Technoeconomic analysis of shale gas gross split contract in Naintupo Formation, Tarakan Basin

Abstract

The deficit of natural gas supply and demand could be minimized by discovering new reserves in conventional or unconventional reservoir. Shale gas potential in Indonesia was estimated 574 TCF and Naintupo Formation in Tarakan Basin had 5 TCF of technically recoverable reserve with 35 TCF risked gas-in-place. This study would discuss technoeconomic aspect of shale gas field development in Naintupo Formation, Tarakan Basin using gross split contract scheme. Three flow profiles would be developed by using Arps hyperbolic decline curves, consist of low flow profile with initial production (qi) of 150 mmcf/mo, medium (qi = 250 mmcf/mo) and high flow profile (qi = 350 mmcf/mo). Costs estimation were based on benchmarking cost of developed shale gas field in United States and nearby oil/gas field development in Tarakan Basin. Economic analysis showed that medium and high flow profile gave positive economic indicator marked by positive NPV and IRR>10%. Sensitivity analysis showed that flow profile gave more effect in NPV and IRR increased than the gas price. In order to develop positive NPV with discount rate of 10%, it is required to sell shale gas at $6.52/MMBTU in high flow profile or $8.42/MMBTU in medium flow profile.