CBM Asia Plans to Commercialize Resource in Kutai West PSC in Kalimantan
The 10-MW power station would employ an array of 1- to 5-MW reciprocating engines; hundreds of such installations already are in operation throughout Indonesia. The power station would be independently owned and operated, with no capital required from CBM Asia. Drilling and completing the wells would require about two months, plus an additional 4 months to install and commission the power plant. An updated engineering audit would be conducted to certify proved and probable reserves, with an excellent chance of qualifying the project for low-cost Phase 2 project financing.
Phase 2: Following success in Phase 1 and the approval of the Phase 2 POD, CBM Asia and its partners would utilize 2 rigs to drill an additional 25 wells (30 total) over a 7-month period. The increased production initially would supply the power station. Pending successful conclusion of a sales agreement, a 12-inch,12.4-mile (20-kilometer) pipeline would be constructed to the Badak compressor station by a third party under BOO basis and funded via an estimated $0.50/Mcf transport tariff. Total capex for phase 2 is estimated at $36.3 million with CBM Asia’s share of costs estimated at $8.0 million. Production estimated at 12.5 MMcf/d (gross) would be sold into the Bontang LNG export network at approximately $8/Mcf or more. Note that Bontang is the world’s second largest LNG plant (22.5 million tons per annum or mtpa), shipping primarily to Japan, but local conventional gas supplies are in decline and the facility is currently operating at less than 60 percent of capacity.
“The Kutai West and Sekayu PSC’s both have substantial engineered resources for commercialization, but Kutai West is most viable for near-term commercial development” noted President and CEO Charles Bloomquist. “We are focusing our efforts on achieving commercial production and gas sales at the block as soon as possible, likely before the end of 2014. We estimate that with completion of the Phase 2 development CBM Asia will be operational cash flow positive. Jointly with its partners the Company has developed a technical plan and budget for the Kutai West commercial development and will post details in a new presentation on its website in the coming days.”
*NI 51-101 compliant resource audit conducted by NSAI
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