sarulla brief.pdf

A Brief History of the Sarulla Geothermal Field Development by Novi Ganeanto1, Paul von Hir2, Elisabeth Easley1 1 PT. Thermochem Indonesia;2 Thermochem, Inc.

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-ItochuKyushu-Ormat, has been granted the rights to utilize the Sarulla geothermal resource for power generation under the framework of a JointOperating Contract (JOC) with PERTAMINA. Construction and development wells drilling for the 330 MW geothermal power development are currently underway, scheduled to be fully completedin 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

Early Exploration The rst systematic exploration studies of the Sarulla geothermal eld 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 oneof the several aractive prospects for geothermal development. A subsidiary of Unocal, together with PERTAMINA, undertook follow-upgeochemical surveys in Sarulla in 1989-1990. The exploration program identied several high-temperature prospects in the greater Sarulla area, in a tectonic graben associated with strands of the Great Sumatra Fault Zone. Further geoscientic

by Unocal, and the commercial and nancing closure by SOL. The journey to the current eld development program provides a unique learning experience worth Figure 1. Location of the Sarulla Contract Area. COURTESY OF UNOCAL capturing. This paper outlines a brief history of the Sarulla geothermal eld development highlighting regulatory, legal, technical, and commercial

investigation identied 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

challenges geothermal over almostthe three decades.developers have faced

to as the Sarulla Contract Area.

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Figure 2. Four geothermal prospectswithin the Sarulla Contract Area.COURTESY OF UNOCAL

Resource Discovery More extensive exploration of the Sarulla prospect begun in early 1990s, immediately after the government issued Decree 45/1991, which provided more exibilityto 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 eld in Salak, negotiated a

The four wells drilled in the Namora-I-Langit eld were all highly productive, encountering a large, high permeability geothermal system. The wells all produced uids withtemperatures in excess of 260°C, with a maximum measured temperature of 276°C. Three of thewells produced neutral Na-Cl brine, but the fourth produced a low-pH Na-Cl-SO4 uid. The permeability of the Namora-I-Langit system appears to be widely distributed and is not directly controlled by the

Sales Contract JOC and Energy (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. Signicant exploration of the Sarulla block began shortly after the signing of the contract, involving extensive eld geologic and geophysics surveys in 1993 and 1994. The geologic mapping consisted of 8 months of eldwork 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 of330 MW of commercial geothermal resources:

Great Sumatra Fault. Two out of ve wells drilled in theSilangkitang eld encountered a strong upow zone with uid temperatures in excess of 310°C. A large-diameter well drilled in this zone is capable of producing uid sucient for 50 MW equivalent of generation, and has a maximum owing 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 eld were all productive, nding 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 218248°C range. Volumetric and reservoir modelling evaluation of the drilled portion of the Eastern Sibualbuali geothermal system suggests reserves of sucient energy to generate 20 MW of electricity for 30 years. Signicant additional potential remains in the Sarulla block in the undrilled portions of the Sibualbuali and Namora-I-Langit elds as well as in the undrilled Donotasik prospect.

• 210 MW proven resource in the Namora-ILangit eld. Four (4) exploration wells have been drilled in this prospect. • 100 MW proven resource in the Silangkitang eld. Five (5) exploration wells have been drilled in this prospect. • 20 MW proven resource in the Eastern Sibualbuali eld. Four (4) exploration wells were drilled in this area. Figure 3.Exploration drilling activitiesin Sarulla between 1994 and 1998. COURTESY OF UNOCAL

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Commercial Renegotiations After exploration conrmed 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 nancial crisis that hit Indonesia. Nevertheless, during this dicult period, Unocal continued to complete the resource feasibility study, and submied a Notication of Reserve Conrmation to PERTAMINA in 2000.

(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).

In 2002, the eectively government issued Presidential Decree 15/2002 rescinding the postponement of the project. After re-negotiation with PERTAMINA and PLN, Unocal nally 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 aJoint 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 eld. An Energy Sales Contract(ESC) for the 330 MW Sarulla geothermal power project was signed in the same month with PT PLN, which will o-take the energy produced by the geothermal power plant for 30 years. On March 28, 2014, the Consortium signed the nancing 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

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 nancing closure, the project construction and development well drilling are currently underway at Sarulla. The project willdevelop 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 eld are scheduled to follow approximately 12 and 18 monthsafter, respectively. Following a comprehensive evaluation of

the Canadian Climate Fund), plus six commercial lenders: Sumitomo Mitsui Banking Corporation

the Silangkitang and resource thermodynamics andNamora-I-Langit uid characteristics, the plant

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Figure 4. Sarulla Project StructureSOURCE: PFI ASIAN BEST PRACTICE REPORT

will use Ormat's Integrated Geothermal Combined Cycle Power Plant (IGCC) technology which is more ecient than conventional steam power plants (see Figure 5). These will be the rst plants of this type in Indonesia, although the technology is well established at other high-enthalpy geothermal elds worldwide. The IGCC consists of a back pressure steam turbine and Ormat Energy Converters (OEC Vaporizers) heated by the lowpressure steam

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 transmied 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.

exiting the exits topping (combined cycle). The steam the steam turbineturbine 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 uid back into the reservoir, maintaining the sustainability of the geothermal resource thus increasing power. A portion of the noncondensable gas (NCG) will Figure 5. Schematic diagram of theGeothermal also be injected combined cycle schematic diagramSOURCE: ORMAT TECHNOLOGIES INC. 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 signicant advantage of the back-pressure is that the NCG does not contain oxygen which is always present in conventional vacuum-condensing plants, which suer from air in-leakage. The IGCC technology utilizes separated brine, producing more power from the same amount of uid extracted from the reservoir than conventional ash plants. The cooled brine is mixed with the condensed steam and a portion of the NCG, providing pH-modication that is inherent to the

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 rst geothermal project in Indonesia to benet from Indonesian Government support in the form of a Business Viability Guarantee Leer under regulation 139, which was previously notavailable. This new form of government support is crucial for any limited recourse nancing project going forward in Indonesia. The Sarulla Project is the rst Greeneld geothermal power project in Indonesia in a long time to have closed with limited-recourse project nancing since the Unit 1 Wayang Windu Project in 1997. The Sarulla Project took an alternative approach by nancing all three separate power generating units as an integrated whole, dierent from many other geothermal projects that are typically nanced on a unit-by-unit basis due to the need to “prove up” the project’s reserves. The integrated nature of the project nancing for the Sarulla project meant that the bankability depended on a detailed reserve analysis and thorough due diligence reports provided by lenders’ independent

process, without need forthe costly sulphuric or hydrochloric acidthe to reduce potential for silica

consultants.

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

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