Work on Banyu Urip Development in East Java's Cepu Block is 87% Complete

Development work on the Banyu Urip oil and gas project in Bojonegoro, Cepu Block, East Java, Indonesia, is 87 percent complete as of the third week of April, according to a recent report by Indonesia's upstream oil and gas regulator SKK Migas.

“The increase in stages [for the Banyu Urip project] will be made until achieving the peak of production of 165,000 barrels per day in 2015,” J. Widjonarko, acting chairman of SKK Migas said at a presentation in Bojonegro attended by Indonesia's Vice President Boediono April 24.

So far, the Banyu Urip project, operated by ExxonMobil's subsidiary Mobil Cepu Ltd. (MCL), has cumulatively produced 38 million barrels of oil, equivalent to $3.47 billion, since an early production facility begun operations in August 2009. Oil production from the Banyu Urip development is now at 29,000 barrels of oil per day, with output scheduled to rise by 10,000 barrels per day in September 2014 due to the addition of early production facility.

Under the plan of development, SKK Migas indicated that the investment cost of the Banyu Urip Project is $2.525 billion, comprising $2.188 billion for construction facilities and $337 million for well drilling.

Construction of the facilities, which is split into five engineering, procurement, and construction (EPC) contracts comprising Central Production Facility (CPF), 44.7 miles (72 kilometers) onshore pipe, offshore pipe and mooring tower, Floating Storage Off-loading (FSO), and infrastructure facilities, are progressing as planned. Meanwhile, drilling activities were carried out at 49 wells, including 33 oil production wells and 16 injection wells.

“The drilling activities took place faster than the schedule,” Widjonarko said.

MCL holds 45 percent participating interest in the block, while Indonesia's national oil and gas firm PT Pertamina's subsidiary Pertamina EP Cepu owns 45 percent, with the remaining 10 percent held by Badan Kerja Sama Blok Cepu.