State-run Oil and Natural Gas Corp (ONGC) has made another discovery in its Bay of Bengal block KG-D5, taking the number of finds in the area to 13.
ONGC discovered oil and gas in the well F-1 in the northern part of the KG basin block KG-DWN-98/2 or KG-D5, which sits next to the flagging KG-D6 block of Reliance Industries.
"On conventional testing, exploratory well F-1 flowed oil at the rate of 732 barrels per day and gas at the rate of 13,155 cubic meters a day," ONGC chairman and managing director Dinesh K Sarraf told reporters.
The 7,294.60 sq km deepsea KG-D5 block has been broadly categorised into Northern Discovery Area (NDA - 3,800.6 sq km) and Southern Discovery Area (SDA - 3,494 sq km). The latest discovery has been made in NDA.
ONGC plans to develop the discoveries in three clusters -- 14.5 million standard cubic meters per day of gas for 15 years from Cluster-1 comprising of D&E finds of NDA in KG-D5 block and G-4 find in the neighbouring area.
Cluster-2A mainly comprises of oil finds of A2, P1, M3, M1 and G-2-2 in NDA which can produce 75,000 barrels per day (3.75 million tonnes per annum).
Cluster 2B, which is made up of four gas finds -- R1, U3, U1, and A1 in NDA -- envisages a peak output of 14 mmscmd of gas, with cumulative production of 32.5 bcm of gas in 14 years.
"We are initially looking at developing Cluster-2," he said. "We plan to get first gas by mid-2018 and first oil by mid-2019."
Cluster-3 is the UD-1 gas discovery in SDA. UD-1 lies in water depth of 2,400-3,200 meters and there is no technology to produce from such depths. And so Cluster-3 is presently not being pursued for development.
Oil produced from Cluster-2 is proposed to be taken on to an FPSO (Floating Production Storage and Offloading) anchored in high-sea, from where it will then be transfered to tankers for transportation to refineries. Gas on the other hand will be evacuated on to Fixed platform through an 18-inch, 21.4 km pipeline.
It will than take the gas to an existing terminal at Odalarevu in Andhra Pradesh, for processing and sale.
Sarraf said besides F-1, ONGC had also made a gas discovery in an onland block in Andhra Pradesh. It also found a new pool in Cauvery onland block in Tamil Nadu.
He said the current low oil and gas prices are "challenging" but was hopeful rates will rise by the time the block is ready to produce.
With oil prices plunging to less than $50 per barrel and gas rates halving, costs of field services like rig rates have also come down. "It is a phase of opportunity... cost of acquisition (of these services) will be lower than what it could have been two years back," he said.
Sarraf added ONGC had prepared a field development plan for Cluster-2 with cost variation of up to 50%. But the Board has asked for optimising the same with a variation of up to 30% only.
"Board has asked us to present narrower cost rage of plus or minus 30%," he said.
Oil and gas price of the day was not "extremely material for an E&P company for investment decision," he said.
Exploration and production (E&P) companies take medium- term outlook of price while deciding on investment proposals.
"We believe this is the best time that one can do development at lower cost. Hopefully, prices will recover by the time oil and gas starts flowing," he said.
He predicted that prices will go up in 8-10 quarters. "By how much I cant say but they will rise in that time horizon," he said.