Shell Mijnbouw as a start to the post war Indonesian coal industry. [Coal Asia Vol. 34]

Shell Mijnbouw as a Start to the Post War Indonesian Coal Industry

By Ian Wollff

The author is an expatriate principal geologist of about 28 years experience in the Indonesian exploration & mining industry, and is employed by an international consultant company.

 

In 1973 an exploration Contract of Work (COW) was undertaken over South Sumatra with N.V. Shell Mijnbouw (Shell).This was later developed into a coal production sharing contract No 36/1975.

The writer entered Indonesia in January 1975 to undertake coal exploration in Muara Enim regency for Shell. Exploration had been going on for about a year, however drilling was stopped due to two coal drill rigs having burnt down when intercepting shallow gas. A period of outcrop mapping was undertaken with helicopter support, as there were essentially no roads though out much of the countryside. This was the era before GPS, satellite images or field computers, where mapping was conducted by compass & tape surveys of creek outcrops tied into wide spaced surveyed base lines for control. Essentially this was the same method Shell had undertaken at the turn of the century when conducting regional exploration for oil, and upon which much of today’s Indonesian 1:250,000 geological maps and stratigraphy is based upon. Indonesia was still emerging from its recent past of a war of independence, wherein even tourist maps were considered a military restricted item, so obtaining 4 wheel drive vehicles, base maps or sterio air photographs was a story all in itself. As a white foreigner it was automatically assumed I was Dutch, to be greeted with great honor, or to be viewed as some object of despise, while the concept that I was Australian was something difficult for most to comprehend. On one occasion when I emerged with a small team from a river mapping program into a small thatched village the women that were hanging out laundry and preparing food saw me and screamed, picked up their babies and ran out into the long grass surrounding the village, where there they hid and called to each other in shrieks until I had left. The more usual reaction was to be surrounded by all the village children wherein the braver ones would want to touch the hairs on my arm, while the parents collected in the back ground. On helicopter trips to nearby regent offices for socialization, the entire village would surround the helicopter as this was their first sighting of foreigners or an aircraft. Shell built a coal assay laboratory in the TABA office building, and undertook a social assistance program to restore the Bukit Asam power station. Indeed Soeharto’s use of these first coal contract arrangements was the start of Indonesia coming out of its past and headed towards its future with the rest of the world.

The Bukit Asam coal mine was producing about 150,000 tons per year(tpy), with another 50,000 tpy being produced from West Sumatra’s Ombilin underground coal mine. The Bukit Asam mine had two pits – the Air Layer mechanized pit, using 2-3 bucket wheel excavators for overburden, plus a shovel for coal. However the manual Suban pit used one bulldozer for overburden and interburden with manual mining and transport of coal to the rail head. A hand turned screw hole was drilled into the coal and a small charge loosened the coal, which was dug with mattock & shovels into wicker baskets that an endless line of coolies carried down to the rail head and loaded the small coal wagons. At one point Shell advised that this manual mine could become more efficient by allowing the rail head to be advanced closer to the coal workings. However this would mean less coolies were needed, and thus less commission could be spread amongst the parties. It was common practice for the workers to ride on the top of the coal carriages back to their home in Tanjung Enim and throw out the large lumps of coal to their friends along the train tract for their home consumption. Despite these inefficiencies, the manual coal mine tended to produce more coal than the mechanized mine, as the latter would have to stop when a spare part was needed. Indeed the miners at the mechanized mine received their wages regardless if the mine was operational or not, and thus a culture had developed where mining was often stopped due to waiting on spare parts.

After about a year of exploration I left to travel Asia, and returned again in early 1977 to the Shell Banko exploration camp. Many of the previous habits remained, including the unbelievable practice of night highway driving where two approaching cars would turn their head lights completely off just prior to passing in complete darkness – so as to not blind the other driver. On rare occasions Indonesian geologist were assigned the Shell teams, however geology was not a popular subject to be taken up by the very limited numbers taking university. Geologist preferred to be assigned as a counterpart position in an oil company, or second choice was the state tin company, while coal was considered the lowest social level. Some of the geologist had no intention of undertaking field work, as expressed by their excessively long selected finger nails – to demonstrate they did not do manual work, not even typing.

