Exxon Mobil Corp. is looking to ramp up oil production from Cepu, the largest oil-producing block in Indonesia, to 225,000 barrels per day (bbl/d) by early next year with a new asset called the Kedung Keris oil field.

Erwin Maryoto, vice president of public and government affairs for ExxonMobil Indonesia, said the Kedung Keris Field is being developed as a tie-in to the producing Banyu Urip Field in the Cepu concession in the Indonesian province of East Java.

“Oil from the Kedung Keris Field will be sent to the Banyu Urip Field to be processed before being sent to the FSO [floating storage and offloading] Gagak Rimang,” he said early this week.

The official said the new oil field could start operations by the end of 2019.

Exxon Mobil last year launched a US$100 million development plan for Kedung Keris Field, located 14 km (8.69 miles) from the producing Banyu Urip Field. The plan includes drilling a development well and constructing well pads, a 16-km (9.94-mile) pipeline and associated facilities.

The new field is designed to produce 10,000 barrels of crude per day (bbl/d) but initial production will be about 5,000 bbl/d due to the limited processing capacity at the nearby Banyu Urip central processing facility (CPF).

The initial barrels are expected to increase oil production from the country’s largest oil-producing concession, Cepu, from 220,000 bbl/d to 225,000 bbl/d from early next year. 

The Kedung Keris Field, discovered in 2016, is estimated to have reserves of 20 million barrels of crude oil.

During exploration, the Kedung Keris-1 well, drilled to a depth of 2,143 m (7,032 ft), encountered an oil layer of 171 m (561 ft) in the targeted carbonate zone. It was discovered in 2001.

The operator has already launched works to modify the Banyu Urip CPF to receive produced oil from the new field via onshore pipeline.

A high rate test (HRT) is being conducted to assess the maximum processing capacity of the existing CPF, which is designed to refine up to 185,000 bbl/d of crude.

Exxon Mobil is also weighing an option to build additional processing capacity if the existing CPF has limitations. Development of additional capacity, however, will require a new environmental impact analysis and approval from the environment ministry.

The CPF, situated about 10 km (6.21 miles) southeast of Cepu and 20 km (12.4 miles) southwest of Bojonegoro in the center of the oil field, will process and treat the crude oil produced.

Processed oil from the CPF will be transported through a 20-in. insulated buried pipeline to the coast at Tuban. From there, it will move through a subsea pipeline to an FSO facility. Oil transportation tankers will load crude oil from the FSO for the local and world markets.

The units were developed to process and transport oil from the nearby Banyu Urip Field, which currently pumps about 220,000 bbl/d from 30 wells.

Banyu Urip, according to SKK Migas, produced 220,000 bbl/d of crude oil between January-June 2019, above the target of 216,000 bbl/d.

The field also produces natural gas, but in limited quantities. The gas is used to fuel power stations in the project area.

Crude oil from Banyu Urip is considered to be light to medium waxy with very low sulfur content that will yield good output of diesel, kerosene and vacuum gas oil, which is used to make gasoline.

Banyu Urip produces about 20% of the country’s crude oil output, making it the largest oil producer in Indonesia.

In addition, the onshore Cepu concession has several significant oil and gas discoveries which include Jambaran-Tiung Biru, Kedung Keris, Alas Tua East and Alas Tua West. It is estimated to have reserves of 709 billion barrels. Recoverable resources from concession are estimated at more than 450 million barrels. 

The Indonesian government has identified the Cepu Block as one of 13 priority projects to boost oil and gas production in the country. Energy and Mineral Resources Minister Ignatius Jonan said he expects oil production at the Banyu Urip Field to rise to 300,000 bbl/d.

He also stated that the output from the Cepu Block is crucial to Indonesia’s long-term efforts to meet rising domestic demand and help compensate for falling production from aging fields. 

Indonesia, a self-sufficient nation in oil and gas until a few years ago, has been struggling to halt declining output. Local oil fields produce about 820,000 bbl/d against the demand of more than 1 million bbl/d. Current production is about half the country’s peak production in the mid-1990s.

Oil production from Cepu fields will help Indonesia meet a goal to produce some 835,000 bbl/d this year, up from output of less than 800,000 bbl/d in 2018. 

ExxonMobil Cepu Ltd. is the operator with 45% participating interest in a production-sharing contract for the Cepu Block that is valid till 2035. Pertamina and a group of local government agencies own 45% and 10%, respectively.

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