Development Model of Existing Oil and Gas Blocks Based on Project Management and Economic Valuation (Case Study: Block B, North Aceh)

Taking over of existing oil and gas blocks is challenging and must be carefully and wisely considered. A development model based on project management and economic valuation can assist the government and other stakeholders in making decisions and policies. Block B in North Aceh, is one of the existing oil and gas blocks that still has remaining gas reserves of 83 BCF in the existing fields, estimated oil/condensate reserves of 34 MMSTB and gas reserves of 326 BCF in the discovered undeveloped fields, and estimated gas reserves of 807 BCF in the exploration fields. In addition to having quite significant potential reserves, it also carries a significant ASR cost burden, estimated at USD 201 million. Economic calculations show that full cycle combined development model yields more feasible and optimal results compared to half cycle and existing optimization development model. This model requires a total capital investment of USD 648.21 million and is capable of generating a gross revenue of USD 3132.85 million, with a distribution of USD 580.08 million (18.52%) for contractor, USD 988.71 million (31.56%) for the government, and USD 1564.05 million (49.92%) for cost recovery. Economic valuation using the DCF method at a 10% discount rate provides NPV of USD 333.04 million for the government and USD 116.97 million for the contractor, contractor IRR of 42.46%, and capital investment payback period less than 6.5 years.