The news of gas supply from the high profile Reliance Industries Limited (RIL) operated KG-DWN-98/3 field off Andhra coast (better known as KG-D6) drying up by 2020 has come as a shocker for energy deficient India that imports 80% of its oil and nearly 40% of its gas requirements for running fertilizers, power plants, households etc and is aspiring to move rapidly towards building indigenous production capability.
Prior to 2000, domestic gas supplies were coming primarily from major gas finds in the Bombay High and South Bassein area in west offshore discovered in late 70s with total production of around 75 million standard cubic meter [mmscmd]. A second bout of major discoveries came around the turn of present century. This led to projection of an additional 150 mmscmd to come mainly from KG-D6 and ONGC operated KG-DWN-98/2 (located next to KG-D6).
Amongst these fields, development work on KG-D6 started at a momentous pace and in an initial development plan (IDP) submitted in 2004, RIL promised production of 40 mmscmd corresponding to in-place reserve of 5.45 trillion cubic feet [tcf] and recoverable reserve [RR] of 3.81 tcf. However, in an ‘addendum’ to IDP submitted in 2006, supply commitment was doubled to 80 mmscmd linked to in-place reserve of 12 tcf and RR of 10-11 tcf. Production from KG-D6 commenced in 2009 and scaled up to reach 60 mmscmd in 2010. Thereafter, it declined progressively to touch a low of around 10 mmscmd currently. In 2012, the operator revised in-place reserves to 2.9 tcf and correspondingly RR to 1.9 tcf.
At present, it has only 0.183 tcf left. Plus, it has residual of 0.064 tcf out of total 0.4 tcf that migrated from ONGC’s G4PML and D1/E1 discoveries in KG-DWN-98/2 area to KG-D6 – as estimated by De-Golyer and MacNaughthon [D&M], a consultant appointed by Union government [following dispute between ONGC and RIL]. That gives a total of 0.247 tcf or 6.675 billion cubic meter [bcm] [37 cubic ft = 1 cubic meter]. Even at current measly flow rate of 10 mmscmd, this will get exhausted in less than 2 years.
As regards, KG-DWN-98/2, ONGC did not take steps to develop it for more than a decade. At present, the field is under development and company hopes to commission it by 2018. However, in view of the migration of substantial quantity to KG-D6 [see above], its ability to deliver the projected output has been impaired. As in case of KG-D6, the facts related to this field are equally disturbing.
According to the original declaration of commerciality [DoC] submitted by ONGC, these fields had 1.7 tcf of in-place reserves of which 1.2 tcf could be recovered. However, according to D&M report, the in-place reserves are 0.9 tcf and RR – taking in to account gas migrated to RIL field – at 0.5 tcf [13.5 bcm] [this could at best go up to 0.6 tcf considering RR to in-place reserves ratio same as furnished by ONGC in the DoC]. At flow rate of 16-17 mmscmd [as per ONGC], this would get exhausted in a little over 2 years.
A few months ago, the Prime Minister’s Office (PMO) had taken a meeting with ministry of petroleum and natural gas [MPNG] to review all the gas fields whose Field Development Plans (FDPs) have been approved by MPNG. It was estimated that domestic gas output will increase from current 92 mmscmd [33.6 bcm] to 160 mmscmd [58.4 bcm] by 2020-21. The current production includes 24 bcm from ONGC, 2.8 bcm from Oil India Limited (OIL) and 6.8 bcm from production sharing contracts (PSC) regime blocks.
PSC covers production from pre-NELP [new exploration licensing policy] exploration blocks as well as NELP. No incremental gas production is expected from pre-NELP blocks. According to MPNG, “The major fields under pre-NELP regime, such as Panna-Mukta, Tapti, Hazira and Ravva are matured and ageing and production from these fields are under natural decline.”
The ONGC’s production is projected to increase from 24 bcm to 35 bcm by 2019 on the back of development of C-26 cluster, Daman offshore block, additional production in east coast from deepwater wells of G1 field and from commissioning of KG-98/2 in after 2017. Even though on paper, KG-98/2 is projected to account for an overwhelming share of the increase, in reality by the time we land in 2020-21, contribution from this field would be scratching the surface [on the basis production starts in 2018].
The RIL production from KG-D6 block is projected to rise from present 3.6 bcm to 12 bcm in 2018. This again will remain only on paper in view of currently producing wells drying up in just about two years time [see above] and the operator unlikely to take up development of other wells [for instance, R-Series project in KG-D6 block and CYD5 in Cauvery basin] citing un-attractive pricing policy environment and regulatory issues.
Given the huge disappointment in regard to the two high profile and much publicised fields of ONGC and RIL in KG basin, of the total projected increase of around 25 bcm, nearly 60% or 15 bcm will just not be available. Consequently, by 2020-21 the availability of domestic gas would at best be 43 bcm or 118 mmscmd which is barely 6% higher than 111 mmscmd achieved in 2012-13.
Most of ONGC’s existing major producing fields are more than 35 years old. These fields have crossed their plateau level and are on natural decline. Maintaining production levels from these fields, through improved/enhanced recovery schemes also poses a big challenge requiring heavy investment besides deft planning and timely execution. Any shortfall here will make a further dent on overall availability.
In sum, the scenario in regard to domestic production of gas 5 years from now is grim and could seriously jeopardize India’s energy security. Luckily, today the global supply scenario is pretty comfortable and is expected to remain so for next 3 years at least. The government should use this interregnum to intensify exploration and production efforts so that India is well equipped to meet rising demand even when global supply becomes tight.