India's state oil and gas companies are stepping up efforts to find and develop more hydrocarbons.
The state companies and petroleum ministry are shifting their strategy on exploration in India for the early 1990s. Impetus for the shift comes mainly from the recognition that India's reserves additions in recent years have lagged production.
India projects its energy demand will soar as a result of population growth and efforts to maintain the pace of industrialization.
Thus, the country faces a rising oil import bill while it struggles to keep its economy afloat.
There may be significant opportunities for international oil and gas companies as well as service and supply companies in India as that nation seeks to expand its petroleum industry.
The change is prompted by a new government under Prime Minister V.P. Singh that is grappling with a huge budget deficit and big debts. Government budgets for oil and gas work are likely to be cut despite the need to expand the petroleum industry.
As a result, more foreign multinational companies and private Indian companies are pursuing exploration and other oil and gas work in India as the government gradually creates opportunities.
THE PROBLEMS
There are pitfalls ahead as well. Trade barriers and political instability have made the country a difficult place for foreign operators.
Efforts to open more exploration acreage to foreign participation stumbled last year and last month but may move off high center in 1991 as the new government places a higher priority on energy development.
The Indian government has postponed to yearend the fourth bidding round for exploration permits. The new National Front government is reviewing programs of the petroleum ministry and state owned Oil & Natural Gas Commission (ONGC). The review covers results of the third bidding round, recommendations on bidding by a committee set up to allocate acreage to foreign and domestic companies, ONGC's assessments of the acreage, and terms under which Indian companies can enter exploration deals.
In addition, Indian oil officials are trying to focus government attention on gas utilization. In the western offshore area, a costly gas development project is being partially shut in and gas flared for lack of demand.
This thrust may put efforts at developing a gas pipeline grid in high gear again, thus boosting domestic demand and drilling for gas.
BACKGROUND
India's sedimentary basins cover a total 1.72 million sq km. Of that, 78% is onshore and the remainder offshore in water depths averaging about 600 ft.
India's first serious push in oil and gas exploration came in the 1950s. In the years that followed, production ramped up as result of significant discoveries such as Bombay High and Upper Assam oil fields.
Officials at the end of India's sixth fiscal planning period (1980-85) noted that additions to reserves lagged production during much of that time.
Further, a technical committee on exploration for the seventh plan (fiscal 1985-90) recently underscored a need to review the country's exploration strategy. The committee emphasized the need to pursue further exploration in proven basins, which were being neglected in favor of frontiers.
The committee recommended a threefold strategy: stepped up exploration in proven basins, an intensified search in basins known to have yielded shows of hydrocarbons but no commercial production, and a strong, separate program for highly prospective, high risk basins.
EIGHTH PLAN
Indian oil officials are continuing to formulate a detailed strategy for the country's eighth energy plan (fiscal 1990-95).
The new plan is centered on India's projected patterns of energy demand. India posted a growth rate of 6-7%/year in demand for petroleum products during the seventh plan. Domestic supply met 66% of that demand. That compares with an oil import dependence level of 40% in fiscal 1988-89 and 30% in 1984-85.
Officials predict India's crude oil production will reach 1.02 million b/d by 1995. Indian oil demand, however, is projected to climb to 1.56 million b/d by then.
The government hopes to keep India's tab for crude and products in fiscal 1990-91 at the previous fiscal year's $4.265 billion. The oil import bill for 1990-91 currently is projected at $5.735 billion, assuming domestic crude production of 700,000720,000 b/d.
Total demand for the current fiscal year is estimated at 1.18 million b/d, a 10% increase from the last fiscal year. Surging demand for kerosine and diesel fuel sparked that growth, and the government is considering curbs on consumption of both products.
To boost Indian oil reserve additions, petroleum officials call for a sweeping reassessment of Indian geological knowledge buttressed by new theoretical approaches, extensive seismic surveys, and further advances in exploration technology such as 3D basin modeling.
To that end, India's oil industry has earmarked about $19.5 billion for exploration in 1990-95, compared with $7.1 billion spent in 1985-90.
Under the eighth plan, footage drilled in India is expected to jump to 19.52 million ft from 9.25 million ft drilled in 1985-90. That kind of drilling campaign calls for rig use totaling 609.05 rig years vs. 589.06 rig years during the preceding plan period.
ONGC PLANS, PERFORMANCE
ONGC hopes to boost its crude oil production in the eighth plan to an average 940,000 b/d in 1994-95 from an average 640,000 b/d in 1989-90, despite likely government cuts in its proposed 5 year budget of $18 billion.
Biggest contributors to the production increase are to be the western offshore area 70,000 b/d, followed by eastern regions 30,000 b/d, and the western onshore areas 20,000 b/d.
