Coal Case: Indonesia Increases Its Commitment to Coal Bed Methane
o First-of-Its-Kind Coal Bed Methane-to-Power Project in Indonesia to Help the Country Meet its Growing Power Needs
o GE's Technology Successfully Used in other CBM-to-Power Markets Around the World
JAKARTA, INDONESIA - November 5, 2010 - Indonesia's leading coal bed methane (CBM) company, Ephindo, today announced that it signed a memorandum of understanding (MOU) with GE (NYSE: GE) last month to develop a pilot power generation plant that will tap into the country's vast reserves of coal methane gas to produce electricity using cleaner burning power generation technology. The new project will help the region end the use of diesel fuel as the primary fuel source to operate its power plants. The project, a first of its kind, is part of a broader GE strategy to invest in resource rich regions like Indonesia to respond quicker to customer needs. Joining Ephindo in the development of the 1-megawatt (MW) pilot CBM-to-power project, GE will be deploying its Jenbacher gas engine technology to support Indonesia's environmental and energy efficiency goals.
Total energy demand in Indonesia is growing 7 percent per year[1], and currently, up to 40 percent of power generation in the country is still coming from diesel fuel. With the third largest CBM reserve in the world, the Indonesian government plans to focus more on using these resources to reduce the country's dependency on subsidized fuel.
"Indonesia has been a net importer of oil since 2004, and although it is currently the world's third largest exporter of liquefied natural gas, conventional domestic gas supply is projected to decrease by 2020. Therefore, the Indonesian government is encouraging investors in commercialization of CBM to Power," said Sammy Hamzah, CEO of Ephindo. "GE's advanced technology and expertise in this industry are very important to the success of this project, which will support the country's goal to reduce dependency on subsidized fuel and help to diversify its primary energy needs beyond imported petroleum products."
GE will finance and develop the 1- MW pilot plant, which will be located at the Sangata field in East Kalimantan, Indonesia. It will feature GE's Jenbacher J320 gas engine technology, which has been successfully used in CBM-to-power markets around the world. If the pilot plant is proven commercially viable, the project could be expanded when the 21 CBM production sharing contracts go into operation in the future. The production sharing contracts are spread across four main areas in Sumatra and Kalimantan.
"GE's investment in this project is consistent with our companywide ecomagination initiative to help meet customers' demands for more energy-efficient products," said Prady Iyyanki, CEO-gas engines for GE Power & Water. "Our Jenbacher technology is harnessing the gas directly from the coal seams as an energy source and can reduce the release of methane into the atmosphere by about 85 percent compared to venting the gas as it is usual in a coal mining operation. This corresponds to a CO2 savings of about 30,000 tons per MW and year."
The signing ceremony was witnessed by Indonesia's Director General of Renewable Energy Luluk Sumiarso and Indonesian Ambassador to Federation Republic of Germany Eddy Pratomo in Berlin, Germany.
Currently, around the world, 200 of GE's Jenbacher units, with a total capacity of more than 400 MW run on CBM and generate more than 3 million MWh of electricity per year-saving the equivalent of 830 million cubic meters of natural gas a year, sufficient to power 2.2 million Indonesian homes.
The four-well pilot drilling program is expected to begin this month and commercial operation is scheduled for the third quarter of 2011. Eventually, it is expected that this CBM-to-power project will be connected to PLN's (Indonesia's national power producer) grid to improve rural electrification in remote areas.
CBM gas occurs naturally within coal deposits and is composed largely of methane, the principal component of natural gas. Compared to natural gas, CBM burns more efficiently and delivers considerable cost savings in extraction. Potential Indonesian reserves of CBM are estimated at 450 trillion cubic feet, almost three times the country's current reserves of natural gas[2].
Ephindo is a pioneer in the exploration of CBM in Indonesia. The company is Indonesian, but works with the world's leading experts in CBM. Ephindo CBM brings together a powerful team of professionals, rich in experience in oil and gas extraction and fired with an entrepreneurial spirit, in the search for, and development of, a significant new source of energy for Indonesia in the form of CBM.
Ephindo was granted the first production sharing contract for CBM in Indonesia in May 2008, with others soon following. Already of huge importance in the United States and Australia, CBM is making its debut in Indonesia, and Ephindo is leading the way. Similarly to other countries like India and China, Indonesia is now beginning to harness this important future energy source.
This announcement continues a series of recent actions in GE's energy business over the past several weeks aimed at growing its overall presence in the global energy space. On Oct. 1, GE announced its purchase of Calnetix Power Solutions, which expands GE's capabilities to recover waste heat from industrial processes for electricity generation. On Oct. 6, GE announced the acquisition of Dresser Inc., a global energy infrastructure technology and service provider. On October 19, GE announced the development of its new, larger, power-generation gas engine-the J920 engine. With electrical efficiency of 48.7 percent and an output of 9.5 MW, the new engine is the most efficient in its class and it extends GE's technical leadership in power generation gas engines.
About GE
GE (NYSE: GE) is a diversified infrastructure, finance and media company taking on the world's toughest challenges. From aircraft engines and power generation to financial services, health care solutions and television programming, GE operates in more than 100 countries and employs about 300,000 people worldwide. For more information, visit the company's website at www.ge.com.
GE serves the energy sector by developing and deploying technology that helps make efficient use of natural resources. With nearly 85,000 global employees and 2009 revenues of $40 billion, GE Energy www.ge.com/energy is one of the world's leading suppliers of power generation and energy delivery technologies. The businesses that comprise GE Energy-GE Power & Water, GE Energy Services and GE Oil & Gas-work together to provide integrated product and service solutions in all areas of the energy industry including coal, oil, natural gas and nuclear energy; renewable resources such as water, wind, solar and biogas; and other alternative fuels.
[1] Ministry of Finance Green Paper: Economic and Fiscal Policy Strategies for Climate Change Mitigation in Indonesia
[2] http://www.ephindo.com/home.php?&page_id=6
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