NuEnergy closes in on first gas as Tanjung Enim build gathers pace

• Tanjung Enim Early Production Facility reaches 48% completion, with PGN’s adjoining CNG station at 23%
• First gas sales remain targeted for Q1 2027 ahead of a fully funded 24MMSCFD expansion
• New drilling concept replaces 209 proposed vertical wells with 13 pairs of wells over the project’s life

Special Report: NuEnergy Gas is making headway towards its first commercial gas sales in Indonesia with construction of two key facilities at the flagship Tanjung Enim coal bed methane project progressing.

The company’s Early Production Facility (EPF) was about 48% completed at September 30, while the adjoining compressed natural gas (CNG) Mother Station being developed by gas buyer PT Perusahaan Gas Negara (PGN) had reached 23%.

The facilities will enable gas from four existing production wells to be processed and supplied to Indonesia’s domestic gas market, with first sales still on target for the first quarter of 2027.

Construction began in August, following several important commercial and funding agreements secured in the previous 12 months.

Tanjung Enim holds the distinction of being Indonesia’s first approved CBM Plan of Development (POD), with an approved production target of 25 million standard cubic feet per day (MMSCFD).

The initial Early Gas Sales Initiative (EGSI) is designed to produce 1MMSCFD, followed by a much larger 24MMSCFD development backed by a Field Service Contract valued at approximately US$88 million.

First gas infrastructure taking shape

Nuenergy Gas (ASX:NGY) made substantial progress on civil work and piping at the EPF during the September quarter, with drainage work among the remaining civil construction activities.

Statutory inspections of technical documentation and equipment were also underway.

At PGN’s CNG Mother Station, construction included retaining walls, drainage, bore piling, equipment foundations and electricity substation works.

PGN, Indonesia’s largest natural gas distributor, has signed a binding Gas Sales and Purchase Agreement with NuEnergy covering 5.59 billion cubic feet of CBM from the EGSI wells.

The two facilities will provide the processing and delivery infrastructure required to begin monetising Tanjung Enim’s initial gas production.

Meanwhile, dewatering, gas flaring and well optimisation continued across all four production wells during the quarter.

A leaner development plan for 25MMSCFD

NuEnergy is also advancing preparations for the much larger second phase of Tanjung Enim designed to increase production by an additional 24MMSCFD.

Following the completion of an updated dynamic subsurface simulation study, a more efficient drilling configuration has been adopted.

The revised concept incorporates a Multi Seam Drainage Intercept drilling technique involving 13 pairs of wells over the project’s production life, compared with the 209 vertical wells originally contemplated.

This approach is expected to improve development efficiency and reduce the project’s environmental footprint while targeting the approved production profile.

It also has positive implications for land access, an important consideration as NuEnergy prepares the drilling locations and supporting gas infrastructure.

During the quarter, the company progressed land access arrangements, engineering work, field surveys and stakeholder documentation for the larger development.

The second phase is supported by a Field Service Contract with PT Beijing Energy Linking (PT BEL), executed in June.

Under the agreement, PT BEL will finance 100% of the contracted field development works at a contract price of approximately US$88m, to be recovered from future gas sales proceeds.

The arrangement provides a funding framework for the drilling and associated field development activities required to reach the targeted 24MMSCFD production plateau.

Indonesian Government backs Tanjung Enim

The September quarter also brought formal recognition of Tanjung Enim as a National Strategic Project by the Indonesian Government.

The designation was approved by President Prabowo Subianto and recognises the project’s importance to Indonesia’s energy development priorities.

It is expected to assist coordination between NuEnergy, the Ministry of Energy and Mineral Resources and other central and regional authorities.

That coordination is particularly relevant to land access, permitting and infrastructure approvals as NuEnergy prepares for the next stage of development.

The project is intended to contribute to Indonesia’s domestic gas supply, with Tanjung Enim providing the initial production base for NuEnergy’s wider South Sumatra ambitions.

NuEnergy also completed a $3.05m placement during September at 3.8c per share.

Proceeds are being directed towards completing the EGSI, preparing for the larger Tanjung Enim development and progressing the company’s three other South Sumatra Production Sharing Contracts.

The company finished the quarter with approximately $2.68m in cash.

Three more projects moving towards development

NuEnergy’s plans for South Sumatra include the Muralim, Muara Enim and Muara Enim II PSCs, which together with Tanjung Enim form the basis of its proposed integrated CBM gas hub.

All three received exploration-period extensions from the Indonesian Government during the quarter, allowing further technical work and preparation of their respective Plans of Development.

Muralim and Muara Enim now have until August 12, 2027, to progress their POD proposals.

NuEnergy has engaged consultants to undertake subsurface evaluations, reserves assessments and development planning for both projects.

Muara Enim II received an extension until February 12, 2028, allowing time to complete a planned coring program and prepare its POD proposal.

This article was developed in collaboration with NuEnergy Gas, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

The post NuEnergy closes in on first gas as Tanjung Enim build gathers pace appeared first on Stockhead.