Overall, ONGC is targeting a production volume increase of 387 million bbl for the current 5 year planning period vs. the seventh plan.
ONGC during the seventh plan boosted production to a 5 year total of 1.064 billion bbl, up from 657 million bbl in the sixth 5 year plan.
ONGC gas production in the seventh plan jumped to 1.059 tcf from 317.8 bcf in the previous period.
In a comparison of the same two periods, ONGC production of liquefied petroleum gases soared to 19.5 million bbl from 4.9 million bbl.
ONGC also accelerated gas utilization efforts in the past 5 years. The company started up gas pipelines to Surat, Bombay, Bharuch, Ankleshwar, Agartala, and Moran. It also started pilot projects using compressed natural gas as a motor fuel.
In exploration, ONGC emphasized improving its wildcat success ratio while trimming costs. ONGC boosted total combined hydrocarbon reserves to 10.15 billion bbl of oil equivalent (BOE) in the 5 year plan against a target of 8.68 billion BOE.
ONGC found 59 oil and/or gas fields during the seventh plan, with the southern basins emerging as a major oil and gas producing province. The state company opened plays in the Meghalaya, Nagaland, and Mizoram areas.
During the period 82 rigs joined ONGC's fleet, boosting the fleet to 148. Rig efficiency also improved in the period, climbing to 2,730 ft/rig/month in 1989-90 from 2,037 ft/rig/month in 1984-85.
ONGC also made strides in private company participation in drilling services for the company. Of 52 joint ventures with private companies approved by the government during the period, 17 have started up.
During 1989-90 ONGC has let contracts totaling $360 million to domestic companies. Total contract awards during the seventh plan reached $1.46 billion. Foreign exchange outflow as a share of planned expenditures dropped to 34% in 1988-89 from 48% in 1984-85.
ONGC also stepped up efforts in foreign exploration and development and in selling its technical expertise abroad. It signed a production sharing contract with Viet Nam's state oil company Petrovietnam, consulting contracts with Thai and Malaysian state companies, and a contract to conduct seismic surveys in the foothills of Bhutan.
It also agreed to conduct petroleum related studies for Abu Dhabi National Oil Co. and for the state company of the former South Yemen, recently merged with North Yemen (OGJ, May 28, p. 42).
OIL EFFORTS
Oil India Ltd. (OIL) had its best year to date in fiscal 1989-90, said OIL Chairman Surajit Chaliha.
OIL's profits jumped 17% from the previous fiscal year as revenues shot up to $448 million from $222.5 million. Revenues to the government in taxes and royalties climbed to $26 million in 1989-90 from $17 million in the previous period.
OIL's crude production in 1989-90 rose to 54,000 b/d from 48,000 b/d the previous fiscal year, although total volume for the 5 year plan fell short of the targeted 109.5 million bbl at 94.1 million bbl. Declining oil production in mature fields such as Nahorkatiya and Moran and civil strife in Assam contributed to a general decline in production for several years during the seventh plan, Chaliha said.
The company's LPG production in 1989-90 was 1,105 b/d.
OIL development well footage in Assam totaled 199,295 ft in the last fiscal year vs. a target of 177,983 ft. OIL shot 2,507 line km of seismic surveys in the period against a targeted 2,400 line km.
OIL has ventured outside its base operations in Assam to explore in Rajasthan, Saurashtra, and Arunachal Pradesh. It completed four gas wells and drilled a fifth well with good oil shows in Rajasthan.
In Arunachal Pradesh, 35 of OIL's 41 wells yielded hydrocarbons, and the company has installed early production systems.
OIL is operating in a 29,400 sq km area in the Kutch-Saurashtra basin off Saurashtra, where it currently is shooting seismic surveys expected to total about 10,000 line km. In addition, the company has applied to the government for a license to explore for oil and gas in the Ganga Valley in the Himalayan foothills.
OIL has pulled out of exploration along the northeast coast of India and off Mahanadi and Anadaman because of a lack of success. It is studying data obtained and may resume drilling in these areas under the eighth plan.
OIL plans capital and exploration spending of $117 million in the eighth plan and has set its crude production target for the 5 year period at 121.2 million bbl.
GAS UTILIZATION PUSH
India's new minister for petroleum and chemicals, M.S. Gurupadaswamy, has asked Gas Authority of India Ltd. (GAIL) to study the feasibility of moving gas from western offshore fields to states in the south for power generation. He called flaring of about 424 MMcfd of gas on Bombay High "a criminal waste."
