Indonesia itself isn’t very rich in the oil & gas resource and reserves. But fortunately, most service companies are open and is global. Schlumberger, British Petroleum, and Total are some examples of this.
Generally speaking, upstream companies can be divided into 2: operating companies and service companies. Operating companies are essentially the manager who arranges and makes the deal before exploitation is done. Meanwhile, the service companies provide the equipments and workers to conduct the exploitation. Some may prefer operating companies because they don’t directly work on the field. Service companies often take the blame on problems throughout the exploitation process. Some well-known service companies are Halliburton and Schlumberger.
Upstream & Downstream: Upstream industry involves the exploration and exploitation of oil and gas. Downstream, on the other hand, is all about refining.
Indonesia is known for its richness in many natural resources, including oil and gas. But in reality, oil is not very abundant in Indonesia, compared to America and Middle East countries. Indonesia is rich in gas. Three biggest gas-producing basins in Indonesia are the West Natuna Basin, the Mahakam River Basin, and the Northeast Java Basin. While for oil, the Central Sumatra Basin produces the most oil.
Not all basins can have their oils extracted, depending on the crude oil. Northeast Java basin is an example. Also, not all hydrocarbons found in basins are filled with oil or gas. It depends on the type of fossils accumulated. Indonesia is actually rich in gases compared to oils. But oil can be found abundant in Central Sumatra, for example in the Minas Oilfield.
Reserves (Upstream): Before begins an exploration after a source is found, economic considerations must be done. It includes the volume of the reserve, the maturity of the oil, the cost of production, and of course the profit. If it is decided that production is to be carried out, tender with the government and its regulations is done.
One drilling operation can cost up to 1 million dollars. In the oil & gas industry, the average possibility of obtaining petroleum is 3 out of 10. Given these conditions, when the oil price is low, local companies tend to shut down their operations because the cost gets higher than the profit. This is why our country chooses to import oil. Only when the price of oil gets higher do companies seek out workers to run their operations.
Petroleum System: The petroleum system consists of 3 important processes: migration (the movement of hydrocarbons to a reservoir), accumulation (the collection of hydrocarbons in a reservoir), and generation (the maturation of the hydrocarbons). These 3 processes also need 5 basic elements to form oil and gas, which are source rock, reservoir rock, seal/cap rock, trapping, and migration pathway. All of these things must be considered for operations. For example, the existence of the seal. Shale oil is a solution to this because it doesn’t need a petroleum system to form. In America, many other unconventional energy reserves are said to be plenty.
Source Rock Concept: After oil has been drilled, chemists analyze this sample oil to know its level of maturity (whether it’s mature enough, immature or too mature) and to determine its kerogen type. The result of this analysis is used to figure out the quality of the oil and what the oil can be developed into (e.g. solar, fuel with what octane number). Again, the type of organic matters determines the content of a reservoir. If algae are generated, it commonly makes oil reservoir. Mollusca and microscopic plant remains create gas reservoirs. While a combination of various organisms makes a reservoir that contains both oil and gas.
Reservoir Porosity and Permeability: Reservoir in the system is the collecting area of the oil. Seal covers close the reservoir and the oil inside it. Porosity is a measure of how much capacity of fluid a rock can store. Therefore, reservoirs have to be porous. Meanwhile, seals must not be porous so that the oil does not escape. Porosity is also affected by the packing of spheres and the variance of grain size. The Middle East is relatively rich in oil because it is mostly made up of deserts with grains of the same size. The porosity of reservoirs in the Middle East can reach 40%.
Porosity can be divided into 2: effective porosity and ineffective porosity. Ineffective porosity occurs when grains are cemented together through chemical processes and thus, cannot allow oil to pass through them.
Drilling Operation: The drilling operation has been designed for safety. The drill bit is equipped with casing and there will be drilling mud to aid the direction of the drilling. There are tens of drilling mud types and it will be determined depending on the lithology. But if the casing covering the reservoir is not strong enough to hold the force of the drill, there will be leakage. Blowout prevention (BOP) is also done for this with risk factor measurement.
Earth Structure: The earth consists of 3 main layers: the core, mantle, and crust. The core is divided into inner and outer. Mantle is the vast layer. But in the petroleum industry, only the crust is to be considered. Because until now, most drilling only reach the crust of our earth. The crust itself is divided into continental and oceanic. Indonesia itself is very complex in its tectonic structure. In fact, many foreign scientists are highly interested in Indonesia’s geology because both the Weber and Wallace lines pass through Indonesia. With its complex geology, Indonesia also has a 40% potential for geothermal energy but has only used 2%.