Government Prepares Regulation On Shale Gas


Kompas | February 7, 2012


JAKARTA: The government is preparing regulations on shale gas, an unconventional gas source whose development will be similar to coal bed methane.

The energy ministry has prepared a draft and expect to issue the special regulation this year, said Director  General of Oil and Gas Evita Herawati Legowo.

“We already have a draft. Hopefully the regulation will be finished this year. We’re adopting what we’ve done in coal bed methane [CBM],” she said yesterday.The government initially targeted to complete the regulation on shale gas in 2011.

The government started the pilot project for coal bed methane in 2004.

Two years later, the regulation on CBM was issued and the first production sharing contract (PSC) was signed in 2008.

Shale gas is gas that is trapped within shale formations and is considered an unconventional gas – the types outside natural gas -- along with tight gas, biogenic gas and CBM..

Shale gas – usually found in shallow rock – is extracted by cracking the host rock, which is possible with current advances in technology.

The government has identified shale gas potential in Indonesia in three basins in Sumatra, two basins in Java, two basins in Kalimantan and in Papua.

Aside from preparing the regulation, the government will conduct at least one joint study on shale gas, Evita said.

“About 15 companies have offered to conduct joint studies on shale gas in Indonesia. One of them is Exxon, which will form a consortium.”

A joint study usually takes 6 months, she said. After the joint study, the government will see whether the working area can be tendered out directly or if there needs to be a pilot project first.

Developed by US

Shale gas has been developed by the US for a long time. The US managed to start exporting natural gas within a decade by implementing modern technology to exploit unconventional gas, including shale gas.

Indonesia and the US will exchange information and experiences on the development of unconventional gas, including price, environment protection and regulations.

“The government is serious in developing unconventional gas by not limiting the cost recovery for shale gas,” said Evita.

US companies are interested to invest and cooperate with Indonesia to develop existing energy sources, including shale gas, said the country’s Assistant Secretary for Policy and International Affairs at the Energy Department David Sandalow.

“The development of shale gas took years, now we can produce shale gas faster,” he said at the sidelines of the second US-Indonesia energy investment roundtable on unconventional gas yesterday.