Overlooked Challenges in Indonesian Geothermal Development

1. Overlooked Challenges in Indonesian Geothermal Development PT Supreme Energy June 5, 2014 IIGCE 2014 Jakarta Convention Center

2. The concessions are along the Great Sumatra Fault (GSF)

3. PT Supreme Energy Muara Laboh PPA signing March 2, 2012 • PPA for Muara Laboh and Rajabasa were signed on March 2, 2012 with electricity tariff of : • Muara Laboh : US$ 0.094 per kWh • Rajabasa : US$ 0.095 per kWh

4. Muara Laboh Project Construction of 14 km access road

5. Muara Laboh Project Preparation of drilling camp, Explosive bunker and Pipe casing storage

6. Muara Laboh Project Construction of Access road to the first Well Pad

7. Muara Laboh Project Drilling starts on September 2012

8. Geothermal system was foundin Muara Laboh, West Sumatra

9. 6(six) wells exploration program completed with resource found around 60 to 95 MW

10. The concessions are along the Great Sumatra Fault (GSF)

11. PT Supreme Energy Rantau Dedap PPA signing November 12, 2012 PPA for Rantau Dedap was signed on November 12, 2012 with electricity tarif of US$ 0.0886 per kWh

12. Construction of about 34 km of access roads

13. A road bridge has to be built across major river Endikat River Ford

14. Stone bridge is built across major ravine -Mechanically stabilized earth (MSE) Wall

15. Extensive earth work were performed to build an MSE Wall

16. 2(two) Stone bridges across ravines were built to reach the first well pad ` ~23m river After Before

17. Spud date for first well drilling commenced on February 3, 2014

18. Drilling of 2(two) wells have been completed with 5(five) to 7(seven) wells exploration program

19. The concessions are along the Great Sumatra Fault (GSF)

20. Forestry permit issued on April 2014 in conjunction with forest for community program 19

21. Overlooked challenges in developing Geothermal Power plants in Indonesia Standard challenges • Electricity tariff – New tariff • Government guarantee (BVGL) – MOF Template developed • Forestry permit – New Geothermal Law • Land Acquisition - • Community issues - Overlooked challenges • Project Management capability for infrastructure development • Other Permits and Licenses • Subsurface engineering capabilities • Sufficient capital for exploration (Equity) Develop harmonious relation with all local stakeholders (formal & informal leaders, Directly Affected Villagers) and work closely with security apparatus to utilize “soft power” 20

22. Finding hot temperature system is related to well pad location Fumaroles H2O,CO2,H2S +2 In many cases, higher elevation has better chance compared to low elevation Acid – SO4, Pools Typical High Grade Na–HCO3– SO4, Springs Steaming Ground +1 Typical Marginal NaCl Springs condensation Cap Rock vapor zone SL 200 oC 250 oC km dilution -1 Lateral outflow of NaCl brine 300 oC meteoric recharge -2 upflow + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + -3 -4 Magma Source H2O,CO2,SO2, HCl Volcanic Arc Geothermal System

23. Making access roads to reach high elevation pads is a civil engineering challenge

24. Crossing ravines and valleys in remote jungles needs special engineering and construction feat Typical Mechanically Stabilized Earth (MSE) wall to cross deep ravines

25. Near Geothermal system, there are possibilities of soft soil condition (Geothermally altered clay) Various technology to improve soil condition needs to be implemented such as the use of Geogrid, Geotextile, Lime stabilizer, Clean set cements

26. Building infrastructure for exploration program needs experienced project management capabilities

27. Overlooked challenges in developing Geothermal Power plants in Indonesia Standard challenges • Electricity tariff – New tariff • Government guarantee (BVGL) – MOF Template developed • Forestry permit – New Geothermal Law • Land Acquisition - • Community issues - Overlooked challenges • Project Management capability for infrastructure development • Other Permits and Licenses • Subsurface engineering capabilities • Sufficient capital for exploration (Equity) Develop harmonious relation with all local stakeholders (formal & informal leaders, Directly Affected Villagers) and work closely with security apparatus to utilize “soft power” 26

28. Number of Permits and Licenses for a Geothermal investment • General corporate : 14 • Operational : 15 • Land related : 3 • Environmental related : 6 • Manpower related : 6 • Safety related : 12 Total : 56

