ONGC plans to invest $2.89bn in KG gas find

NEW DELHI: State-owned Oil and Natural Gas Corp (ONGC) plans to invest $2.89 billion (about Rs 15,340 crore) in developing its ultra-deepsea UD-1 gas discovery in the Krishna Godavari basin by 2016-17. ONGC believes that UD-1 gas discovery in the southern part of its Block KG-DWN-98/2 can produce for 14-15 years with peak of about 20 million cubic meters per day (mmcmd) lasting for five years, official sources said.

The company detailed the production profile and the likely investment in the revised proposal for declaring the UD-1 find as commercial (called Declaration of Commerciality). Block KG-DWN-98/2 sits next to Reliance Industries’ KG-D6 block where drop in reservoir pressure and water/sand ingress has seen output dip by over 35% to just over 39 mmcmd.

UD-1 is the deepest gas discovery ever made in the country and ONGC estimates it may hold 4.257 trillion cubic feet of inplace gas reserves, source said adding the upstream regulator, the Directorate General of Hydrocarbons (DGH) has accepted the DOC but with lower inplace volumes of 3.938 Tcf.

Of the inplace reserves, ONGC estimates 2.55 Tcf can be recovered while DGH puts the figure at 2.315 Tcf. Sources said ONGC plans to drill 11 wells to bring the field to production by 2016-17 with an output of 585 million cubic feet per day (16.5 mmcmd).

The production would rise to 715 mmcfd (20.24 mmcmd) in the second year and stay there for five years. Output from the seventh year would start dipping and it would be 86 mmcfd (2.4 mmcmd) in year 15. DGH, they said, found the discovery commercial after considering cumulative production of 2.315 Tcf with recovery of 58.5% for 15 years. It estimated a net present value (NPV) yield for ONGC at $200 million.

Source By Times Of India (Date:03/01/2012 Time:11:45 IST)

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