First Open Pit Oil Mining in Indonesia

MINISTRY OF ENERGY AND MINERAL RESOURCES

REPUBLIC OF INDONESIA

PRESS RELEASE

NUMBER: 250.Pers/04/SJI/2020

First Open Pit Oil Mining in Indonesia

Ministry of Energy and Mineral Resources (EMR), through its Public Service Agency (BLU) PPPTMGB "LEMIGAS" of the EMR Research and Development Agency (Balitbang ESDM) and PT Medco E&P Indonesia are conducting an "Open Pit Oil Mining Pilot Project" at PT Medco E&P Indonesia's Work Area in Tanjung Laut Village, Suak Tapeh Sub-regency, Banyuasin Regency, South Sumatra Province.

The open pit trial is carried out to discover the volume of oil that can be extracted, environmental mitigation that must be conducted, and the economies of scale as the basis to decide the next steps. The open pit oil mining is the first in Indonesia, but it's been commercially applied in Canada.

Coordinator of Research and Development Executing Group (KP3) for Exploitation Technologies of PPPTMGB "LEMIGAS" Usman Pasarai explained that the pilot project is meant to follow up EMR Ministerial Decision Number 111.K/11/MEM/2019, which has assigned PPPTMGB "LEMIGAS" to cooperate with PT Medco E&P Indonesia in carrying out an open pit pilot project for four to six months.

"This pilot project of open pit oil sands mining is a joint effort of Balitbang ESDM and PT Medco E&P Indonesia to find appropriate technological breakthroughs to increase national oil production", added Usman.

LEMIGAS and PT Medco E&P Indonesia have pioneered the open pit mining method at laboratory scale since 2018. The experiment has now moved on to excavation for ore sampling of oil-saturated sandstone. The pilot project is part of the exploration to get the data needed in the feasibility study. Experts at LEMIGAS will test the extracted ores and evaluate the environmental aspects of the excavation operation.

LEMIGAS and PT Medco E&P Indonesia presented the progress of the pilot project to the Banyuasin Regency government on Tuesday (14/7/2020). Banyuasin Regent, Askolani, expressed his appreciation and hoped the pilot project gave positive impacts to his regency.

"We're ready to support the project according to our capacity and authority at the regency government level, in line with President Joko 'Jokowi' Widodo's instruction to simplify and facilitate oil and gas business," Askolani explained.

Askolani requested that people living near the pilot project location support the activities, because the project offers huge opportunities for both the people and the government of Banyuasin Regency.

Operation Manager of PT Medco E&P of South Sumatra Region, Sutami, explained that PT Medco E&P Indonesia and LEMIGAS have carried out various activity stages, from pre-construction such as land acquisition and environment permits, to construction such as land clearing, site preparation, and ore sampling and delivery to lab for recovery factor testing, to land revegetation.

"Dissemination about the open mining pilot project has continued to be carried out, while community participation in the project has been maximized, all with the intention of giving positive socio-economic impacts to the communities", continued Sutami.

The open pit oil mining is carried out according to Regulation of South Sumatra Governor Number 17 of 2005 on Ambient Air Quality Standards and Noise Quality Standards. Management of mine location has been done properly, such as returning the overburden, spreading the topsoil, revegetation of ex-mines with oil-palm trees, rubber plants, and legume tress. Ore sampling of 40 tonnes of oil sands for the open pit oil mining has been completed well, including by obeying the Covid-19 health protocol at the open pit.

The pilot project is carried out because PT Medco E&P Indonesia's Work Area at Iliran High offers potential for heavy oil at a shallow depth. PT Medco E&P Indonesia carried out geological and seismic surveys between 2004 and 2010. In 2011-2014, the company continued its activities with drilling, well testing, exploration, laboratory work, and geological, geophysical, and reservoir study. In 2015-2018, the company made reservoir distribution study, carried out drilling, and experimented with drilling method. At this stage, PT Medco E&P Indonesia consider that drilling method is not an optimum way to produce heavy oil, so oil mining option was immediately selected, and it is initiated with an open pit trial. (IY)

Head of Bureau of Communication, Public Information Services, and Cooperation

Agung Pribadi (08112213555)

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