Tuesday, November 26, 2013

ONGC’s Renewed Impetus on Monetization of its Smaller Hydrocarbon Resources

During the last fiscal, ONGC made 22 oil and gas discoveries out of which 14 discoveries were made onshore and 8 discoveries were in offshore fields. In these discoveries, 9 were from the NELP blocks and 13 from the ONGC operated blocks awarded to the company during the nomination regime. The company has been making a steady progress in discovering new hydrocarbon resources which has been elicited by its reserve accretion y-o-y. During 2012-13, reserves accreted by the company from domestic assets stood at 84.84 million tons of oil equivalent from the nomination fields/blocks which was supplemented by noticeable accretion in reserves from its share in PSC fields and blocks which stood at 4.24 million tons of oil equivalent in comparison to 1.31 MMToe (million metric tonnes of oil equivalent) from JV fields in fiscal 2011-12.
Discoveries in Bantumilli South-1 which was a Gas discovery and Vanadurru South-1 which found both Oil & Gas resources have strengthened the prospectivity of the area and have opened up the entire adjoining tract for hydrocarbon exploration in the Krishna-Godavari onland acreage of ONGC. Basement oil and gas discoveries in Madanam-3 (the first hydrocarbon strike in ONGC operated NELP blocks in Cauvery onshore Basin) and Pandanallur-8 which found both Oil & Gas in Cauvery onshore Basin and BH-68 (again Oil & Gas discovery) in Mumbai offshore has given huge impetus to ONGC’s renewed efforts. KG-DWN-98/2-A-2 which found both Oil & Gas resources in the NELP deep-water block KG-DWN-98/2 has given a definite positive fillip to ONGC's efforts towards monetizing discoveries in the Northern Discovery Area (NDA) of this block.

Out of 14 onshore discoveries made during 2012-13, four discoveries (Anklav-9, Motera-36, Mandapeta West-12 & Phulani-1) have already been put on production and one discovery (Mansa-36) is under trial production. Efforts are on for bringing the other discoveries on production at the earliest. One discovery in offshore sector (D1-D-1) has also been put on production.

Production Performance and Upside

The company’s forecasted production volumes will see some upside within the short term period through monetization of its cluster field projects – some of which have already started producing. The rest of these 13 projects are slated to come onstream within the next two years.

ONGC’s crude oil production from its nomination acreages is slated to increase to 24.08 million tons and 24.95 million tons over the next two years backed by the completion of most of its projects that are aimed at monetizing the small and marginal fields – mostly seated surrounding the Mumbai High prolific producing region. The company’s share in joint venture blocks especially the resource rich Barmer block – operated by Cairn, is also expected to give some upside to its share of crude oil production from JV fields in the short to medium term.

Natural gas production upside will be significant from FY15 when almost all of the cluster field projects are set on production with annual volumes expected to reach levels of 25.1 BCM from its nomination acreages. However, gas production from JV fields are soon depleting due to production downslide in Panna, Mukta and Tapti fields.
Cluster Field Projects

Currently, 12 cluster field projects are under advanced stages of execution. Five projects are expected to be completed by the end of the current fiscal. Out of these five projects except the Development of G1 and GS-15 fields in KG Offshore, all other field development projects are located in the Mumbai Offshore area.
The total investment made by ONGC on these projects are over Rs. 34,000 crore and is expected to give a production boost of around 12-13 mmscmd of gas and 4-5 million tons of oil initially with ultimate peak production volumes of close to 22 mmscmd of gas and 7-8 million tons of oil.

Towards realizing the benefits of the cluster field development projects, ONGC has already started producing from B-146 fields with production of around 0.43 mmscmd of gas. D1 fields are also producing approximately at the rate of 18,000 barrels of oil per day while initial production from the North Tapti, C-Series and B-22 fields are 1.35 mmscmd, 1.53 mmscmd and 1.33 mmscmd respectively.

Next in line are B-193 field, additional production from D1 field, BHE field and WO-16 cluster fields which will be brought onstream within the next six months. ONGC has also planned to expedite the development of 6 fields in the Daman offshore area which comprise of C-22, C-24, C-39-A, C-39-1, B-12-7, C-26, C-23, B-12-1 fields. Phase I involved the drilling of 15 wells out of total of 22 wells including all three phases. Phase II and III development has been advanced by 4 years looking at the production upside through the integrated development of these fields.

The integrated development strategy adopted by ONGC has the potential to flip several small/marginal fields which were individually unviable into viable projects for commercial production. As a result of this approach, ONGC will be able to give a fillip to its hydrocarbon production from domestic fields in the short-term till the NELP discoveries further supplement production volumes.

                           
    Infraline Energy Oil & Gas Knowledgebase Team

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