Abstract

The Tangguh Liquefied Natural Gas Project, located in the frontier area of Papua, Indonesia, will be the country's third LNG production center. Generally, LNG requires both long-term supply agreements and significant capital investment, so a large, high-quality gas resource is needed to justify development.

To prove that such a gas resource exists, the operator has to conduct a thorough appraisal of gas discoveries. For the Tangguh project in the mid-1990's an independent consultant was employed to certify reserves. This paper describes the process by which Tangguh LNG's gas resource was discovered, appraised and certified over a four-year period in order to meet a mid-1998 marketing objective.

Tangguh LNG's gas resource, spanning three blocks and comprising six offshore and onshore gas fields, was appraised and certified in July 1998 with proved reserves of 14.4 trillion standard cubic feet and total reserve potential approaching 24 tscf. This was accomplished at a cost of roughly $0.16 per boe and communication with the independent certification consultant played an important role in developing cost-effective appraisal strategies.

Following thorough appraisal, proved reserves in the primary, high-quality Middle Jurassic reservoir were 77% of the total possible reserves, while proved reserves in the more complex, lesser-quality Palaeocene reservoir were 30% of total possible reserves. During the four-year program, the reserve growth strategy switched from more certain but increasingly difficult and costly appraisal, to more risky but potentially faster and less-costly exploration (with appraisal given success) highlighting the value of having exploration alternatives available in a program of this magnitude.