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The clock is ticking for ONGC if it wants to become the country’s first hydrocarbon explorer to produce gas from the most challenging and only ultra-deepwater discoveries.
Discovered in 2006 about 150 km off the Andhra Pradesh coast is ONGC’s ultra-deepwater find, called UD-1, in the Krishna-Godavari basin block KG-DWN-98/2. This block was awarded to ONGC under the New Exploration Licensing Round (NELP) and is governed by a production-sharing contract, which clearly defines a timeline for each activity.
Though giving extensions are normal for such difficult finds, they cannot be granted forever, sources in Directorate General of Hydrocarbons said. ONGC had been going slow on this area of the block due to technological challenges. Only after the discovery is found to be commercially viable does the contractor submit a field development plan.
The block is adjacent to the Reliance Industries Ltd-operated KG-D6 block and the GSPC block recently acquired by ONGC.
“Till now we have been communicating to ONGC on technical issues, but now we have asked the company to come back again with its proposal seeking the commerciality of the find,” said a senior official in the Directorate General of Hydrocarbon.
The find, since it was struck, has had its own share of controversy. Not only was it a challenge for the explorer, but in 2007 questions were also raised by the then DGH on the method of testing the find. The discovery was accepted only after the contractor had proven that it could flow the gas to the surface.
Its recent proposal for Declaration of Commerciality was returned by the current DGH on the grounds that ONGC needs to come up with technical studies showing how it would flow the gas to the surface and the quantum of in-place reserve.
According to ONGC, the major challenges were sub-zero temperatures and the water depths of 2,600-2,900 metres. The discovery, according to ONGC’s assessment, holds about one trillion cubic feet of recoverable reserves.
Officials in the ONGC believe that the time is right to go for this find. “The company will re-submit the declaration of commerciality proposal. It is also weighing the option of drilling more appraisal wells. We are confident of the results,” the official added.
ONGC had geared itself up with studies of similar acreages, such as Perdido, Cascad & Chinook, and Independent Hub in Gulf of Mexico as well as Stones in the same region. In its declaration, ONGC had said it might process this gas by floating a production unit and evacuate through a pipeline.
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