WorldWide Drilling Resource

36 JANUARY 2015 WorldWide Drilling Resource ® Indonesia Revises Geothermal Laws Compiled by Bonnie Love, Editor WorldWide Drilling Resource ® Developing geothermal power plants in Indonesia will be a little bit easier since the Indonesian House of Representatives has revised their geothermal laws. Until now, operations to develop geothermal resources, including explo- ration drilling, came under the category of mining activities and were subjected to the country’s mining laws. One of those laws prohibits mining operations in forest conservation areas. Although the Energy and Mineral Resources Ministry recently offered 58 geothermal concession areas for development, only 9 of them are in production. The remaining 49 have re- mained undeveloped for a variety of reasons, such as; they are located in protected forest areas, electricity pricing problems, and the high costs and risks associated with drilling geothermal explo- ration wells. The newly amended law changed the definition of geothermal de- velopment so it is no longer considered part of the mining industry. “We have huge potential, but devel- opment has remained low due to envi- ronmental concerns,” Energy and Mineral Resources Minister Jero Wacik said in a parliamentary speech. “This has now been changed, and we hope it will cre- ate a new era in geothermal development.” Another key change is the guidelines which were put in place to establish an electricity-pricing policy which would require geothermal power plant devel- opers to allocate production bonuses or part of their revenue to local communities. According to Jero, the passing of this new law will help resolve the pricing problems. The Indonesian government hopes the revised law will encourage further development of the country’s geothermal resources. Although Indonesia is believed to contain the second largest amount of geothermal resources in the world with an estimated 27,510 megawatts of geothermal potential, less than 5% of those resources are utilized. Locating a geothermal resource which can provide a rel iable power supply for the country is a priority. The recent upswing in economic growth is threatening to cause serious power short- ages. Some estimates indicate Indonesia can expect to see a 7-9% increase in electricity demand every year, for years to come. The country is also plagued with one of the lowest electrification rates in the region with 66% of people in the coun- try having no access to electricity. Incoming President Joko Widodo, who was inaugurated in October, has promised to encourage the development of power generation infrastructure and introduce a quicker process for acquiring land and permission for power generation businesses. The government has also allocated funds to help offset the costs for exploration drilling. &% ! "" * "(%$ ))) (" $( ' & $ %# # " (" $( $ ( " !" !! ! &% ! % ! (" $( & $ $ $ " ! $ $ ! ! $ ! $ # $ $ $ according to the Geothermal Energy association, Indonesia is the third highest producer of geothermal energy.