ARCO to develop huge gas field in Irian Jaya

JAKARTA (JP): Atlantic Richfield Co (ARCO) of the United States announced yesterday a massive discovery of about 13 trillion cubic feet (TCF) of proven and probable natural gas reserves in Irian Jaya.

"This is the largest international discovery in ARCO's history," Mike Bowlin, ARCO's Chief Executive Officer, said after a meeting with President Soeharto.

Bowlin said the reserves, which are equivalent to almost 2.2 billion barrels of oil, would be more than sufficient to support a natural gas liquefaction (LNG) plant with two production trains.

He said ARCO planned to invest up to US$3 billion to develop the gas field on the Weriagar and Berau blocks onshore and offshore Irian Jaya in Indonesia's easternmost province.

President Soeharto yesterday named the gas project Tangguh, which means strong in Indonesian.

Size

The size of the Tangguh reserves was estimated by the Dallas- based independent petroleum engineering consulting firm DeGolyer & MacNaughton (D&M), ARCO said in a statement.

D&M said there may be an additional 6.5 trillion cubic feet beyond the 13 TCF of proved and probable reserves.

The project will provide Indonesia with a significant resource base to expand its LNG market share.

State-owned Pertamina oil company, which now operates two LNG plants at Bontang, East Kalimantan, and Arun in Sumatra's northernmost province of Aceh, is already the world's largest exporter of LNG commanding 50 percent of the Asia-Pacific market.

Pertamina now exports about 25 million tons of LNG to Japan, South Korea and Taiwan each year under long-term contracts.

"This is a milestone in ARC0's global growth agenda and our continuing relationship with Indonesia, where we have been Pertamina's partners for three decades," Bowlin said.

"LNG development in Irian Jaya will give ARCO yet another anchor field development to broaden our income generations overseas," he said.

Pertamina's president Faisal Abda'oe, who accompanied Bowlin to the meeting with Soeharto, said the Tangguh gas project would be included in Indonesia's LNG marketing program.

In addition, Pertamina, Mobil Oil, Exxon and several other foreign investors are preparing to develop another huge gas field on Natuna island near Singapore.

Atlantic Richfield Indonesia's president, Leon Codron, said Irian Jaya was ideally located to service expanding Asian markets where energy growth was forecast to remain robust.

"ARCO and its partners will drill more wells to certify additional reserves for a multiple-train LNG project," Codron added.

ARCO owns 48 percent of the Berau block with Occidental Berau of Indonesia Inc holding 22.86 percent, and Nippon Oil Exploration Ltd 17.14 percent.

ARCO also owns 80 percent of the Weriagar block in partnership with KG Werigar Petroleum Ltd which has 20 percent. (aly/prb/vin)