The Gujarat government-owned GSPC, which finds itself if the midst of a political storm over allegations of Rs 20,000 crore of wasted expenditure, is expected to start commercial production by September with technical help from oil major BP.
The Gujarat government-owned GSPC, which finds itself if the midst of a political storm over allegations of Rs 20,000 crore of wasted expenditure, is expected to start commercial production by September with technical help from oil major BP. A relatively small production is expected as early as next month.
While the Congress party recalls Narendra Modi’s claim of a 20 trillion cubic feet (tcf) find in 2005 — party MP Jairam Ramesh has cited a figure of 9 billion cubic feet (bcf) in a recent article in The Hindu — Gujarat industry minister Saurabh Patel reiterated the earlier estimate certified by reservoir experts Gaffney, Cline & Associates (GCA) of between 14 and 23 tcf at a press conference in Gandhinagar on Tuesday. According to GCA, the recoverable reserves range between 7.6 tcf and 11.8 tcf (see graphic).
While the total KG OSN 2001/3 block extends over 530 sq km, GSPL has so far submitted a field development plan that has been approved by the Directorate General of Hydrocarbons (DGH) for the Deen Dayal West (DDW) field which extends over 17 sq km — the approved estimate for gas reserves in DDW is 2 tcf, of which half is recoverable.
GSPC, which has drilled four wells so far has had limited success — the second well had a production of just 0.1 million metric standard cubic metres per day (mmscmd). After GSPC hired a new technical consultant, and had its recommendations vetted by BP, which has been guiding GSPC, a new well design is being tried. Since the field is a ‘tight’ gas one, hydro-fracking of the type done in the US is being tried out. While GSPC officials are hopeful of getting a good flow in the fourth well, it is the fifth well that they are more confident about since it combines both hydro-fracking and a new design.
Confirming the development, a senior official told FE that the initial production from DDW field would be around 1 mmscmd.
DDW is the first natural gas field in India to get the benefit of a higher gas price approved by the Union Cabinet for difficult fields in March. GSPC’s field categorised as ‘high pressure-high temperature with low permeability’ is free to choose its consumers and charge them up to $6.61 per million British thermal units (mBtu), more than double the current price of $3.06 per mBtu for other fields.
Ramesh wrote in The Hindu, “… nearly 11 years since that grandiose announcement (of GSPC’s KG Basin gas discovery) by Mr Modi. There has been zero gas recovered yet from the KG Basin. Yes, zero. Why? Because there is no gas there. GSPC spent Rs 19,700 crore during this period, ostensibly looking for the missing gas.”
The Congress in the ongoing Parliament session has demanded a joint parliamentary committee probe into the alleged scam. The Comptroller and Auditor General (CAG), which audited GSPC, had also called into question GSPC investment of Rs 19,576 crore in its KG block, saying “future prospects” of the block remained shrouded in “uncertainty”.
Giving details of the GSPC’s efforts at extracting gas from the basin, sources said it has spent Rs 14,652 crore on the DDW field till now. GSPC has started test production from wells DDW-1 and 2 in August 2014 and from DDW-3 from September 2014. These were conventional wells where initial results were positive but did not sustain for a longer period. Currently, only DDW-2 is under test and producing about 0.1 mmscmd of gas.
Later, it drilled another well, DDW-4, where it utilised hydro-fracking technology. This well, the sources said, would be put on stream for commercial production this month. The output is expected to rise after a fifth well — DDW-5 — would be completed later this year. At the same time, side-tracking model would be implemented to DDW-1, 2 and 3 to hydro-frack and improve gas production from these wells. “This (DDW) is not an easy field. BP is also helping in to provide technology solutions for production where wells are at a depth of 4,000 metres,” said a second official monitoring the progress of the project.
The offshore KG-OSN-2001/3 block was awarded to GSPC in February 4, 2003. According to the field development plan (FDP) submitted by GSPC in November 2009, first commercial production was expected in December 2011 and it was envisaged to touch a peak output of 5.24 mmscmd in three years or in 2014. A total of 11 development wells were to be drilled to produce 1.0596 tcf or 54.3% of the gross initial in-place reserve of 1.952 tcf.
GSPC has already set up well-head platform, processing cum living quarter platform, sub-sea pipeline network and onshore terminal. Of the 11 development wells, about six are in different stages of drilling.