Planned Increase in Cepu Block"s Production Hindered by Environmental

The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) has yet to approve plans to increase oil production in the Cepu Block, Bojonegoro, East Java because the oil and gas contractors must ascertain the environmental impact of these activities.

Head of Public Relations of SKK Migas Taslim Z. Yunus said the production facility in the Cepu Block was only designed for a capacity of 185,000 barrels per day (bpd). If production is to be increased beyond capacity, an Environmental Impact Assessment (EIA) is required. "We need to get permission from the Ministry of the Environment and Forests," he told Katadata Wednesday (1/6). (Read: SKK Migas Relies on Cepu Block to Achieve 2016 Lifting Target)

The management of Pertamina EP Cepu admitted that one obstacle to increasing the production of the Cepu Block is the EIA permit. Director of Pertamina EP Cepu Adriansyah said that the production limit of the Cepu Block under the current EIA is 165,000 bpd.

Currently, ExxonMobil as the operator of the Cepu Block is in the process of applying for a permit to increase production to 200,000 bpd. "SKK Migas has agreed in principle, but a more detailed study and proposal are needed," said Adriansyah.

Pertamina EP Cepu is one of the contractors that has a 45% participating interest in the Cepu Block. The operator of the block is ExxonMobil Cepu Limited, which also has a 45% participating interest. The remaining 10 percent share is owned by the four regional-owned enterprises: Blora Patragas Hulu, Petrogas Jatim Utama Cendana, Asri Dharma Sejahtera and Sarana Patra Hulu Cepu. 

According to Adriansyah, SKK Migas need to be concerned if the block’s production rose to 200,000 bpd, even though maximum production capacity is only 185,000 bpd because minor modifications would be made to the production facilities to maximise production. (Read: Low Oil Prices, Exxon Focuses on Working On Cepu Block)

Another argument for increasing production is that the block contains more reserves than initially thought. Thus, an increase in production will not result in the rapid depletion of oil reserves in the Banyu Urip Field in the Cepu Block.

In the block’s plan of the development plan (PoD), reserves in the Cepu Block were estimated to be around 450 million metric barrels of oil (mmbo). "After drilling, reserves could have increased 50 percent on the initial estimate. But this still needs to be confirmed," said Adriansyah.

Earlier, Deputy Chief of SKK Migas M.I. Zikrullah expressed his concern that and increase in production would quickly deplete the block’s reserves, despite ExxonMobil’s claim that the reserves in Banyu Urip Field have increased 60 percent. Also, the blocks production facility is not designed to produce 200,000 barrels per day. "If we increase production, the oil reserves would be quickly exhausted," he said. (Read: SKK Migas Concerns Oil Reserves to Quickly Deplete if Cepu Block Production Increases)

Meanwhile, ExxonMobil announced that as of early May, the Cepu Block’s oil production was 185,000 barrels per day (bpd). This exceeded the peak production target of 165,000 bpd contained in the plan of development (PoD) for the Banyu Urip Field, which was approved by the government in 2005.