In 1897, the first drilling of oil began by a small refinery company. Construction of roads, wharves, warehouses, offices, barracks and bungalows started when a Dutch oil company arrived in the area. On January 24, 1942, Balikpapan became a war theatre between Japanese army and the Allied Forces in which the oil refinery and other facilities were heavily damaged. Several campaigns followed until the 1945 Battle of Balikpapan which concluded the Allied Forces' Borneo campaign after which they took control of the Borneo island.
Extensive wartime damage curtailed almost all oil production in the area until major repairs were performed by the Royal Dutch Shell company. Shell continued operating in the area until Indonesian state-owned Pertamina took it over in 1965. Having a lack of technology, skilled manpower and capital to explore the petroleum region, Pertamina sublet petroleum concession contracts to multinational companies in the 1970s.
Being the only oil refinery site in the region, Balikpapan emerged as a revitalized center of petroleum production. Pertamina opened its regional headquarter in the city, followed by branch offices established by international oil companies. Hundreds of labourers from other part of Indonesia, along with skilled expatriates who served as managers and engineers, flocked into the city.
Balikpapan oil refinery is located on the shore of Balikpapan Bay and covers an area of 2.5 km². Established in 1922, it is the oldest refinery in the area. It was destroyed in World War II by the Allies of World War II and re-built in 1950. The refinery has two subunits, Balikpapan I and Balikpapan II.
Balikpapan I consists of two raw oil refinery units that produce naphtha, kerosene, gasoline, diesel fuel, and residue and one high-vacuum unit that produces 100 tonnes (approx 98 tons) of paraffin oil distillate (POD), used as raw material for wax factories. The wax itself has various grades and is sold domestically and internationally.
Airlines currently using the airport are Lion Air, Merpati Airlines, Batavia Air, Kartika Airlines, Sriwijaya Air (domestic routes), and Garuda Indonesia, Air Asia, and SilkAir (International routes).
The airport is one of the five principle sites in Indonesia where Muslims begin the pilgrimage to Mecca, the "Hajj". Between 1996 and 1997, the airport served over 4,500 East Kalimantan pilgrims, and from 1997 to 1998, it served pilgrims from East Kalimantan, South Kalimantan, Central Sulawesi, and North Sulawesi.
Other than the airport, Balikpapan also has a seaport called "Semayang" which has many destinations to Surabaya, Makassar, Jakarta, Pare-Pare, and Manado. in 1990s, transportation using ships was very popular. But after the booming of so many new airlines with very cheap price, people now prefer travelling using airplanes to the ships.
The ferry is also another alternative for travelling to other places within coastal areas in East Kalimantan, such as Penajam.
Tourists who wish to see the real side of Indonesia should definitely come here. Especially those who enjoy unbelievably fresh seafood caught off the ample shores of balikpapan.