Sarulla Geothermal Power Project 3 x 110 MW

1GEOTHERMAL - RENEWABLE ENERGY

6th International Geothermal Workshop

Bandung Institute of TechnologyMarch 22, 2017

Table of Contents

The Project Overview

Brief History of the Project

Project Financing Scheme

Upstream development program

Reservoir Chemistry and Model

Drilling History

Drilling Challenges

The Power Plant System and Technology

Project challenges

Questions

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3

Project Overview

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Project Name Sarulla Geothermal Power Project

Location Pahae Jae and Pahae Julu Sub District, North Tapanuli Regency, North SumatraProvince, Indonesia

Capacity 3 X 110 MW

Sponsors PT Medco Power Indonesia (In June 2015, INPEX acquired 49% of Medco’s interest)

Itochu CorporationKyushu Electric Power Co., Inc. Ormat International, Inc.

Project Co. Sarulla Operations Ltd (“SOL”)

Financial Close 23 May 2014

Total Project Cost USD 1.6 Billion (original budget)

Commercial Operation Date

SIL : November 2016 (original schedule)NIL-1 : November 2017NIL-2 : May 2018

Contract Period 30 years after NIL-2 COD

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MedcoSubsidiary

(99% X 37.25%)

SOL(1%)

PLN

ADB

Energy SalesContract (ESC)

HDECMultifab

Halliburton

ConstructionContract

DrillingContract

JBIC

CommercialBanks

Loan Agreement

ITOCHUSubsidiary

(99% X 25%)

Kyushu ElectricSubsidiary

(99% X 25%)

ORMATSubsidiary

(99% X 12.75%)

PertaminaGeothermal Energy (PGE)

Gov. of Indonesia

Business Viability Guarantee Letter

(BVGL)

Joint OperationContract (JOC)

Joint Operation Agreement (JOA)

Supply Contract

HDEC

Stakeholders’ Structure

HDEC: Hyundai Engineering & Construction Ltd.

Medco(51%)

INPEX(49%)

Project Location and General SitingProject Location and General Siting

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Pahae Jae and Pahae Julu Sub District, North Tapanuli Regency, North Sumatra Province, Indonesia

Pahae Julu SubdistrictNamora-I-Langit (NIL)

2 x 110MW

Pahae Jae SubdistrictSilangkitang (SIL) -110MW

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Brief Project History

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Period Events

Feb 27, 1993 Unocal North Sumatra Geothermal (“UNSG”) signed JOC (with Pertamina) and ESC (with PLN)

1993 - 1997 UNOCAL conducted drilling exploration in Silangkitang, Namora I Langit (5 wells at SIL, 4 wells at NIL) and Sibual Buali, acquired partial land

1998 Economic crisis occurred in Asia, project was halted

Jan 23, 2004 Project assigned to PLN (effective February 24, 2004) by UNSG through Deed of Assignment

Dec 1, 2004 Bid Submission for taking over of Project

Jul 25, 2006 Letter of Award to SOL Consortium

Dec 14, 2007 ESC Amendment (among PLN, Pertamina Geothermal Energy (“PGE”) and Consortium) and JOC Amendment (between PGE and Consortium) were signedTariff

Mar 10, 2011 New Tariff (staged tariff) Approval by Ministry of Energy and Mineral ResourcesTariff – 3-stage tariff;

Apr 4, 2013 Second ESC/JOC Amendments were signed

Mar 28, 2014 Loan agreements were signed

May 23, 2014 Financial Close achieved / Notice to Proceed issued

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Financing schemeUS$1.17 billion 20-year tenor project financing

Japan Bank for International Cooperation – US$492 million

Asian Development Bank – US$250 million

ADB-administered concessional lending – US$100 million

Clean Technology Fund (US$80 million)

Canadian Climate Fund for Private Sector in Asia (US$20 million)

Commercial banks (backed by JBIC extended political risk guarantee) - US$328 million

Setting the precedent

First greenfield non-recourse project financing in Indonesian geothermal sector since 1997.

Integrated project financing (non-recourse)

Three generation plants financed as one entity rather than unit-by-unit.

Steam fields development (drilling costs etc) also covered.

Tight covenants under the financing docs. Close coordination with the lenders required.

