Oil and gas producers need 3 years for adjustment

Oil and gas industry will need up to three years to adjust to the new environmental law, upstream regulator BPMigas said.

The 2009 Environmental Law stipulates strict environmental standards which include several requirements such as the maximum temperature and degree of impurities in liquid waste.

“We need to find new equipment and technology to adjust to these environmental standards. This will require between two to three years,” BPMigas chairman R. Priyono said over the weekend.

The environmental law took effect since October last year. The implementing regulations giving details on the environmental standards will reportedly be issued by April this year.

Priyono said the law would also impact upon major oil and gas projects in Indonesia. He cited the example of the regulation requiring companies to lower the temperature of liquid waste from 45 degrees Celcius to 40 degrees Celcius, which will have a major impact on the operations of PT Chevron Pacific Indonesia (CPI) in Duri, Sumatra.

“CPI uses massive steam flood. It needs to boil water to produce the steam. If the waste water temperature is too restrictive, then the steam cannot [easily] be produced and used,” he said.

Another example is the Conoco Phillips operation in Belanak field, Natuna. Priyono said the field’s crude contains a high degree of mercury and limiting the average mercury concentration at 40 parts per million (ppm), as required by the law, will require the company to redesign its facility.

“The crude refinery is not available in Indonesia. It’s available among other options in Thailand. If the standards are implemented, the field’s production will decrease by between 28,000 to 40,000 barrels oil per day [bopd],” Priyono said.

Decreasing production due to the new law has been signaled by several other oil and gas contractors earlier. CPI said its production might drop by 248,000 bopd.

PT Pertamina EP, a subsidiary of state oil and gas company PT Pertamina, said its production might drop by 61,000 bopd.

Priyono said the national production would decrease by about 50 percent of total production. The state budget set national oil production at 965,000 barrels per day (bpd). But as of March this year, total oil production had only reached 954,000 bpd.