ONGC’s output stagnates even as reserves rise

Oct 28 2013, 02:46 IST
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SummaryDespite good accretion to reserves year after year, public-sector ONGC is finding itself in the quagmire of stagnant production

Despite good accretion to reserves year after year, public-sector ONGC is finding itself in the quagmire of stagnant production, primarily because major discoveries are held up in deep-water blocks.

Since new discoveries have come on stream slower than it wanted, producing fields are being tapped with aggression, forcing their quick march to exhaustion.

The reserve-replacement ratio has been greater than 1 since 2005-06, indicating that the discovered resources more than replaces production in any particular year; it went as high as 1.84 in 2012-13. Yet, the production numbers have hovered around the 51-53 tonnes of oil equivalent (mtoe) band.

ONGC officials say that major discoveries are held up in deep-water blocks where the company holds limited production expertise. Weak product management practices have also contributed to stagnation in production. Around 75% of ONGC’s production now comes from just 15 fields.

Of course, it is aware of the need to augment output. It pins a lot of hope on rich gas fields — particularly in the Krishna-Godavari Basin (KG-DWN-98/2), Daman and Mahanadi — and the oil reserves in the D1 block in the Mumbai offshore field. ONGC recently appointed BCG to enhance its project management practices.

ONGC has more than 50 % of the total NELP exploration acreage allotted, of which, around 66% acreage is in high-potential-deep water fields. Since 2004, ONGC has drilled over 100 deep-water wells and discovered hydrocarbons in water depths of 3,000 feet feet in environmentally and logistically difficult areas off the east and west coasts. This ranges ranging from Gujarat offshore to Mahanadi and the KG Basin offshore and Andaman offshore. Out of these, around 25 wells have been drilled in water depths of 5,000-7,500 feet and 16 wells in water depths of 7,500-10,000 feet.

The company's most prospective block is KG DWN 98/2 with around 4.85 trillion cubic feet in-place gas reserves and 100 million tonnes of in-place oil reserves. The water depth ranges from 594 metres to 2,841 metres in the block. The block has been marred by delays and attempts at inviting foreign partners have not materialised. Other prospective blocks like MDW-13 (gas) in the deep-water Mahanadi offshore and ANDW-1 (gas) in deep-water Andaman offshore fields are challenging to produce from, say ONGC officials.

Around 200-300 million mtoe of in-place reserves are trapped in high-pressures (HP) or high-temperature zones or tight reservoirs. ONGC has created a ‘Centre of Delivery’ for HP/HT zones in Chennai,

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