ASIA

Mud, mud inglorious mud

THE East Javanese mud volcano that erupted in May last year has not only become a messy multi-mil...

Mud, mud inglorious mud

At least 13 people died in November when a natural gas pipeline cracked under the weight of a dam built to channel the mud to the sea, triggering a powerful explosion. It took emergency workers several days to find the bodies in the sludge.

Nine months after it first began to flow, questions remain as to its exact cause, who is to blame and what the actual cost of the tragedy will be.

British experts in January said the mud volcano, known locally as ‘Lusi,’ could flow for another 30 years. They said it most likely began when an exploratory gas well punched through a layer of rock 2800m below the surface, allowing hot, high-pressure water to escape.

The water carried mud to ground level, where it has spread across a region 4km in diameter since the eruption began.

Added to the mix is a soap opera-like rivalry between two of Indonesia’s most powerful families – the Bakries, including Welfare Minister Aburizal Bakrie, who control well-operator Lapindo Brantas, and the Panigoros, who control the third partner in the venture, Medco Energi.

Lapindo claimed the volcano was triggered by “a natural disaster,” possibly an earthquake some 300km away. But Medco has said “gross negligence” was to blame and alleges the 3km-deep well was not properly cased.

In mid-December, funding and technical issues temporarily halted a drilling operation aimed at ending the flow. This was partly caused from a cash flow problem after Medco filed a petition with an arbitration court in the US against Lapindo over financial responsibility for damage caused by the mudflow.

Australian partner Santos said it was not involved in management of the site and was unwilling to comment on the cause while police continued to investigate.

Stopping the torrent is proving incredibly difficult.

Plans to pump the mud into a nearby river have been abandoned because the mud is too thick. The government, which oversees the site, is considering building a 17km channel to direct the mud to the coast, hoping it will form new mangrove swamps.

By latest accounts, the Indonesian government plans to drop up to 300 high-density concrete balls weighing about 400 to 500 kilograms each, linked by metal chains, into the volcano in an attempt to reduce the mudflow. Lapindo will cover the estimated $430,000 cost of the operation, which is expected to start mid-February.

According to recent media reports, the Indonesian Government and Lapindo Brantas will shoulder most of the clean-up and reconstruction costs, estimated to be a massive $570 million.

Lapindo, Medco and Australian partner Santos, which holds an 18% stake in the well, are expected to pay for the civil works and emergency relief for 15,000 evacuees, expected to cost about $180 million.

That would leave Santos looking at having to pay about $32 million. But the company is remaining tight-lipped on what it thinks the true cost will be.

“In terms of cost and so forth, our line is that once we have definitive information and have been able to analyse that, we will be able to make a comment on whether it has any future impact on our potential liability surrounding our position,” Santos spokesman Christian Bennett said.

Bakrie has reportedly said he will pay the estimated $350 million it will take to rebuild the houses, factories, businesses and rice paddies now lying under the mud.

But if the bill blows out, so could Santos’ financial commitment. The Adelaide-based company has said it has “appropriate” liability insurance, but refuses to disclose the limit of this cover.

The company initially made a provision of $24 million for the cost of fixing the site, but that figure has since blown out to $43 million. It has already paid $US15 million ($A19 million) into the joint venture’s fund to support social, technical and environmental responses to the disaster.

The government has said Lapindo should be held responsible for the disaster. Despite denying fault, Lapindo has signed an agreement to pay victims compensation for their swamped land and said it has already paid them up until 2008.

But some of the 12,500 evacuees living in a large nearby marketplace that has been converted into a camp say they have yet to receive anything.

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