CBM Asia Plans to Commercialise Kutai West PSC This Year
CBM Asia Development Corp. has announced commercializing the Kutai West Production Sharing Contract (PSC) in East Kalimantan, Indonesia, located near the Bontang LNG export facility would be company’s primary goal in 2014.
“Achieving early-stage commercial production will help unlock the value of this asset, which is situated close to high-priced Asian gas markets,” the company said.
CBM Asia holds an 18% working interest in the Kutai West PSC, representing 705 Bcf of recoverable prospective resources net to CBM Asia from the estimated total 3.9 Tcf.
Kutai West is regarded as one of the best and commercially most advanced of the more than 50 awarded CBM blocks in Indonesia.
Management’s main focus this year is to initiate commercial gas production at Kutai West with a 5-well pilot, followed by a larger commercial scale 25-well development (total 30 wells).
“To this end we have reached consensus with our partners to sell the produced gas to locally installed gas engine power generation units selling power into the PLN grid and later to feed gas into the gas-short Bontang LNG export network. Anticipated gas prices are $8/Mcf or higher,” CBM Asia said.
Under Phase 1 four new CBM wells will be drilled near the existing KW-CBM01. Produced gas estimated at 2.0-2.5 MMcfd (gross) would be sold to a power station developer/operator and PLN for on-site power generation at about $8/Mcf. CBM Asia’s share of the Phase 1 costs is estimated at $2.15 million.
Under Phase 2 CBM Asia and its partners would utilize two rigs to drill an additional 25 wells (30 total) over a 7-month period.
Total capex for phase 2 is estimated at $36.3 million with CBM Asia’s share of costs estimated at $8.0 million. Production estimated at 12.5 MMcfd (gross) would be sold into the Bontang LNG export network at approximately $8/Mcf or more.
“We estimate that with completion of the Phase 2 development CBM Asia will be operational cash flow positive,” the company said.
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