Long time back Theo saar has said something about ONGC not developing the East coast field like Reliance... Here
are some details regarding what the problem is....
The immense excitement over the KG basin deepwater block KG-DWN-98/2 from the time when ONGC began making discoveries in the block seems to be ebbing now. The excitement is now being transformed into frustration as the company is figuring out that the discoveries are too small to justify commercial production. Exploration is an uncertain science and while the adjacent D-6 block seems to be full of gas, the ONGC block seems to be run into no such luck.
*The block has turned out to be geologically much more complicated that what was assumed earlier. Keeping in mind the different geological structures of the two areas within the block, the entire area has been divided into two parts, the northern and the southern discovery areas, While the Northern Discovery Area (NDA) comprises of discoveries Annapurna, Kanakdurga, Padmawati, D-1, E-1, A-1, U-1 and W-1, the Southern Discovery Area (SDA) has an ultra deep discovery, UD-1 including its northern and southern extensions.
*But sadly enough, the NDA discoveries didn`t come up to much and the company had thought of abandoning plans of putting them to commercial use.
*Even for the UD-1 discovery, which was once thought to be highly prospective, the prognosis had turned out to be rather poor. The total GIIP was a mere 120.55 BCM (4257.1 Bcf) and at this level of reserves, the ultra deepwater discovery was perhaps not worth putting to commercial use.
*The company had thought of two scenarios going forward. One envisaged a standalone development of UD-Main area, while under Scenario-2, integrated development of the two areas (UD-Main and the contiguous North West Area) with sub-sea completed wells (in clusters) tied to a semi-submersible at the UD-Main structure and gas evacuation by a 140 km pipeline was envisaged.
*The expected peak gas production rate under Scenario-1 has been pegged at 565 MMScfd, while under Scenario-2, it has been estimated at 777 MMScfd. A total 8 development wells are planned for Case-1 and 11 wells for Case-2.
*Despite all the efforts going into hammering out a programme for the SDA, ONGC is still skeptical of the overall plan. The company is of the view that a concrete development plan of the project, at this stage, is not possible as it may change based on emergence of new data.
*Knowing that it is never going to be easy to have a breakthrough, the company had sought five years to submit the Declaration of Commerciality of the UD-1 discovery. This is something that the DGH cannot agree to as is far too out of line with what is prescribed in the PSC.
The UD-1 discovery gas a GIIP of just 120 BCF, not enough to justify commercialization.
*Clearly, current gas prices does not make exploitation of such reserves viable.
*Then again, UD-1 well is is an ultra deepwater discovery, at a depth of 2,841 metres. This is a rarefied space and there are technological limitations in the development of fields in the super-deepwater (water depth > 2500 mts) paradigm because there are problems in hydrocarbon gathering and evacuation from a Floating Production System. The present cost database available globally, has fair level of confidence upto the water depth of 2500m. Beyond this water depth extrapolation has been applied while estimating the capex and all of that becomes an uncertain science.
*The current record for the deepest steel catenary riser system installation for a gas field development is in water depths of 2,430 metres at the Independence Hub in Gulf of Mexico, wherein they have used Steel Catenary Risers for gathering and evacuation of well fluids. In this Hub development concept, the Floating Production System (FPS) is centrally located to maximize production from five satellite fields, one of it being the well known Cheyenne field, in 2,743 meteres of water depth. The well is tied back to a host platform (Independence Hub) positioned in water depths of 2,430 metres over a distance of 74 km.
*For development of UD-1, unlike the Independence hub, many of the technologies may have to be developed for positioning the FPS close to the field for favourable techno economics. Technological advancements in metallurgy to bring the riser hang off loads to within the allowable limits or alternate riser systems like the Free Standing Hybrid Riser systems as in ultra-deep Cascade and Chinook fields (installed in 2,600 m) may have to be evaluated. The pipeline installation vessels have to be upgraded or suitably adopted for laying larger diameter pipelines in a water depths of 2,800 m (current record is a 24-inch pipeline in 2,430 m of water depth at the Independence hub).
*Under the above circumstances, it would be difficult for ONGC to formulate a feasible development plan for UD discovery with no comparable development in such water depths at this point of time and with the current reserve base.
*In any case, it will be not at be viable to develop such a small GIIP base at the current prevailing gas price of $4.2/mmbtu