29. Current environmental regulation implements similar treatment as Oil & Gas drilling cuttings Burn Need coordination help between between Ministry of Energy and Mineral resources (Director General of EBTKE) with Ministry of Environment to differentiate between Oil & Gas drilling cuttings and Geothermal drilling cuttings

30. The needs of EBTKE certification for ALL earth moving equipment To develop exploration drilling infrastructure needs about 50 to 70 Earth moving equipment. Each equipment currently has to be certified by Director General of EBTKE. Crane, Drilling rig and equipment certification are accepted but earth moving equipment needs reconsideration on the necessity of certification

31. Overlooked challenges in developing Geothermal Power plants in Indonesia Standard challenges • Electricity tariff – New tariff • Government guarantee (BVGL) – MOF Template developed • Forestry permit – New Geothermal Law • Land Acquisition - • Community issues - Overlooked challenges • Project Management capability for infrastructure development • Other Permits and Licenses • Subsurface engineering capabilities • Sufficient capital for exploration (Equity) Develop harmonious relation with all local stakeholders (formal & informal leaders, Directly Affected Villagers) and work closely with security apparatus to utilize “soft power” 30

32. Requirement for Subsurface and drilling engineers in a Geothermal development Requirement for 1(one) exploration area for 24-hour continous drilling campaign : • Geologist, Geochemist, Geophysicist – 3 to 5 engineers • Numerical Modeler – 1 to 2 modeler • Well testing engineers – 2 to 3 engineers • Drilling managers & engineers – 3 to 5 engineers Experienced engineers salary : • Subsurface engineers – US $ 5.000 to US $ 15.000 per month with transfer fee amounting to US $ 100.000 • Drilling engineers – US $ 20.000 to US $ 25.000 per month Limited engineers resulting in hijacking of employees

33. Cooperation between Government, Industry, and University • Develop of a geothermal education capacity expansion roadmap • Provide grants for Masters and PhD Students • Conduct field trips • Offer “Distance Learning Courses” • Conduct monthly seminars on Geothermal energy • Develop short courses and workshops • Establish a technical program exchange 

34. Proposed future cooperation program • Generic engineers accelerated program (max 1 year) - for 1 to 5 years experienced engineers - Geologist, Numerical modeler, Well testing engineers, Drilling engineers • Specialist engineers accelerated program (max 2 years) - for 5 to 10 years experienced engineers - Geophysicist, Geologist, Geochemist, Numerical modeler

35. Overlooked challenges in developing Geothermal Power plants in Indonesia Standard challenges • Electricity tariff – New tariff • Government guarantee (BVGL) – MOF Template developed • Forestry permit – New Geothermal Law • Land Acquisition - • Community issues - Overlooked challenges • Project Management capability for infrastructure development • Other Permits and Licenses • Subsurface engineering capabilities • Sufficient capital for exploration (Equity) Develop harmonious relation with all local stakeholders (formal & informal leaders, Directly Affected Villagers) and work closely with security apparatus to utilize “soft power” 34

36. Histogram of capacities of worldwide productive wells from 869 wells – GeothermEx data Better economics

37. Kamojang Field, West Java, Indonesia (after Sanyal and Morrow, 2011)

38. Required equity for Geothermal explorationis about US $ 1 million per MW target • For 60 MW Power plant Project financing : • Lender would need at least 50 % steam at well head • 30 MW steam means about 6(six) wells each at 5 MW • Exploration drilling for 6 wells x US $ 7 million $ 42 million • Civil infrastructure cost $ 20 million • Drilling casings, Master valves, Pump and Pipings $ 5 million • Required equity at least US $ 70 million

39. Clean Technology Fund Solutionto be implemented for Rantau Dedap US $ 50 million

40. Summary of challengesRecent solutions and also Proposed solutions Standard challenges • Electricity tariff – New tariff • Government guarantee (BVGL) – MOF Template developed • Forestry permit – New Geothermal Law • Land Acquisition - • Community issues - Overlooked challenges • Project Management capability for infrastructure development – Prepare and recruit experienced Project management team • Other Permits and Licenses – Simplify un-necessary permits • Subsurface engineering capabilities – Accelerated education • Sufficient capital for exploration (Equity) – CTF fund Develop harmonious relation with all local stakeholders (formal & informal leaders, Directly Affected Villagers) and work closely with security apparatus to utilize “soft power” 39

41. Thank you for your attention