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Project Status – DrillingWells Drilled to date - 32 drilled at present

P – production well; R- reinjection well

4 drill rigs were working at Site until early 2016

Reduced to 3 drill rigs until early 2017

Reducing to 1 drill rig at NIL March 2018 at WJP-1n, drilling the 3rd production well

Plant Design Requirements SIL: 110 MW

Achieved: 166 MW

Plant Design Requirements NIL: 220 MW

Achieved: 252 MW

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Location Production Injection Drilled / abandoned

From Previous developer

SIL 3 7 0 1 P

NIL 10 9 3 1 R

Total 13 16 3 2 (P&R)

main geological structures and well location :

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Project Status – Reservoir Model (SIL)

Heat Source

Outflow

Outflow

Project Status – Reservoir Model (SIL)

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Depth

(m)

Pressure

(bara)

Temperature

(oC)

Enthalpy

(kJ/kg)

Permeability-thickness products

(kh)(darcy-m)

1900 - 2200 150 - 170 264 - 329 1250 - 1420 11 - 95

Physical properties

Chemical properties

Brine pH(@25oC)

Cl in reservoir(ppm)

SO4 in reservoir(ppm)

SiO2 in reservoir(ppm)

NCG in steam*(wt%)

6.4 - 8.0 880 - 980 32 - 41 650 - 760 3.1 - 4.2

* Non-condensable gas content in steam separated at 22 barA

Current status of well for SIL :

PAD Well TypeDrilling Estimated Well Capacity

Spud in Finish Production Injection

SIL1N

SIL1-2(Existing)

P 4/12/1995 6/19/1995 21.1 MW -

SIL1N-6 R 3/10/2015 5/5/2015 - 312 t/h

SIL1N-5 R 5/12/2015 7/25/2015 - 75 t/h

SIL1N-4 P 8/6/2015 10/15/2015 35.2 MW -

SIL1N-1 P 11/10/2015 12/19/2015 54.7 MW -

SIL1N-2 P 12/24/2015 1/31/2016 55.1 MW -

SIL2N

SIL2-1(Existing)

R 2/11/1995 4/3/1995 - 200 t/h

SIL2N-1 R 8/21/2015 8/21/2015 - 603 t/h

SIL2N-2 R 10/8/2015 11/1/2015 - 638 t/h

SIL2N-3 R 11/8/2015 11/27/2015 - 456 t/h

SIL3N

SIL3N-3 R 2/15/2016 4/1/2016 - 567 t/h

SIL3N-2 R 4/9/2016 5/22/2016 - 834 t/h

SIL3-1 (Existing)

R 6/28/1995 8/9/1995 - Reservoir Monitoring well

TOTAL 166.1 MW 3,685 t/h

• P = Production well:; R = Reinjection well:• The estimated well capacity at designed steam turbine inlet pressure from individual production test

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Project Status – Well Drilling (SIL)

Current status of well for SIL :

PAD Well TypeDrilling Estimated Well Capacity

Spud in Finish Production Injection

SIL1N

SIL1-2(Existing)

P 4/12/1995 6/19/1995 21.1 MW -

SIL1N-6 R 3/10/2015 5/5/2015 - 312 t/h

SIL1N-5 R 5/12/2015 7/25/2015 - 75 t/h

SIL1N-4 P 8/6/2015 10/15/2015 35.2 MW -

SIL1N-1 P 11/10/2015 12/19/2015 54.7 MW -

SIL1N-2 P 12/24/2015 1/31/2016 55.1 MW -

SIL2N

SIL2-1(Existing)

R 2/11/1995 4/3/1995 - 200 t/h

SIL2N-1 R 8/21/2015 8/21/2015 - 603 t/h

SIL2N-2 R 10/8/2015 11/1/2015 - 638 t/h

SIL2N-3 R 11/8/2015 11/27/2015 - 456 t/h

SIL3N

SIL3N-3 R 2/15/2016 4/1/2016 - 567 t/h

SIL3N-2 R 4/9/2016 5/22/2016 - 834 t/h

SIL3-1 (Existing)

R 6/28/1995 8/9/1995 - Reservoir Monitoring well

TOTAL 166.1 MW 3,685 t/h

• P = Production well:; R = Reinjection well:• The estimated well capacity at designed steam turbine inlet pressure from individual production test

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Project Status – Well Drilling (SIL)

Project Status – Reservoir Model (NIL)

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Depth

(m)

Pressure

(bara)

Temperature

(oC)

Enthalpy

(kJ/kg)

Permeability-thickness products

(kh)(darcy-m)

1060 - 1800 85 - 150 261 - 273 1183 - 1220 5 - 127

Physical properties

Chemical properties

Brine pH(@25oC)

Cl in reservoir(ppm)

SO4 in reservoir(ppm)

SiO2 in reservoir(ppm)

NCG in steam*(wt%)

