Shirish Nadkarni
OGJ Correspondent
MUMBAI, Jan. 7 -- India's Oil & Natural Gas Corp. (ONGC) has delayed drilling its well UD-1 on Block KG-DWN-98/2 in the Krishna-Godavari basin because it is having difficulty contracting an ultradeepwater rig. The well is needed to prove ONGC's claims of a large gas discovery on the block.
The amount of the volumes found remains in question. ONGC informed VK Sibal, India's Directorate-General of Hydrocarbons (DGH), of the commercial discovery last year, claiming gas reserves of 2-14 tcf. However ONGC cut the estimated size of its KG basin find to 56.6 billion cu m (about 2 tcf) from the original 595 billion cu m (about 21 tcf) estimate it had announced in December 2006 (OGJ, Sept. 3, 2007, p. 32).
In return for a rig, the explorer is understood to have offered an equity stake in the block.
A senior ONGC official confirmed talks with global oil firms for securing a rig. "We know there is gas there, but it cannot be confirmed unless we drill more, and we do not have the rigs for this," he said.
The company intends to develop other gas discoveries on the block, now claiming it holds 6.37 tcf of gas, and has submitted to the DGH an appraisal and conceptual development plan for the fields. It also plans to produce oil from the region.
The DGH said the plan must be studied in depth because the issues involved concern different exploration regimes. The KG-DWN-98/2 Block was awarded under the New Exploration Licensing Policy, while the other discoveries belonged to nomination blocks. Both involved different policies.
"Issues [such as] profit, allocation of development costs, and potential of each discovery need to be studied before the plan is given the green signal," said Sibal. "All these issues take time."
The cost of developing the Krishna-Godavari discovery has been pegged at $5 billion. The earliest commercial production could start, given the worldwide shortage of rigs, is 2011.
