Pertamina to suffer heavy losses from C. Java gas blowout

Moch. N. Kurniawan, The Jakarta Post, Jakarta

State-owned oil and gas company Pertamina said on Thursday it could suffer losses totaling many millions of dollars from the gas blowout at its exploration well in Cepu, Central Java.

Pertamina spokesman Ridwan Nyak Baik said damage to drilling equipment could cost the company about US$15 million alone. Other potential losses were still being calculated.

According to one estimate, the gas explosion could inflict losses totaling $50 million.

"We're still calculating the total losses from the well.

"Some of the damages will be covered by insurance, but we can't get any compensation from gas losses as the (gas) reserves has yet to be certified." he told The Jakarta Post.

The blowout, which occurred at the RBT 1 oil exploration well in Cepu, Blora regency, on Monday, was blamed on the blowout preventer (BOP) not being able to cope with the pressure when gas from 2,900 meters suddenly emerged.

The blowout, which ignited, destroyed Pertamina's rig, demolished nearby crops, and forced more than a thousand villagers to flee the area to escape the flames and noise.

300 local residents have reportedly undergone medical treatment for breathing difficulties.

Some locals have returned home after Pertamina said there were no toxic gases released from the well.

Pertamina's latest data, made available to the Post on Friday, showed the fire reached about 30 meters in height and the heat and noise radiation affected a 400 meter radius.

But Pertamina has said the blow out also proved that the well had better than expected gas reserves, which is currently estimated at 450 billion standard cubic feet (bscf).

Ridwan said Pertamina had taken measures to stop the blowout, namely through direct capping, and expected it to be completed in three to four weeks.

The capping equipment, to be supplied from the Prabumulih operation in South Sumatra, was expected to arrive on Sunday, Ridwan said.

Once the equipment arrived, Pertamina would start fighting the fire with chemicals and mud, and by capping the well, he said.

The last stage would be environmental rehabilitation estimated at $4000.

However, should the method fail to extinguish the fire, Pertamina would drill two new wells to be used to inject mud to stop the gas flow from RBT 1.

The technique, called site truck, would need between two and three months to complete, he said.

Asked how the company would prevent blowouts happening in the future, Ridwan said they could take place anywhere as it was difficult to conquer nature.

He pointed out that the former Mobil Oil Indonesia, now known as ExxonMobil Oil Indonesia Inc., also experienced a blowout during preliminary drilling at the Arun field.

He said the company had always applied its best standards to minimize the risk and had also had contingency plans in place to deal with the blowout.