ONGC is turning focus on its deep water block KG-DWN-98/2 in the Krishna Godavari (KG) basin, as the state-run explorer reckons there could be more hydrocarbon reserves in about 11 discoveries in the block, than what has already been found.
ONGC, sources said, has sought permission to drill more appraisal wells in the block, while its declaration of commerciality (DoC) is being examined by the oil regulator, said NK Verma, director (exploration), at ONGC. ?We expect to find more reserves (in KG-DWN-98/2) and therefore have asked the government to allow us to drill more wells by the time DoC is approved. We want to drill at least two more wells. Each well would cost around $80-$100 million,” Verma told FE.
Once the DoC is approved by Directorate General of Hydrocarbons, ONGC would take steps to commercially produce hydrocarbon from the acreage.
ONGC’s block in KG basin, which lies adjacent to Reliance Industries’ much-talked-about KG-D6 block, holds about 2-3 trillion cubic feet (tcf) of gas and 2.5-3 million tonne of crude oil. This alone can lead to a peak production of 25-30 million metric standard cubic metres per day (mmscmd). The production is expected to begin from 2017.
The block, which lies off the Andhra Pradesh coast, sees favourable weather during October through February to go-ahead with deep water drilling. ONGC wants to carry out the additional drilling programme during this period.
With the natural gas price likely to be doubled from April 1, it gives incentive to explorers to invest in more tough areas finding hydrocarbons. Every dollar increase in gas price boosts ONGC bottomline by about R4,000 crore and credits about R2,400 crore in post-tax revenues.
At the same time, the firm has appointed Norwegian oil and gas industry service provider Aker Solutions to chart out the field development plan for the KG basin block, Verma said.
Aker Solutions is a global provider of products, systems and services to the oil and gas industry working in about 30 countries.
Earlier, ONGC tried to rope in an equity partner to work in the deep water block. However, no deal could be sealed till now. It is now developing the block itself.
Currently, ONGC pumps out nearly 65 mmscmd of gas. Of this, it sells about 50-52 mmscmd and the rest is consumed by the explorer itself for generating power and running field activities.
The KG-DWN-98/2 block is broadly divided into two areas ? Northern and Southern discovery area. The company expects to pour in around $9 billion to take out gas from the Northern discovery area.
In 2005, ONGC took over 90% stake in the block from Cairn Energy. The private explorer still holds 10% stake in the acreage.