Oil and Natural Gas Corporation (ONGC), facing a prolonged stagnancy in oil production, has got a shot in the arm with one of its blocks in the Krishna-Godavari basin off the Andhra Pradesh coast, close to Reliance Industriesí much-touted KG-D6 field, having been found to hold reserves four times the previous estimate, at 100 million tonnes (mt). The PSU has stumbled upon rich in-place reserves of oil in block KG-DWN-98/2, earlier believed to hold predominantly gas.
ONGC has consistently missed its production targets over the last five years despite a healthy reserve replacement ratio (1.84 in FY13) due to project delays and most new finds being in difficult terrain.
Confirming the find of oil reserves to the tune of 100 mt (700 million barrels) in the block, ONGCís director (exploration) Narendra Verma told FE that oil was struck in three out of six appraisal wells drilled in the block. ďWith two more appraisal wells remaining to be drilled, a further upside to oil reserves is possible and the estimate is subject to (upward) revision,Ē Verma said.
ONGC has lined up a massive capital expenditure plan of around R51,500 crore or close to $9 billion for the block by 2030. The block was awarded to Cairn in the NELP round in 2000, which offloaded a 90% stake to ONGC in 2005 before selling out completely.
The public sector company had earlier made seven discoveries (mostly gas) in the block that has been divided into northern and southern discovery areas.
The declarations of commerciality (DoC) of these were submitted in 2010 and 2009, respectively. ONGC was subsequently granted an extension to its exploration period in the block up to December 2013 for drilling eight appraisal wells.
As the recovery factor for oil ranges between 25% and 30%, if the current oil estimates hold ONGC might be able to recover around 30 mt or around 200 million barrels of oil from the block. ďWe are now planning to set up a floating production, storage and offloading unit to store the oil as well,Ē Verma said.
The oil find at 98/2 is in addition to the 4.85 trillion cubic feet of natural gas reserves the block is said to hold. The commencement of natural gas production from the block is targeted by 2017-18, with an estimated peak output of 22 million metric standard cubic metres per day (mmscmd). ONGC chairman Sudhir Vasudeva had said that the