India’s ONGC Ltd. is firming up plans for oil and gas prospects in the deepwater KG-DWN-98/2 block, off Bay of Bengal, by using existing offshore and onshore infrastructure in the neighboring KG-DWN-98/3 or KG-D6 block.

“The block is targeted for production by 2016-17 and a peak production of 22 million standard cubic meters per day (MMscm/d),” said Sudhir Vasudeva, ONGC chairman and managing director. The operator has already floated a tender seeking a consultant for preparation of a field development plan for KG-DWN-98/2.

The proposed plan would initially focus on development of seven oil and gas fields – A, D, E, N, Padmavati, Annapurna, and Kanakadurga – in the Northern Discovery Area (NDA) of KG-DWN-98/2, and on four fields in the Southern Discovery Area (SDA), including ultra-deep UD-1, in the second stage. The seven fields in NDA are located in water depths ranging from 594 m (1,949 ft) to 1,283 m (4,209 ft). The SDA consisting of UD-1 ultra-deepwater discovery has a depth of 2,841 m (9,321 ft).

ONGC plans to invest US$9 billion in producing oil and gas from the fields in northern area.

Development of hydrocarbon prospects in NDA would be taken up with two other gas discoveries in the adjacent Block-IG, namely GS-4 and GS-29-5, under a cluster plan, Vasudeva said. The two discoveries are expected to produce up to 9 MMscm/d.

After appraisal tests, the operator stated in a declaration of commerciality submitted to the regulator Directorate General of Hydrocarbons (DGH) that the block is estimated to have reserves of 85 Bcm (3 Tcf) to 113 Bcm (4 Tcf) of gas and 90 MM tons to 100 MM tons of crude oil. NDA holds an estimated 92.3 MM tons of oil reserves and just less than 98 Bcm (3.5 Tcf) of in-place gas reserves spread over seven fields. The southern part of the block, containing the ultra-deep sea UD-1 discovery has estimated gas reserves of up to 85 Bcm (3 Tcf).

“The oil reserves may further increase. The large part of the block is yet to be explored,” an ONGC official said. This asset is considered the company’s third largest. Mumbai High and Neelam Heera are located on the India’s west coast.

The KG-DWN-98/2 block is in the hydrocarbon-bearing Krishna-Godavari, off Bay of Bengal, in water depths of 300 m (984 ft) to 3,000 m (9,843 ft). It has probability of success as it lies west of the KG-D6 block and southeast of Ravva field, which is producing about 50,000 b/d of oil and about 70 MMscf/d of gas.

Sharing Infrastructure

Instead of developing offshore and onshore infrastructure, ONGC is looking at using unutilized gas gathering and transportation facilities in the adjacent KG-D6 block developed by Reliance Industries Ltd. (RIL) for production from its discoveries.

RIL is willing share the spare infrastructure it developed at KG-D6, particularly the gas gathering station, pipelines that transport extracted fuels, and the onshore processing plant at Kakinada on Andhra coast. The two companies have already signed a memorandum of understanding with concerning use of the production facilities.

Usage would not only minimize ONGC’s initial capex but also expedite development and early monetization of its deepwater fields, Vasudeva said.

“It is a win-win situation not only for both companies, which are striving hard to accrete new reserves and put them on production at the quickest time, but also for [an] energy starved nation,” he added.

RIL has pipeline and other facilities capable of handling a gas output of 80 MMscm/d. KG-D6 output dipped to 11 MMscm/d in early December from the peak 69 MMscm/d achieved in March 2010. The company indicated it may never touch 80 MMscm/d due to unexpected geological complexities.

ONGC has hired Norway-based Aker Engineering & Technology for preparation of a conceptual study and feasibility report for the integrated development D&E fields in block KG-DWN-98/2 using RIL’s existing infrastructure facilities set up for the KG-D6 field.

By using RIL’s existing infrastructure, ONGC will minimize capex and speed up development of its deep-sea gas fields, an ONGC official said. It could save about $1 billion on development of independent infrastructure for handling and evacuation of well fluids.

A preliminary report prepared by the company suggested that by using existing spare capacity in KG-D6 block, development of the D and E fields in KG-DWN-98/2 block could be taken up in a cost effective manner within a limited time span. It said offshore facilities in KG-D6 have adequate provisions for tie-in of wells from the G-4, D, and E fields. The deepwater pipeline end manifold and the umbilical distribution hub) of the neighboring block are about 1.3 km from the G-4-3 well and have spare capacity for necessary tie-ins.

For the KG-D6 fields, RIL developed the offshore process facility, subsea pipelines and the onshore terminal at Gadimoga for handling 80 MMscm/d of gas with an option to increase to 120 MMscm/d. It is currently using the capacity of about 13 MMscm/d. KG-D6’s control riser platform has spare capacity in the control station for the subsea infrastructure.

Partner Search

ONGC is scouting for a partner with technical expertise to develop deepwater KG-DWN-98/2. The company has initiated talks with majors, such as Shell, Eni, and BG, to form a partnership.

“We are looking for global companies that have expertise to produce oil and gas from deepwater fields. We have opened our KG basin block data to global companies,” the ONGC official said. The company is willing to offer up to 30% participating interest (PI) in the KG basin block to the company that provides requisite technology.

Statoil and Petrobras finalized separate deals with ONGC to participate in developing the deepwater KG block two years ago, but withdrew them citing the delays in regulatory approvals.

ONGC has roped in Japan’s Inpex Corp. as a partner for another deepwater block in KG basin – KG-DWN-2004/6. Inpex acquired 26% PI in the block.

The Indian state-run explorer is keen on farming out its participating interest in KG-DWN-98/2 and other deepwater blocks to pass on some of the high costs and risks involved in exploration and development of deepwater oil and gas fields.