Volcanic benefits
Volcanic benefits
The Nov. 22 eruption of the Merapi volcano near Yogyakarta
that killed more than 50 people reminded us of the potential for
disaster in the 127 volcanoes that ring our country. Indeed, the
nature of Indonesia's geology is such that the country is often
dubbed a ring of fire.
On the positive side, however, it is the large andesitic
volcanic cones that generate huge geothermal resources, which
will produce power to fuel the country's economic growth.
It might simply be a coincidence that only a few weeks after
we were shocked by the horror that a volcano could cause, two new
geothermal power stations in West Java will be dedicated on
Thursday, and four contracts were signed early this month for the
exploration and development of geothermal resources in West Java
and Central Java.
The contracts involving Pertamina, the State Electricity
Company and Indonesian-American joint ventures will eventually
bring in total investments of more than US$3 billion and produce
an additional power generating capacity of about 1,400 megawatts.
Even though the full benefits of the deals will be felt only
within the next seven to eight years, the projects are surely a
greatly welcomed development at a time when the doomsday scenario
for the country's oil resources, which now supply more than 70
percent of its commercial power, seems to be coming closer and
closer to reality. Almost all analysts predict that Indonesia
could become a net oil importer by the year 2010 at the latest.
That grim scenario is of course based on the assumptions that the
oil consumption will continue to grow by six percent a year and
that no new significant oil reserves will be discovered.
The additional power from the four geothermal power plant
projects will surely help delay the predicted "oil doomsday".
Since one megawatt to be generated by the geothermal power
projects will save the equivalent of 12,775 barrels a year, the
four projects will thus be able to save around 17.8 million bbl a
year worth US$303 million at the current average price.
The conclusion of the four contracts is expected to attract
more foreign investors to tap more geothermal resources in Java,
Bali, Sumatra and Sulawesi. Pertamina and the geology department
have thus far identified more than 8,000 MW of possible, probable
and proven geothermal resources on the four islands. Now that the
standards of contracts have been established, negotiations with
new investors are expected to be much more expedient.
Contractual terms have thus far been the main barriers to the
harnessing of the geothermal resources, which actually started in
1982 with the startup of a 30-MW plant at Kamojang in West Java.
Two contracts were awarded in 1982 and 1984 to Union Oil Co. and
Amoseas for geothermal resource development, also in West Java.
But it took about 10 years before the four new contracts were
concluded. Today, only about 300 MW of the resources have been
developed, including the two new plants which will be dedicated
by President Soeharto.
The latest deals also have produced a new, better concept.
Different from the 1982 and 1984 contracts that required the
State Electricity Company to build the power plants because the
foreign contractors are responsible only to supply the steam, the
new contracts call for the contractors to bear all the costs of
geothermal development and power stations. This new arrangement
should speed up the development of geothermal power resources.
There are more benefits from the harnessing of geothermal
resources. Since geothermal resources are usually located in
rural areas their development also will contribute greatly to
rural development. Moreover, geothermal steam can be used not
only to generate power, but also for heating rooms for drying
agricultural produce and fishery products. So all in all, the
special nature of the geology of our country, with its extensive
chain of volcanoes, does not only spell potential danger. It also
provides us with an alternative source of large amounts of
commercial energy.