s to monetize the remaining gas reserves,Train-I Project has all the qualities necessary to meet all of the buyer requirements.Train-I is the best option for Indonesia to increase LNG sales in today’s market and to develop its gasreserves in the short/medium term.

Untung 7

REFERENCE :

(1) Indonesian LNG plant uses effectiveness study to optimize investment, Oil Gas Journal 4 March 2002,by M. FAYOT, G. RAIMONDEAU, Chris THOMAS, Nanang UNTUNG, A. LEROY.

Aknowledgement :The authors would like thanks the management of Pertamina, PT. Badak, TOTALFINAELF E&PINDONESIE, UNOCAL INDONESIA for their continous support to promote Train-I Project.

RESUMES

I Nyoman Winten is PERTAMINA Project Manager for Bontang LNG Train-I Project. He waspreviously the Engineering Manager of Train-H Bontang LNG Project from 1996 to 2001 and assumevarious position in Refinery Project work from 1990 to 1996. He joined Pertamina in 1980 as RefineryElectrical Engineer in Pertamina Balikpapan.

Nanang Untung is PERTAMINA Engineering Manager for BONTANG LNG TRAIN-I Project. Heworked for Arun LNG Plant for 14 years before joining PERTAMINA in 1996. His major projectexperiences are North Sumatra Offshore Project as Technical Coordinator, Natuna Project as LNGFacilities Engineer and BONTANG LNG Train-H as Process Engineering Superintendent.

Georges RAIMONDEAU is Train-I Project Manager (Advisor) for TotalFinaElf. He was previouslyManager Operations (Upstream & Downstream) of Qatargas from 1995 to 2000, and occupied variousManagement positions for Total E&P worldwide after joining the Group in 1980. He started his careerwith Exxon refining in 1971.

Chris THOMAS is Engineering Manager (Advisor) for BONTANG LNG TRAIN-I Project. Prior to thisassignment, he was in charge of Gas Technology within the Business Development division ofTotalFinaElf E&P and earlier responsible for the start-up of QATARGAS LNG Train 1&2.