Massive Cepu block produces first oil

The Jakarta Post, Jakarta | Thu, 12/11/2008 10:44 AM  

The huge Cepu oil and gas block started production on Wednesday, producing around 5,000 barrels of oil, amid concerns it would take longer to reach its peak output as progress on the acquisition of land sites within the block remains slow. 

In these early stages of production, the block's output has reached around 5,600 barrels of oil, with operator Mobil Cepu Ltd (MCL), a local subsidiary of U.S. energy giant ExxonMobil, expecting output to more than triple in six months time. 

"We expect the block to produce up to 20,000 bpd of oil in the first half of 2009," said ExxonMobil Indonesia spokesperson Deva Rachman in an official statement on Wednesday. 

Production start-up is confirmed by state oil and gas firm PT Pertamina, which holds another 50 percent interest in the block which is located on the borders of Central Java and East Java. 

Pertamina said the first oil production come from the Banyu Urip field at the block. 

"The field has started its first oil production today (Wednesday) with a capacity of 5,600 barrels per day (bpd)," said Pertamina processing director Rukmi Hadihartini at a press conference. 

The oil is produced from four wells located on 20 hectares of land within the block. 

The block, discovered in March 2001, is believed to contain reserves of more than 250 million barrels of oil. 

The government has high hopes for the block, which at its peak could produce 165,000 bpd -- or some 15 percent of total national production, to boost national declining output. 

"We hope, production will reach 10,000 bpd next March," said Rukmi. 

Earlier, MCL scheduled the Cepu block to produce up to 100,000 bpd of oil by 2010 and 165,000 bpd by 2012, its vice president, Maman Budiman, said in a Dec. 2 hearing with House of Representatives' Commission VII overseeing energy and mineral resources. 

Lawmakers, however, put the company's schedule into doubt as it has yet to complete the acquisition of 250 hectares of land at Bojonegoro, East Java, where the main production facility for the block will be built. 

The production facility at the already-acquired area of the Banyu Urip field has been built separately from MCL's planned main production facility. 

The block is targeted to reach full production capacity by 2012 by drilling 34 production wells and by using a vast oil transportation network with 95 kilometers of pipelines. (hwa)