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Sarulla project about to start drilling in coming days

Sarulla project about to start drilling in coming days Jakarta, Indonesia (source: flckr/ fidzonflickr, creative commons)
Francisco Rojas 27 Aug 2014

According to Energy and Mineral Resources Ministry’s renewable energy director general, Rida Mulyana the drilling process would start on September the 15th and a second one on September the 20th.

The giant geothermal power plant project, Sarulla, located in North Tapanuli, North Sumatra, would begin its well-drilling operations later this month, according to the Energy and Mineral Resources Ministry’s renewable energy director general, Rida Mulyana.

“The first spudding in will be performed on Sept. 15 and the second on Sept. 20. We are waking up a sleeping giant. The project has been idle for 23 years and this is a good start,” Rida said.

The development plan for the Sarulla 3 x 110 MW plant was initiated in 1990. Following the 1998 economic crisis that hit the country, the project was abandoned. The government tried to resume the project in the early 2000s, but no deals were ever reached.

In 2007, a deal was reached resulting in the project now being developed by a consortium named Sarulla Operations Ltd., consisting of PT Medco Power, Itochu Corp., Kyushu Electric Power Co. and American company Ormat International Inc. The Sarulla project is estimated to be worth US$1.5 billion.

Sarulla’s first phase of development of 110 MW is expected to be completed by the middle of 2016.

This year, two wells will be drilled, Medco Power president director Fazil Alfitri said.

“We will need to drill 30 wells in total. As many as 13 of them have been drilled before [by previous developers]. Most of the 13 wells are for the first phase of development,” Fazil said.

Given its geographical position on the so-called Ring of Fire — a series of fault lines and volcanoes encircling the Pacific Basin — Indonesia is estimated to have abundant geothermal potential resources of up to 29,000 MW. The government is also trying to encourage renewable energy potential, as part of attempts to reduce the country’s dependency on fossil fuel.

However, development of geothermal plants is a sensitive issue, particularly in relation to environmental concerns. Most geothermal resources lie in protected mountain and forest areas, where mining activities are not allowed.

As of yesterday, the government has approved a new bill on geothermal development in which geothermal activities would no longer be included as mining activities, so that such works could be carried out in the areas.

Apart from the environmental issue, pricing and financing issues have also put several geothermal plants on hold. Recently, the Energy and Mineral Resources Ministry issued a new regulation regarding the use of a price ceiling for new geothermal projects, ranging from 11.8 US cents to 29.6 US cents, as part of attempts to make the industry more attractive. Under the regulation, the price ceiling would be applicable to new projects while existing development could also have adjustments with certain requirements.

Source: Jakarta Post Website