India’s Gujarat State Petroleum Corp. Ltd. (GSPC) is looking for a strategic partner to solve problems the company is facing in developing the Deen Dayal West (DDW) Field in the shallow-water KG-OSN-2001/3 Block, off Bay of Bengal.

HP/HT conditions and low permeability have stifled development at the field for the last two years, making it difficult for GSPC to produce commercial volumes of gas.

The company has approached a couple of global firms, including state-run ONGC Ltd., to discuss offering a majority share of its 80% participating interest in field in return for hydraulic fracturing expertise and funding to develop the oil and gas prospects.

ONGC Chairman and Managing Director D K Sarraf said the company has been in talks with GSPC and appointed consultant Ryder Scott to evaluate gas properties in the deepwater block and independently certify the reserves quantities.

“We did some technical study on the field and post that we thought that it would be better to appoint a consultant because it is quite a difficult field,” Sarraf said.

ONGC is weighing the benefits of sharing infrastructure, considering the block is next to some of its prospects in the KG-D5 Block.

Cost overruns and failure to produce gas from developed wells in the field forced GSPC to seek a strategic investor.

So far, GSPC has invested more than $2.5 billion in exploration and development of infrastructure around the field but has achieved little success in addressing low permeability problems.

The operator carried out hydraulic fracturing in one of the four wells (DDW D3) in an attempt to solve the low permeability problems but failed to produce any result. A study on the job indicated that the main reason for failure could have been the use of an inappropriate fracturing fluid. Two wells (DDW D1 and D2) were developed later without hydraulic fracturing. The results of the fourth well are yet to be disclosed.

A report prepared by the Comptroller and Auditor General of India said the operator had not developed suitable drilling technology during the exploration phase and data gathered during the exploration stage was inadequate, which created problems in the development phase.

“The successive changes in approach for resolving the issue of low permeability and their outcome indicate that the company is still not clear on how to obtain the proposed production rate from the wells,” the report stated.

Four development wells have been drilled so far, compared with the target of 15 wells envisaged in the field development plan.

Trial production from the field began in August 2014, and production remains about 19 MMscf/d. The production target from the 15 wells was set at about 200 MMscf/d.

The operator acknowledged the failures and lessons learned during exploration and development well drilling, pointing out the need to make changes in well design, specifications for casings and chemicals, and completion strategy to boost production. The operator also said hydraulic fracturing and drilling multiple wells would be better options to increase the production.

During the exploration stage, GSPC drilled 13 exploratory and five appraisal wells in the KG Block. Some of these wells were drilled to up to 6,000 m (19,685 ft) depth. Nine discoveries were made in the southern part of the block. Of these, three were in the DDW and six were in other areas.

The field development plan (FDP) for the DDW discoveries was launched with a plan to drill 11 development wells, convert four exploratory wells already drilled to development wells, and build offshore and onshore processing facilities, including a wellhead platform, an offshore process-cum-living quarter platform, a subsea pipeline and an onshore gas terminal.

The operator has so far drilled four of the proposed 15 development wells but has constructed all the offshore and onshore facilities, spending about $2.57 billion— including exploration costs—as of March 31, 2015. The amount is much higher than the $1.7 billion cost for the entire DDW development plan approved in 2009.

The DDW Field, according to the FDP, has estimated oil and gas in place reserves of about 55.2 Bcm (1.95 Tcf) with a projected cumulative production of 30 Bcm (1.06 Tcf) at a recovery rate of 54.3%.

The KG-OSN-2001/3 Block, which is spread across an area of 1,850 sq km (714 sq miles), is estimated to have in-place reserves of 396 Bcm (14 Tcf) with about 215 Bcm (7.6 Tcf) recoverable, according to Gaffney, Cline and Associates. Jubilant Offshore Drilling Ltd. and GeoGlobal Resources each hold a 10% participating interest in the block.

—Ravi Prasad