The oil regulator Directorate General of Hydrocarbons (DGH) has said that ONGC did not adhere to the minimum work programme, while exploring the offshore deepwater block (KG-DWN-98/2) in the Krishna Godavari (KG) basin. The block is expected to commence output from 2017.
The regulator has told the petroleum ministry that ONGC has ?drilled 15 less wells? in the block between 2006 and 2014.
The block was awarded in the first round of auction under New Exploration Licensing Policy (NELP) regime. The adjacent block to
PSU?s KG-D6, operated by RIL, is producing hydrocarbon since 2009.
?ONGC has categorised drilling of exploratory and appraisal wells into two
categories ? firm and to mature. However, the terminologies do not appear in the production-sharing contract (PSC),? a petroleum ministry official told FE.
Contacted, a director on the board of ONGC said, ?We are confident that we
have completed the minimum work programme in full. We have submitted the declaration of commerciality (DoC), which is being
reviewed by DGH.?
Interestingly, the management committee of the block, comprising officials from the ministry, DGH and the contractor, reviewed all the locations for drilling without any distinction of ?firm? or ?to mature? categories.
In 2008-09, the explorer could not drill any wells due to acute shortage of deep water rigs worldwide and the firm applied for rig holiday policy. The petroleum ministry granted extension of Rig Holiday Policy from January 1, 2008, to December 31, 2010, to complete drilling of wells. But, ONGC could not complete all the requisite drilling during this period and sought further extension of rig holiday policy.
In June 2012, government extended the exploration
period for the block KG-DWN-98/2 up to December 29, 2013, for drilling appraisal wells.
Moreover, ONGC has sought permission to continue with exploratory and appraisal drilling during the intervening period between submission of DoC and approval of field development programme (FDP).
ONGC has appointed Norwegian oil and gas industry service provider Aker Solutions to chart out the field
development plan for the KG basin block. The explorer is initially developing the northern area of the KG basin block.
At peak production, which is generally achieved after three-four years of the fields put under production, the acreages are expected to produce 27-metric standard cubic metre per day (mmscmd) of gas and 75,000 barrels of oil per day (bopd). Asked if not drilling the wells would impact production timelines, the ministry official said it is pre-mature to reach such a conclusion. ?The ministry wants ONGC to commence production from the KG basin block by 2017,? the official added. On December 26, 2013, ONGC hade submitted the revised DoC, which is under examination with the DGH.
The implementaion of the new gas-pricing regime from October 1 is vital for commencing production from the block. This block may not be viable at the current gas price of $4.2/mBtu.
