Bukit Asam, Indonesia plans a $3.1 billion plant to convert coal into synthetic natural gas

Bukit Asam, the Indonesian state-owned coal miner, is examining a plan that would invest $3.1 billion in a plant for converting coal into synthetic gas. Its chief executive announced this on Monday.

Bukit Asam would be the latest to try to produce gas using coal. The government is pushing for value-added domestically on its natural resources after its partner withdrew from a project that was to produce dymethylether gas.

Bukit Asam, led by Arsal Ismail as its chief executive, plans to convert 8.4 millions metric tonnes of low-grade coal with a GAR of 3,700 kcal/kg into 240 billion British Thermal Unit per day (1.6million metric tons each year).

Arsal stated that some of Bukit Asam’s low-grade coal deposits would be ideal for conversion into synthetic gases. The project is intended to meet future gas demands in Indonesia.

He said that the company would form a joint-venture with the state-controlled gas distribution company, Perusahaan Gas Negara, and a technology supplier to build the plant. However, he did not name the technology provider.

Bukit Asam is currently working with PGN to conduct a feasibility report for the project. This includes determining the cost of gas that will be produced and the project's competitiveness compared to liquefied gas.

Arsal stated that an initial study showed the synthetic gas to be competitive with imported LNG. Indonesia is a net LNG exporter at the moment, but some analysts expect that by 2040 it will become a net LNG importer.

Bukit Asam had previously partnered with U.S.-based Air Products in order to convert coal to dimethyl ether and produce a substitute to liquefied petrol gas, which is commonly used as a cooking fuel.

Air Products withdrew from the project by 2023, deciding to use its capital for other projects.

Bukit Asam has been in contact with several Chinese companies to form a potential partnership that could replace Air Products. (Reporting and editing by David Evans; Fransiska Nangoy)

(source: Reuters)