49204-001: Pilot Carbon Capture and Storage Activity in the Natural Gas Processing Sector | Asian Development Bank

Indonesia: Pilot Carbon Capture and Storage Activity in the Natural Gas Processing Sector

Sovereign (Public) Project | 49204-001 Status: Proposed

The Pilot Carbon Capture and Storage Activity in the Natural Gas Processing Sector Project will establish and operate facilities to capture and sequester carbon dioxide (CO2) from a natural gas processing plant in Gundih, Central Java, Republic of Indonesia. This includes (i) capturing and preparing CO2, (ii) transporting and injecting CO2 for subsurface sequestration, and (iii) monitoring the injection site to verify permanent sequestration. The project will also develop carbon capture and storage (CCS) regulation for deploying CCS technology in Indonesia. During the 2-year pilot, the project will capture and store 20,000 tons of CO2 and increase awareness of and experience with CCS technology in Indonesia.

Project Details

Project Officer
Cowlin, Shannon C. Southeast Asia Department Request for information
Country
  • Indonesia
Modality
  • Grant
Sector
  • Energy
 
Project Name Pilot Carbon Capture and Storage Activity in the Natural Gas Processing Sector
Project Number 49204-001
Country Indonesia
Project Status Proposed
Project Type / Modality of Assistance Grant
Source of Funding / Amount
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change Governance and capacity development
Knowledge solutions
Partnerships
Private sector development
Sector / Subsector

Energy / Energy efficiency and conservation - Energy sector development and institutional reform

Gender Equity and Mainstreaming No gender elements
Description

The Pilot Carbon Capture and Storage Activity in the Natural Gas Processing Sector Project will establish and operate facilities to capture and sequester carbon dioxide (CO2) from a natural gas processing plant in Gundih, Central Java, Republic of Indonesia. This includes (i) capturing and preparing CO2, (ii) transporting and injecting CO2 for subsurface sequestration, and (iii) monitoring the injection site to verify permanent sequestration. The project will also develop carbon capture and storage (CCS) regulation for deploying CCS technology in Indonesia. During the 2-year pilot, the project will capture and store 20,000 tons of CO2 and increase awareness of and experience with CCS technology in Indonesia.

Indonesia is one of the largest greenhouse gas (GHG) emitters, in absolute and per capita terms. Though its GHG emissions have been largely attributed to land use and land change activities, emissions from Indonesia's energy sector are growing. CO2 emissions from the power sector are expected to increase from 110 million metric tons in 2005 to 750 million metric tons in 2030. Natural gas processing also contributes to Indonesia's GHG emissions, including when CO2 is separated from the gas and then vented, such as is done at the Gundih plant. Indonesia's Intended Nationally Determined Contribution (INDC) submission to the United Nations Framework Convention on Climate Change unconditionally pledged to reduce GHG emissions by 29% by 2030 compared to business as usual. It projects increased energy conservation and use of renewable energy and other technologies to reduce emissions without sacrificing economic growth. The INDC pledged an additional 12% reduction by 2030 conditional upon a global agreement on international assistance including technology transfer, capacity development, and financial assistance.

The energy sector will be crucial to achieve these emission reduction targets. The Ministry of Energy and Mineral Resources (MEMR) has projected 7% annual energy demand growth including a tripling of electricity demand between 2010 and 2030. The current energy mix is highly dominated by oil and coal, which constituted 46% and 31%, respectively, of total primary energy supply in 2013. Given increasing reliance on imports for oil use, Indonesia plans to reduce oil dependence and increase the share of domestic energy sources in the country's energy supply. Indonesia has been among the top five (5) coal producing countries for the last several years, and with the third largest natural gas reserves in the Asia-Pacific region, is the 10th largest natural gas producer globally. Accordingly, Indonesia's National Energy Policy envisions coal, and natural gas contributing 30%, and 22%, respectively, of the country's energy mix in 2025, complemented by renewable energy contributions of 23%.

Persistent dependence on fossil fuels means that CCS could be central to realizing emission reductions from Indonesia's energy and industrial sectors. Indonesia's geology makes it uniquely suitable for deploying CCS technology, with several depleted oil and gas fields that could serve as suitable subsurface storage sites for CO2. Considering these potential storage sites along with existing and planned large CO2 point sources suggests that CCS could account for up to 40% of the power sector's GHG emission reductions. CCS also provides a pathway for development of Indonesia's high-CO2 natural gas fields while avoiding any consequential increase in GHG emissions.

