Tarakan’s Oil Wells Set for Revival to Boost Production

The Jakarta Globe, June 13, 2013.


Tarakan. Officials in the North Kalimantan city of Tarakan have announced a plan to revive 47 oil wells out of the more than 1,300 disused wells scattered throughout the region.
Budi Setiawan, the head of the municipal forestry, mines and energy agency, said on Wednesday that the wells slated for revival were the only ones that Pertamina, the state oil and gas company, would allow the city to operate.
“These are wells that haven’t operated since 1970 and that now fall outside the existing work area of oil contractors,” Budi said.
He added that as part of the requirement for being allowed to revive these wells, the city administration would have to set up a city-run company in joint venture with a private operator.
Budi said several private companies had already expressed their interest in investing in the project.
“They’re very drawn to this venture because getting the permits for these disused wells is much easier [than applying for new production permits],” he said.
“Once the city has decided on an investment partner, we’ll file for a permit from the Directorate General of Oil and Gas. In the meantime, we’ll also keep trying to get permission to revive the remaining old oil wells in the city.”
There are 1,346 abandoned wells in Tarakan, once the heart of the country’s oil industry.
Pertamina has only 80 wells in the city that still produce oil, with output at around 700 barrels per day and falling.
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The company said at the end of last year that output typically dropped by around 20 to 30 percent after the first year of production, and that plans to revive other wells were thwarted by the fact that most of them now stood in the middle of residential areas.

As Tarakan boomed during the heady oil days of the early and mid-20th century, little thought was given to urban planning, and the growing population built homes wherever free space was available, resulting in 60 percent of all oil wells there now located in residential areas.

The move to revive some of the old wells comes amid a wider push to maximize onshore oil production in light of high offshore exploration costs.

SKKMigas, the government’s upstream oil and gas regulator, says offshore investment costs range from $100 million to $300 million per block, while for onshore blocks it is between $20 million and $80 million
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