Conrad and Pertamina eyeing small-scale LNG options for prospects offshore Indonesia

Singapore-headquartered natural gas player Conrad Asia Energy has disclosed information about its recent commercialization activities for shallow-water gas discoveries in two production-sharing contracts (PSCs) located off the coast of Indonesia’s Aceh Province, including a potential small-scale liquefied natural gas (LNG) plant.

According to the firm, the past two years have been spent exploring commercialization options for the current discoveries in shallow water areas of Offshore North West Aceh (Meulaboh) (ONWA) and Offshore South West Aceh (Singkil) (OSWA) discoveries near shore as well the multi-trillion cubic feet (Tcf) prospective resource potential in deep-water areas relatively close to shore (approximately 30 km offshore).

The natural gas player holds 100% operated interests in both PSCs offshore Indonesia, which were won in November 2022 and signed in January 2023. Each PSC has a 30-year tenure to develop the existing discoveries and explore additional resources.

The ONWA block, which contains the Meulaboh-1 and Meulaboh East-1 gas discovery wells, covers 9,182 square kilometers, while the OSWA block, containing the Singkel-1 gas accumulation, covers 10,700 square kilometers.

A screening exercise was commissioned to test the technical and commercial feasibility of a small-scale LNG plant (under 0.5 million tonnes per annum (mtpa)) as an outlet for gas from the Meulaboh Main and East discoveries. The study confirmed this to be a feasible gas commercialization option due to its nearshore location and flow-testing which showed almost pure methane content. 

Furthermore, competent person reports (CPRs) estimated a gross (100%) 2C contingent resource of 214 Bcf of sales gas (161.5 Bcf net attributable to Conrad) in three of the four discovered gas accumulations in the two PSCs. Meulaboh and Meulaboh East as a cluster were estimated to hold 86.9 Bcf and Singkil 74.6 Bcf of the amount net attributable to Conrad. The CPRs for ONWA and OSWA ascribed an NPV of $88 million net attributable to Conrad.

Conrad Managing Director and Chief Executive Officer, Miltos Xynogalas, noted: “The CPRs have indicated the value of our discovered resources at US$88 million based on a domestic market commercialization option. Additional options are now being evaluated which include gas to power, compressed natural gas or small-scale LNG. We have been working to mature some of these options in partnership with PGN, Indonesia’s largest gas company and the small-scale LNG option is looking particularly favorable as several of such projects are now being brought into commercial production.” 

Plans are underway to acquire up to 500 square kilometers of modern 3D seismic data in each PSC to delineate near-field, low-risk drilling opportunities and continue to evaluate the deepwater prospective targets. According to the company, several large structures with multi-Tcf potential have been identified in the deepwater area. The environmental permits for the seismic acquisition are expected in Q4 2024. 

“Conrad’s two Aceh PSCs which cover both shallow and deep-water areas have four gas discoveries in shallow water and large low-risk exploratory potential in the deep water. This is a significant opportunity, especially considering the historical exploratory success rates in the shallow-water geological play type of close to 70%. We aim to bolster our discovered resources in the shallow-water areas with the upcoming 3D seismic,” said Xynogalas.

Prospective resources in the Aceh PSCs exceed 15 Tcf of recoverable gas (P50, 100%) of which circa 11 Tcf (P50) are net attributable to Conrad, the natural gas player said. Seismic studies of these structures show gas chimneys and flat spots, providing direct indications for the presence of hydrocarbons. The Singaporean firm claims several partners have expressed their interest in a prospective farm-down of some of its participating interests in the ONWA and OSWA PSCs.

In February 2024, Conrad signed a memorandum of understanding (MOU) with Indonesia’s Pertamina to cooperate in using the gas from discovered gas resources from its ONWA and OSWA PSCs for liquefaction. The two intend to further mature the small-scale LNG opportunity for the discovered Aceh resources and investigate its options for the gross prospective resources.

The duo plans to cooperate in the development and maintenance of possible small-scale LNG infrastructure and natural gas sales. The deal also covers broader cooperation relating to the two blocks, including a joint study of commercialization schemes for gas and LNG supply, a plan for developing gas and LNG infrastructure, and marketing gas, among other things. 

The partners have since agreed that commercializing the gas discoveries in the form of small-scale LNG and transportation to the nearest LNG receiving terminal is the preferred development option.

The latter is said to be one of the many opportunities that exist in the immediate area of the resources. The potential market for gas in the area is described as strong, including refined products from mining companies where Conrad claims to be engaged with potential gas buyers.

Conrad is developing another field offshore Indonesia – Mako, believed to contain 2C contingent resources of 376 Bcf. Steps towards its commercialization were taken in July when a binding gas sales agreement (GSA) for the sale and purchase of the domestic portion of gas was signed with Pertamina. A final investment decision is expected by the year’s end.