Project Rationale and Linkage to Country/Regional Strategy

Despite the recognized opportunity of CCS in Indonesia, no CCS projects have yet been deployed in the country. Lack of experience with planning and operating CCS plants, lack of policy mechanism allowing recovery of the high investment and operational costs, and lack of comfort with CO2 storage have all impeded CCS development. The Asian Development Bank (ADB) has supported Indonesia's exploration of CCS through 3 successive technical assistance projects culminating in this pilot activity. In 2010, ADB initiated a study of the potential for CCS in the country, which revealed strong CCS potential in the south Sumatra region, among others. It found that the most cost-effective near term opportunities were in the natural gas processing sector and the largest long-term emission reduction potential would be from capture at gas- and coal-fired power generation plants. In 2013, State-owned Oil and Natural Gas Mining Company (PERTAMINA), ADB, and the Japan International Cooperation Agency (JICA) signed a Memorandum of Understanding to conduct a detailed feasibility study for a pilot CCS plant at an existing central gas processing plant in Gundih, Central Java. JICA supported the subsurface investigation, and ADB supported the pilot design and review of Indonesia's legal-regulatory framework for CCS. ADB is currently establishing an Indonesian CCS Center of Excellence, which will capture and disseminate lessons from this pilot, among other activities.

The pilot is essential to increase domestic awareness of CCS, test CCS technology in the Indonesian context, and to demonstrate CCS storage and monitoring performance. The project will build, operate, and monitor a pilot CCS plant and draft CCS regulation to facilitate CCS deployment. At the Gundih natural gas processing plant, facilities will be constructed to capture the CO2 waste gas, remove residual sulfur and moisture, liquefy the CO2, and store it while awaiting transport. The CO2 will be transported by truck between the collection site at Gundih and the Jepon-1 injection site, so the project will construct loading and unloading facilities at both locations, procure trucks, and make any necessary improvements to the 44 kilometer stretch of existing road to be used for transport. The injection site is an abandoned exploration well at Jepon-1; the project will construct storage, injection, and monitoring facilities and will prepare the well for injection. The project will then operate and monitor the CCS Pilot for a period of two years. The project will also support Indonesia in developing amendments and additions to the existing regulatory framework to address any legal issues that will be encountered in the deployment of CCS technology. A grant financing modality is proposed since the project will not involve any revenue generation.

The project is aligned with the recent Sustainable and Inclusive Energy Program, under which one planned outcome is the implementation of cleaner fossil fuel technologies, expected through continued CCS activities. The $1.3 billion subprogram 1 was approved in 2015, including a $500 million contribution from ADB. ADB plans to support subprograms 2 and 3 at a level of $400 $500 million each to provide sustained support for the Government's reform agenda. At least two pilot CCS projects are expected under the medium-term review framework for the program. This proposed pilot project is a direct contribution to that target.

Impact

Development without harm to the environment and balance of ecosystem supported. (RPJMN 2015 2019)

Institutional capacity for mitigating greenhouse gas emissions strengthened (Indonesia's Intended Nationally Determined Contribution to the United Nations Framework Convention on Climate Change).

Outcome CCS technology successfully transferred
Outputs

1. CCS facilities at Gundih and Jepon-1 constructed

2. National CCS regulatory framework published

Geographical Location Nation-wide
Safeguard Categories
Environment B
Involuntary Resettlement B
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects The project will regularly monitor project-induced environmental changes on the quality of air, surface water, groundwater at community well and soil.
Involuntary Resettlement The total number of potentially impacted people on the foreseen road expansion and reinforcement is not expected to be substantial.
Indigenous Peoples Preliminary assessment of the potentially impacted communities suggests that indigenous peoples will not be impacted by the project.
Stakeholder Communication, Participation, and Consultation
During Project Design Meaningful consultation will be carried out to enable affected parties to provide their views and concerns in relation with project potential impacts, resettlement, social risk and mitigation measures. The methods to be used for consultations will vary and may include: public consultation meetings and focus group discussions; facilitated discussions through community-based organizations; meetings and interviews with national and local government officials; meetings with informal leaders/groups in the project area.
During Project Implementation Stakeholders will be consulted to get their views and suggestions on the project's potential impacts and mitigation measures.
Business Opportunities
Consulting Services A project implementation consulting firm will be recruited using Quality and Cost Based Selection (90:10) following ADB's guidelines on the Use of Consultants (2013, as amended from time to time) to assist the Executing Agency in implementing the project.
Responsible ADB Officer Cowlin, Shannon C.
Responsible ADB Department Southeast Asia Department
Responsible ADB Division Energy Division, SERD
Executing Agencies
Directorate General of Oil and Gas of the Ministry of Energy and Mineral Resources (MEMR)
Migas Plaza Building Centris
Jl. H.R Rasuna Said Kav. B-5 Central
Jakarta 12910 Indonesia
Timetable
Concept Clearance 29 Sep 2016
Fact Finding 01 Feb 2018 to 09 Feb 2018
MRM 15 Apr 2018
Approval -
Last Review Mission -
Last PDS Update 19 Sep 2017

Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

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Safeguard Documents See also: Safeguards

Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.

None currently available.

Evaluation Documents See also: Independent Evaluation

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Related Publications

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Procurement Plan

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