PLN secures CNG supply from Medco
The Jakarta Post, Jakarta
Amid soaring global oil prices, state power firm PT PLN plans to get compressed natural gas (CNG) for its power plants from PT Medco Energi Internasional's Senoro field in Sulawesi.
The two companies signed a Memorandum of Understanding (MOU) on the gas supply on Sept. 20, PLN's director of power plants and primary energy generation Ali Herman Ibrahim said on Wednesday.
"The CNG will be used for our plants in Bali, South Sulawesi, and Southeast Sulawesi," said Ali in a telephone interview. He did not name which plants would use the CNG.
PLN expects to get about 100 million standard cubic feet per day (mmscfd) of CNG, which will be enough to generate 100 megawatts of power.
"We hope to get the project moving by 2008," said Ali.
Medco's corporate secretary Andi Karamoy said that under the MOU, a task force would be formed to study the feasibility of the CNG supply.
"We will study the possibility (of supplying the gas) in more detail," said Andi.
The Senoro block in Southeast Sulawesi has a proven reserve of 1.5 trillion cubic feet (tcf) of gas and a probable reserve of another 1.1 tcf.
As global oil prices soar and PLN's need for oil-based fuel rose above the quota set by the government, the company is looking for cheaper sources of power.
A study conducted recently by a consortium that includes Korea's Samsung and Japan's Sumitomo Corp. shows that sea transportation for CNG is viable for a supply of between 150 mmscfd and 250 mmscfd with a distance of between 500 nautical miles and 1,000 nautical miles.
Bali was selected to be a pilot project for the use of CNG in power plants.
Meanwhile, in a separate event, Ali said that PLN was ready to operate its first power plant to use liquefied petroleum gas (LPG) in late September.
The power plant, which would be a pilot project for the use of LPG to generate power, is located in Jambi and has a capacity of 6 MW, Ali was quoted as saying by detik.com news portal.
The power plant previously used diesel fuel and has been modified to accommodate pressurized LPG. Some 30 tons of pressurized LPG per day will be provided by Medco from its Kanji field in South Sumatra.
PLN planned to convert four power plants -- Tambak Lorok, Sunyaragi, Siantan, and Sei Kledang -- to use LPG in the first phase of its fuel diversification project. It is still unclear, however, from where the company will get 2,350 tons of LPG per day to generate a total of 361 MW of electricity.
Combined-cycle power plants like Tambak Lorok, Sunyaragi, and Siantan can operate on natural gas, but are forced to use petroleum fuel as the gas supply is not available yet.
Several analysts have questioned the use of LPG to generate power, as PLN will have to build regasification terminals near the plants. Such a scheme will prove to be cost-ineffective as the terminals will be of no use once natural gas starts flowing.