Proposed Methodology For Generating Geothermal Drilling Cost Estimate In Indonesia: A Case Study In Central Java and West Java

There are several challenges associated with generating an accurate or close enough cost estimate for geothermal drilling in Indonesia. To begin, drilling requires various services and materials that may be provided by different companies, complicating the estimation of cost for each service/material. Secondly, the drilling industry is tightly linked to the market condition of the oil & gas industry, which will fluctuate the price of the services and goods for drilling depending on the oil price. This condition is further aggravated by the absence of any accessible geothermal drilling cost database in Indonesia, in contrast with the oil and gas industry that may have several databases such as IHS Markit’s Rushmore.

Those difficulties in generating accurate geothermal drilling cost estimates are problematic as drilling is one of the major cost components in the whole geothermal project. Moreover, several geothermal developers in Indonesia have their own procurement guidelines that may dictate the tender process to be redone if the cost estimate is way below the price quoted by service companies. The time spent redoing the whole procurement process is disadvantageous to the developers especially in the exploration phase, as the exploration duration is limited by the Government in Indonesia. Therefore, having an accurate cost estimate is crucial to preventing such events.

This paper aims to highlight the importance of having an accurate drilling cost estimate in Indonesia. A framework and methodology for obtaining the cost estimate are proposed, including the market survey methods that can be used in Indonesia. Geothermal drilling planning in Central Java and West Java using the proposed method for cost estimation were used as a case study