Chevron bets on $30 billion volcanoes beneath rainforest
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Chevron Corp. drilled 84 wells to a depth of two miles beneath the Indonesian rainforest -- not for oil and gas but to tap steam that's trapped in the world's richest store of volcanic energy.
The oil driller's geothermal plant, set among wild orchids and bamboo trees, uses 315 degree Celsius (600 degree Fahrenheit) heat to spin turbines 24 hours a day, generating electricity for Jakarta, a four-hour drive to the north. Chevron, which pioneered geothermal energy 20 years ago in Southeast Asia's biggest economy, is about to see competition.
Companies from General Electric Co. to India's Tata Corp. are leading an investment boom in Indonesia that may climb to more than $30 billion, anticipating President Susilo Bambang Yudhoyono will honor his promise in February to boost clean-energy subsidies. The pledge has spurred the biggest geothermal spending spree in Asia and the largest outside of the United States.
"There's great momentum in Indonesia's geothermal market, and demand for power is there," Mark Taylor, a geothermal analyst in Washington at Bloomberg New Energy Finance, said in an interview. "But there are regulatory risks for developers."
Chevron was burned by Indonesia in the late 1990s, when the state-owned utility forced it to renegotiate a power-purchase accord. The San Ramon, Calif.-based oil company is now planning to expand its geothermal operations, helping Yudhoyono eliminate energy shortages that threaten his target for as much as 6.6 percent economic growth through his term's end in 2014.
Geothermal is central to Indonesia's push for alternatives to fossil fuels such as oil, which the country once exported and now must import, driving up costs and curbing growth. Brownouts are frequent on the main island of Java, and 35 percent of the nation's 245 million population doesn't have access to electricity, the International Energy Agency has said.
The nation, described by clean-energy investor Al Gore in January as the first potential "geothermal superpower," plans 9.5 gigawatts of capacity by 2025. That's more than triple the U.S.' geothermal use and about 33 percent of Indonesia's electricity demand, according to Bloomberg New Energy Finance.
Indonesia's 17,000 islands straddle the Pacific Ocean's volcanic "ring of fire," making the country to geothermal power what the Middle East is to oil -- the world's largest potential resource with 40 percent, or about 28 gigawatts, of the total.
First Published June 26, 2011 12:00 am