During these years Shell was creating and applying leading edge technology and computerized systems of drill data gathering. The first use of slim line down hole geophysical logging outside England was implemented with the contractor British Plaster Board (BPB), trialed and tested in South Sumatra. Shell devised an 80 character data computer input form (COGEO) for logging coal core lithology, geotechnical and assay data. Shell then spread this geophysical & computer based logging technology to Australia and South Africa, and this is the for runner of today’s coal drill recording program. Shells experience in oil drilling lead to a unique development of a coal drill mounted on a platform with a blow out preventer (BOP) below to allow for safe drilling in high gas areas. Such a drill rig may provide an example for today’s Coal Bed Methane (CBM) drill programs instead of the bulky modified oil drill rigs of today. Shell also introduced the “Winky Drill Rig” being a very light portable drill suited for scout drilling and Limit Of Oxidation (LOX) drilling. Today we see this as the Power Rig based around chain saw motor technology. Shell undertook some bulk sampling, with the coal being railed to Palembang. Unfortunately some for the coal rail cars did not arrive at Palembang, wherein a heli survey located the missing coal cars in various village rail sidings, and when recovery teams arrived the local villages were disappointed to loose their free source of coal for home use as had been arranged with the train drivers etc. The coal was loaded out at the Kertapati port in Palembang wherein the contract with the sampan barges was to provide only metal hulled vessels. However the subcontractor provided wooden vessels that promptly sank upon loading at the docks, creating multiple level of issues. Shells social assistance program included further coal drilling about the Bukit Asam mine to define coal reserves, upon which the Government would eventually approach the World Bank for a project loan, that would be realized in the 80’s, and so forms the starting point of today’s Bukit Asam mine.

Shell spent about 5 years and a considerable fortune to develop the South Sumatra coal resources and reserves. Final negotiations was undertaken to determine profit share and other operational issues. However there was an ongoing cultural difference between the Dutch that expected a straight businessman like approach, and the Indonesians that had a Government policy to renegotiate everything. Several times the negotiating parties came to an agreement, but prior to signing the Indonesian parties threw it all out and went back to the negotiation phase. In the end Shell gave up and left. When asked why the Indonesian parties would not settle on a deal and begin the much needed development of Indonesia, their response was that such development may be left for their children or grand children – but it would be all theirs. This outlook continues to underpin some Indonesian attitudes today, whereupon the development of schools, roads, hospitals and the well being of Indonesia can wait until it is secured by a given Governor, Bupati or conglomerate group for their personal benefit.

I continued working for Shell in Australia, and undertook a variety of other exploration work, returning to the Bukit Asam field in 1985 with the World Bank’s exploration program to verify and expand upon the Shell defined coal reserves. At this time BAMCO (a combined American and German team) was building the new Bukit Asam coal mine with new bucket wheel excavators, waste spreaders and a new coal terminal was being constructed at Tanjung Karang. Also the pre war Bukit Asam power station was to be replaced with a new coal fired power station built by Alstom. The World Bank program included further field geological mapping, drilling & assay, but also included its own geotechnical laboratory at Bukit Asam. By this time a new breed of Indonesian coal miners was emerging, brought on in part from the high profile nature assigned to this World Bank project, and the significance it would play in Indonesia’s future. Upon leaving Indonesia, Shell provided all its data to the Mines Department, along with training computers and software, possibly representing the first comprehensive computerized coal data set received by the Government. This provided a great incentive to the Universities and Mines Department to develop the coal exploration industry.

On 24 April 1978 a report to the President of the Republic of Indonesia proposed a loan of USD 10 million (repayable in 10 years) from the International Bank for reconstruction and development for the Bukit Asam coal mining and transport engineering project. The World Bank’s completion report of 25 June 1990 refers to the second loan of USD 185 million that was also required to complete the project. The overall purpose was to provide coal as an alternative to oil for power generation. The report states “Project implementation was dogged by delays, compounded by organizational deficiencies, with the result that the original target date for coal movement to Suralaya slipped over four (4) years. Arrangements for project control were ineffective. Project construction faced many delays occasioned by inadequate qualifications of staff in the implementing agencies, cumbersome and biased GOI procurement procedures, poor performance of local contractors, protracted GOI negotiations with cofinancing agencies, land acquisition, mobilization of local currency, and inadequate site ground investigations. Initial operations were disappointing. Mine development was slower than anticipated due primarily to poor performance of the main mine equipment and unsuccessful training programs. Coal transport from initial mine operations was slow to develop due to incomplete construction, rail operations planning deficiencies, and settlement difficulties experienced at the terminal site. However, the project objectives were eventually reached, which is a tribute to the dedication of the implementing agencies.”

History has taken its path, with Shell and South Sumatra playing a pivotal roll in the technical development of the world wide coal exploration industry. The people of Indonesia have certainly developed into a distinctive vibrant modern community, though questions if such development could have been faster under an earlier development opportunity by Shell, as may be pondered by comparing the development of Kalimantan through its privately held coal mines. It is up to each reader to draw from these historic experiences to determine for themselves on the nature of the development of the GOI (central & regional) and the Mines Department.