With 17% of the global population, India faces a huge challenge to meet its growing domestic energy consumption, especially as it holds only 0.35% of oil reserves and 0.6% of natural gas reserves in the world.
As a result of dynamic economic growth, the country’s oil consumption is expected to increase from 3.7 million BOPD in 2013 to approximately 4.4 million BOPD by 2018.
According to the BP Statistical Review of World Energy 2014, India’s proved oil reserves stand at 5.7 billion bbl with a production of 894,000 BOPD. Ranked as the fourth largest oil consumer after China, United States, and Russia, the country imports 82% of oil and 25% of natural gas to meet its demand.
Approximately 56% of India’s reserves are offshore and 44% onshore. The majority of the reserves is located in the western offshore region, near Gujarat and Rajasthan. The Assam-Arakan basin in the northeastern region holds 23% of reserves and 12% of the production in the country.
Although the country has enormous production potential, exploration efforts have not yet tapped the Indian sedimentary basin. Data from the Directorate General of Hydrocarbons (DGH) showed that India has a sedimentary area of 3.14 million km2 consisting of 26 basins, of which 1.39 million km2 is onshore, 0.4 million km2 is located in shallow water, and 1.35 million km2 is located in deep water. Deepwater oil production began in September 2008 when Reliance Industries (RIL), India’s largest private sector company, started production in the KG-D6 block of the Krishna-Godavari basin in the eastern offshore region.
According to the state-controlled Oil and Natural Gas Corp. (ONGC), only 22% of the sedimentary area is well explored, 44% has had exploration initiated, 12% is poorly explored, and 22% is unexplored. Of the 26 basins, only seven are currently producing.
To boost investment in the upstream sector, Indian exploration and production (E&P) companies want the government to provide incentives to local players. “The core policy initiative of the government of India’s ‘Make in India’ can gain necessary momentum and direction if supplemented by ‘Discover in India’ initiative, the latter aimed at discovering, developing, and producing energy resources in India,” said Manish Maheshwari, chief executive officer of Essar Oil E&P.
Maheshwari said that policies with a clarity of intent and richness in content are needed to attract the much needed capital in the upstream E&P sector. “We expect the Ministry of Petroleum and Natural Gas to usher in the next wave of reforms in the E&P sector through various policy initiatives. For instance, exploration focus through open acreage licensing policy, execution driven through simultaneous exploration and production of reserves across conventional and unconventional plays, and ensuring fiscal certainty,” he said.
Since 1999, India has auctioned 254 blocks in nine rounds of bidding under the government’s New Exploration Licensing Policy (NELP). The 10th round of licensing (NELP X), set to be held in the first quarter of last year, was delayed as the ministry tries to simplify the process and make it more transparent.
The government is considering a shift to a uniform licensing policy (ULP) instead of NELP. “The government is finalizing ULP to enable the contractor party to exploit all types of conventional and nonconventional hydrocarbon resources in order to remove hurdles in exploring and exploiting various types of hydrocarbons,” said Anil Sood, deputy general manager of NELP at DGH. “Once the policy is finalized by the Ministry of Petroleum, NELP Round X can be held.”
A New Mission
ONGC is the largest oil and gas producer in India, controlling 59% of the country’s oil production and 62% of natural gas output.
The company said it produced a total of 22.26 MTPA of crude oil from April 2014 to March 2015 compared with 22.25 MTPA from April 2013 to March 2014. ONGC said it is the first reversal in a 7-year decline of oil production. The decline began in 2007–2008 when the company produced 25.94 MTPA, down from 26.05 MTPA in 2006–2007.
ONGC invested heavily to maintain production in operating fields and has pumped more capital and technologies into 15 major fields responsible for 70% of its crude production.
The company said it is one of the best players in the world in terms of brownfield management. As production from mature fields declines by 7% to 8% per year worldwide, ONGC said it succeeded in offsetting its own production decline by 1.5% to 2% in its western offshore region by infusing technology, drilling new wells, and taking other measures to enhance oil production.
Following 5 years of a continuous decline in production, the company said crude oil production from the western offshore fields reached 325,000 BOPD in March compared with 315,000 BOPD in February as a result of increased production from new and marginal fields and aging facilities.
“The addition of a couple of high-producing new wells in marginal field B-193, installation of high-volume electrical submersible pumps in the D1 field, and undertaking massive hydrofracturing jobs are among some exclusive hi-tech initiatives, which have resulted in additional oil gain,” the company said.
The diversion of well fluids from the Cluster-7 fields to the newly engaged floating, production, storage, and offloading (FPSO) vessel, Sterling-II, was largely responsible for the increase in production.
Located 210 km off Mumbai in the Mumbai High-Deep continental shelf of the Mumbai basin, Cluster-7 comprises three marginal fields with a water depth of approximately 80 m to 88 m. The B-192 field produces oil and gas and the B-45 and WO-24 produce gas.
Because the fields are remote and marginal, ONGC opted for a cluster development for technological and commercial viability. Installation of the FPSO increased the production from 7,500 BOPD to 14,000 BOPD by reducing the backpressure from the producing wells.
Last December, the company revealed plans to boost production from the giant offshore oil field of Mumbai High (South) and to begin the integrated development of the Mukta, Bassein, and Panna formations. The Phase 3 redevelopment of Mumbai High aims for an incremental gain of 7.55 million tonnes of crude oil and 3.86 Bcm of gas by 2030.
The plan calls for the drilling of 36 new wells and 34 sidetrack wells, along with the installation of three well platforms, two clamp-on facilities for wells on existing platforms, associated pipelines, and modifications at 18 platforms. The facilities are scheduled to be installed by April 2017 and the drilling of wells and overall project completion is set for March 2019.