2.5 - 8.2 740 - 1050 290 - 780 530 - 620 6.0 – 9.0

* Non-condensable gas content in steam separated at 11.5 barA

PAD Well TypeDrilling Estimated Well Capacity

Spud in Finish Production Injection

NIL1NNIL1N-7 P 12/24/2014 4/11/2015 30.01 MW -

NIL1N-3 P 4/22/2015 6/25/2015 Abandoned -

NIL2N

NIL2N-1 P 9/23/2014 1/16/2015 27.6 MW -

NIL2N-4 P 1/26/2015 3/20/2015 42.1 MW -

NIL2N-7 P 3/30/2015 5/26/2015 39.3 MW -

NIL2N-3 P 6/11/2015 8/26/2015 14.8 MW -

NIL2N-6 P 9/5/2015 11/3/2015 17.6 MW -

NIL2N-2 P 9/23/2015 12/26/2015 44.4 MW -

WJP1N

WJP1-1 P 2/17/2016 5/26/2016 No productive -WJP1-3 P 6/2/2016 9/12/2016 23.2 MW (acidic)

WJP1-5 P 6/2/2016 1/28/2017 13.4 MW (acidic) (Estimated from short term test)

WJR2

WJR2-1 R 2/21/2015 4/30/2015 - Abandoned

WJR2-3 R 5/12/2015 7/30/2015 367 t/h

WJR2-2 R 6/26/2016 8/9/2016 537 t/h

WJR2-4 R 8/20/2016 10/8/2016 953 t/h

WJR2-5 R 11/11/2016 1/1/2017 872 t/h

WJR2-6 R 1/18/2017 Drilling in progress - -

WJR1 WJR1-1 R 7/28/2015 10/19/2015 - Abandoned

NIL3(Existing)

NIL3-1 R 1/21/1996 2/11/1998 - 292 t/h

NIL3N

NIL3N-1 R 1/11/2016 5/11/2016 - 920 t/h

NIL3N-2 R 5/19/2016 8/12/2016 1361 t/h

NIL3N-3 R 8/21/2016 10/3/2016 1883 t/h

NIL3N-4 R 10/26/2016 12/25/2016 544 t/h

NIL3N-5 R 1/10/2017 2/11/2017 1442 t/h

TOTAL 252.4 MW 9,171 t/h

18• Well capacity from flow test results estimated at separation pressure (11 bars); WJP1N-5 is estimated based on the short term test (injection test); long terms test (production test) yet to be executed.

• Reinjection capacity targeted (based on design enthalpy; to be revised)– 9,862 TPH:

Current status of well for NIL : P=Production well; R=Reinjection wellProject Status – Well Drilling (NIL)

General

Challenging logistics for 4 rig simultaneous operation.

Drilling Water Supply/Pumping Stations

Material Delivery/fuel/warehousing

Large Base camps, over 400 personnel

Drilling and flow testing on a pad at the same time

Drilling and Constructing Power plants at the same time.

Drilling Challenges for the Sarulla project

SIL

Production pad near Sumatra Highway/local residence-social

challenge

Discrepancy between the fault distributions shown in the old

UNOCAL geological model and the drilling results. Very low

permeability in originally planned injection area. Need to change

injection targets.

Stuck Pipe when near to the GSF due to clays in the fracture

formations

EPC Schedule, Constructing separator stations while drilling

Higher pressure/enthalpy than estimated, mis-match with EPC

design

Drilling Challenges for the Sarulla project

NIL

NIL formation much more fractured as compared to SIL.

Difficulties drilling wells through a high pressure shallow gas (CO2) zone at

pads NIL1N, WJR1 and WJR2.

Two abandoned injection wells due to shallow high CO2 gas

pressure.

One abandoned production well due to shallow high steam

pressure.

Multiple Stuck Pipe/Lost in Hole/Sidetracks due to paleosol (clay)

formations.

Cold water encountered in first production well on WJP-1 pad.

Acid fluids encountered in second and third wells drilled on pad WJP1.

