Development of Natural Gas Hub Network Based on Specific Total Annual Cost in East Java Region

Abstract

Natural Gas is one of fossil fuel energy with the lowest CO2 emission and has been widely used in Indonesia. However, the absorption of natural gas in Indonesia is still not optimal. Several regions have natural gas supply above the region’s needs and some regions otherwise. The solution to these problems is to create a coordinated gas network in a system that called the hub method. In this method, all producers send their gas to the hub or collection point, then the gas is sent from the hub to consumers. Later a regasification station and LNG plant were connected into the hub. With this method, the problem of excess gas supply and lack of natural gas can be overcome. In this study, the natural gas network was developed by using hub method modelling with the case study in East Java. The first model is the grassroots model which assumes there is no natural gas network in the region. The second model is a combined model that was done by modifying/adding pipelines from existing pipelines. The two models were optimized by minimizing the total annual cost (TAC) needed which includes the cost of making and operating pipes and compressors. From the results obtained, the specific TAC which is the TAC divided by annual gas supply capacity from the grassroots, existing, and combined models are US$ 1.52/MMbtu, US$ 1.50/MMbtu, and US$ 1.44/MMbtu, respectively. Therefore, the combined model is the most optimal based on specific TAC.