The integrated development of the Mukta, Bassein, and Panna formations is intended to increase the gas pressure from 10 to 27 kg/cm2 with the ultimate goal to further enhance the field life and increase recovery. ONGC plans to drill 18 wells, including 5 subsea wells, and install a process platform with gas processing and compression facilities. The project is set for completion in April 2017.
The company aims to increase production by 23% to 29 MTPA by 2019–2020, mainly from the Mumbai and Gujarat offshore fields, which contribute about 70% of its production. Offshore oil output reached 16.19 MTPA in 2014–2015, up from 15.54 MTPA in 2013–2014, while onshore production declined to 6.06 MTPA compared with 6.7 MTPA year-on-year. ONGC is targeting a total production of 26 MTPA in the next year.
Unconventional Plays
India’s unconventional hydrocarbons include an estimated potential 450 Tcf of coalbed methane, 65 Tcf of shale gas, 142 Bcm of gas hydrates, and 6,900 Tcf of gas through underground coal gasification, ONGC data showed. The shale gas reserves are more than 20 times the volume of the country’s biggest gas discovery, the KG-D6 block, which is operated by RIL.
The engagement of India’s oil and gas companies in tapping these unconventional resources is in the preliminary stages. In 2013, the Indian Cabinet approved a shale gas exploration policy for national oil companies, including ONGC and Oil India, by allowing the companies to explore and produce shale gas and oil in the blocks they already control. The government plans to extend the opportunities to private players at a later stage.
So far, ONGC and Oil India have identified 55 shale gas blocks, with 50 and 5 shale blocks, respectively. The petroleum ministry said that the 55 blocks are located in the states of Assam (6 blocks), Arunachal Pradesh (1 block), Gujarat (28 blocks), Rajasthan (1 block), Andhra Pradesh (10 blocks), and Tamil Nadu (9 blocks).
ONGC was the first company in India to establish a shale gas presence when it signed a deal with ConocoPhillips in 2012 to explore and develop assets. Last year, ONGC announced the successful drilling of the first shale gas exploratory well near Jambusar, which was followed by another well in Cambay basin in Gujarat. It has also started another exploration well in the Gandhar area in the same basin.
Oil India is focusing its shale oil and gas efforts in the Deomali and Jairampur blocks in Arunachal and the Chabua, Dibrugarh, and Dumduma blocks in Assam.
Essar Oil was the first company to tap the coalbed methane (CBM) reserves in the country. “We are the largest CBM gas producer in India,” said Maheshwari. The company holds 100% interest in CBM blocks in Rajmahal (Jharkhand), Raniganj (Durgapur, West Bengal), Sohagpur (spread between Madhya Pradesh and Chhattisgarh), Talcher (Orissa), and IB Valley (Orissa).
“Gas resources across the five CBM blocks are to the tune of 10 Tcf. Raniganj block’s current production exceeds 0.5 million std m3/d, which is slated to rise to 1.2 million std m3/d by the end of the year,” he said.
Seeking International Assets
In April, Indian Prime Minister Narendra Modi said the country aims to reduce its reliance on imported oil and gas from 82% of its demand to 67% by 2022 and 50% by 2030.
To achieve this goal, Indian companies will need to look for international oil and gas resources, conventional and/or unconventional.
ONGC, through its subsidiary and overseas arm ONGC Videsh (OVL), is involved in upstream projects around the world, including shale projects in Russia. OVL has interests in 36 oil and gas assets across 17 countries with total reserves exceeding 637 million tonnes of oil equivalent. The company currently produces 182,000 B/D of oil and oil equivalent.
RIL holds 60% interest in the KG-D6 block in the Krishna-Godavari basin, but is facing growing challenges as the gas output has declined from a peak of 70 million std m3/d in 2010 to 11.8 million std m3/d currently. Last month, the petroleum ministry began collecting the USD 195 million in penalty imposed on the company for producing less natural gas from the KG-D6 field than the output pledged in its revised field development plan.
RIL has invested USD 8 billion in US shale gas projects (Marcellus and Eagle Ford plays) and signed a production sharing contract with Myanmar Oil and Gas Enterprise for two offshore blocks located in the Tanintharyi basin of Myanmar.
Last year, RIL expanded its investments in Venezuela and Iraq and entered an agreement with Mexico’s national oil company Pemex to explore potential upstream oil and gas business opportunities in that country.
On the Cutting Edge
From major national oil companies to private sector E&P players, Indian oil and gas companies are deploying cutting-edge technological solutions to boost production.
More than 70% of ONGC’s local producing fields are mature fields and are in a phase of declining production, which has been offset with the deployment of improved oil recovery (IOR) and enhanced oil recovery (EOR) technologies. The recovery factor at the fields ranges from 25% to 33%. The company aims to achieve a recovery rate of 40% by 2020.
Cairn India, a private E&P company, produces 27% of India’s domestic crude oil. It is implementing one of the largest EOR projects in the world at the Mangala field, in which it started injecting polymers.
“Injecting the polymer at our world-class polymer flood EOR project ahead of schedule is a testament to our execution skills and teamwork. This will enable us to further unlock the potential of the prolific Rajasthan block and help contribute significantly toward the nation’s energy security,” said Sudhir Mathur, chief financial officer of Cairn India.
In addition to EOR, Cairn India is the first company in India to use microseismic hydrofracture monitoring techniques, applying them in the Raageshwari deep gas field.
“We are also deploying two different techniques for horizontal fracturing: plug and perf and openhole ball drop. These techniques allow us to create multiple fracs in the same well with minimum time and cost,” said Sourav Das, deputy general manager of corporate affairs and communications at Cairn India.