Drilling Challenges for the Sarulla project

Field Variability Summary

Average Drilling Days for Productions wells:

SIL 47 NIL: 78

Standard casing program: 13 3/8 inch casing to 3,000 ft, 10 ¾ inch slotted liner to 6,000 ft

Cost per Production well at NIL was 70% higher as compared to SIL

Average Drilling Days for Injection Wells:

SIL 44 NIL: 65

Standard casing program: 9 5/8 inch casing to 3,000 ft, 7 inch slotted liner to 6,000 ft

Shortest Drilling Duration: SIL-2-3 (20 days) (completed shallow)

Longest Drilling Duration: NIL-3-1 (122 days) (sidetracked well)

Cost per Injection well at NIL was 35% higher as compared to SIL

Drilling Challenges for the Sarulla project

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The SIL Power Plant

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The SIL Power PlantSteam Field and Steam aboveground Surface (SAGS) Equipment

2 sets separator systems

5 km of gathering/injection pipeline (sizes of 36” for steam, 24” for brine, 30”for brine/condensate)

Power Plant

Integrated Geothermal Combined Cycle (IGCCU) Technology:

1 back-pressure steam turbine (62 MW gross)

4 Organic Rankine Cycle (ORC, binary cycle) condensing steam units

(7 MW gross each)

2 Organic Rankine Cycle (ORC, binary cycle) geothermal brine units (16 MWgross each)

Integrated Control System (ICS - DCS/PLC)

A 150KV double bus Substation connected to PLN substation via 2 lines of 2.25km- 150KV Transmission Line

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SIL Site Plan

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The SIL Power Plant

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Wellpad Area

SIL Production wellpad & Separator System

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The NIL Power Plant

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The NIL Power Plant Steam Field and Steam aboveground Surface (SAGS) Equipment combined forboth NIL 1 and NIL 2 phases - drilling is still ongoing and the following may stillchange based on further drilling results

8 sets separator system and 13km of steam, brine and brine/condensatepipelines

Integrated Geothermal Combined Cycle (IGCCU) Technology. Each plant (NIL-1and NIL-2 consists of;

1 back-pressure steam turbine (57.5 MW gross)

4 Organic Rankine Cycle (ORC, binary cycle) condensing steam units

(7.5 MW gross each)

2 Organic Rankine Cycle (ORC, binary cycle) geothermal brine units (16 MWgross each)

Integrated Control System (ICS - DCS/PLC)

A 150KV double bus Substation connected to PLN substation via 2 lines of 10kms150KV Transmission Line

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NIL Site Plan

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NIL Production Wellpad & Separator System

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Wellpad Area

Power Plant Technology – IGCCU(Integrated Geothermal Combined Cycle Units)

33Combined Cycle (Binary) Condensing System

Sarulla - Combined Cycle:• Uses both geothermal steam &

brine;• Reinjects 100% of the geothermal

fluid• Uses air-cooling instead of water• Multiple modular units

SIL Process Flow Diagram (PFD)

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IGCCU Technology Features

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Feature Advantages Disadvantages Remarks

Resource enthalpy change

More flexible to changes – loss in steam, gain in brine or vice versa

Lower steam efficiency as compared to simple steam condensing

SIL fluid enthalpy is higher than design

Modularity Expects to have higher availability factor

Lower profile; lighter equipment and smaller components

More equipment to install and maintain

Air cooling Increase resource sustainability though 100% reinjection

Eliminate mists and chemicals in water cooling

100% injection means more injection wells at the initial phase

Bigger plant footprintCost/Efficiency

Expectation is that this will benefit the project in the long run

Original Plan Current estimation

Enthalpy 1,290 kJ/kg 1,365 kJ/kg

Separator Pressure 20.4 bara 22.0 bara

Geothermal fluid

Steam 579 t/h 638t/h

Brine 2,320.88 t/h 1,972 t/h

Total Flow 2,899.99 t/h 2,610 t/h

Gross output

STG 62.85 MW 67.45 MW

Bottoming OEC 26.97 MW 29.40 MW

Brine OEC 27.78 MW 23.17 MW

Total (MWg) 117.60 MW 120.02 MW

Plant Technology Features

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Flexibility to manage changing/variation on geothermal fluid enthalpy

Plant Technology Features

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Combined Cycle (Binary) Condensing System

Air cooling enhances 100% reinjection and eliminates mists from water cooling towers

Project ChallengesTechnical

Fixing plant process design and proceeding with an EPC, withsimultaneous field development.

Risk that production well enthalpy will not match equipmentdesign.

Risk of designing separators stations and pipelines to wellpads, before flow capacity is actually tested and known.

pH mod system design (required due to high silica in reservoir).Corrosion, control, logistics problems.

Soil type at SIL that was hard to work under frequent raining;required more extensive earthwork and foundation.

Public road conditions not conducive to transportation of heavyequipment.

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Project ChallengesSocial

SIL wellpad close to community – puts restraint even on certainstandard practices in more remote geothermal areas.

Private Roads become public roads. Traffic, house construction,interference with pipelines.

Demands for local contracting, Employment and businessopportunities for local community.

Communities complaints expressed through demonstrations,causing work disruptions

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Summary and Conclusions

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Summary and Conclusions

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