"Why cannot this gas be supplied by a pipeline from Bombay High to the four southern states-Andhra Pradesh, Karnataka, Tamil Nadu, and Kerala-which are chronically short of electricity?" Gurupadaswamy asked.
Proponents of a national gas grid point out that laying the 1,700 km Hazira-Bijaipur-Jagdishpur (HBJ) pipeline from South Bassein field off the western coast has spawned industrial development such as fertilizer and power production in areas of Gujarat, Madhya Pradesh, and Uttar Pradesh.
India has only 2,571 km of gas pipelines, including the HBJ line. There are 387 km of gas pipeline in Gujarat, 182 km in Northeast India, the 72 km Kovvur-Narasapur line in Andhra Pradesh, and a 14 km gas line from Narimanam to a steel rolling mill and a ceramic factory at Nagapattinam in Tamil Nadu.
ONGC proposed a national gas grid in 1984. S.P. Wahi, former chairman of ONGC, in July 1989 put India's gas reserves at 16.95 tcf and then current production at 1.16 bcfd. India consumes only about 70% of its gas productive capacity, however, Wahi said. The new chairman of ONGC is P.K. Chandra.
Brahm Dutt, the former petroleum minister, pushed for development of regional gas grids before creating a national gas grid.
The petroleum ministry late last year came up with a plan to more than double gas production and end flaring by 1995 (OGJ, Dec. 4, 1989, p. 20).
BASSEIN WOES
Although Bassein gas has spurred industrial development in western India, slow progress in that regard has forced ONGC to shut in big volumes in the field for lack of demand.
As a result, the ambitious $400 million offshore gas development project is suffering economically.
About 10% of the investment in the project is by foreign partners.
ONGC is producing about 424 MMcfd at Bassein, formerly South Bassein, against a capacity of about 706 MMcfd.
ONGC wants to slice Bassein flow by a further 71-106 MMcfd following an increase in associated gas production at Bombay High.
The Bassein-Hezira pipeline extends to Bombay High, allowing the area's increasing associated gas production to supplant the shutin flow at Bassein in the pipeline.
India's government had set a gas production target for ONGC of 636-706 MMcfd by the end of the seventh plan.
To meet that goal, ONGC installed two gas processing complexes in Bassein field.
Bassein was expected to deliver gas to six fertilizer plants, three power plants, and a number of other industrial projects along the HBJ pipeline route.
Three of the fertilizer plants and a planned power plant at Kawas remain shelved, and the rest of the planned industrial infrastructure is not expected to get off high center soon.
It now appears, say Indian industry officials, that the investment in Bassein should have been postponed for a 10 year period for lack of market.
ONGC estimates that 547 MMcfd of gas in all is flared in western offshore fields, almost 30% more than Bassein produces.
FRACTURED BASEMENT CAMPAIGN
ONGC is pressing a campaign to produce oil and gas from fractured basement, which it estimates could yield as much as 20,000 b/d by 1992-93.
Borholla Changpans field in Upper Assam Valley, recently placed on stream, produces oil and gas from fractured basement. In addition, ONGC has declared commercial a fractured basement gas discovery on a structure off Tamil Nadu.
In the past, commercial gas was produced from fractured basement in the onshore Andhra Pradesh area.
ONGC considers the Bombay High area prospective for fractured basement hydrocarbon potential, according to new geological models.
It drilled several wildcats in the western offshore area to test the theory, with production tests yielding as much as 450 b/d of oil and 7 MMcfd of gas.
COCHIN HIGH ACTION
Drilling by ONGC and foreign operators in the Cochin High area is expected to increase in the next 3 years.
ONGC estimates Cochin High's potential oil resource at more than 1 billion bbl in the Cochin-Mangalore region.
BHP Petroleum Pty. Ltd. suspended a wildcat after tests yielded apparent oil shows in the Cochin High area off Cochin. BHP drilled the well to 10,499 ft. It plans further drilling after evaluating samples.
Drilling plans in the Cochin High area call for three wells by ONGC and one well each by BHP and Shell International Petroleum Co. Ltd.
OTHER FOREIGN INTEREST
Other foreign multinational companies have expressed an interest in exploration in India, says Leila Gurcharan Singh, India's trade liaison representative to Oklahoma.
A combine of Chevron Corp. and Texaco Inc. has asked for permission to drill wildcats in the onshore Krishna-Godavari basin, she said.
She also cited OIL's recent award of a contract to Spie-Capag of France and the local Punj & Sons for work related to the HBJ pipeline.
Hindustan Oil Exploration Co. (HEOC) was awarded a production sharing contract in an undisclosed area in partnership with ONGC and OIL, Singh said.
Further, HEOC is working with West Germany's Prakla Seismos AG to acquire and interpret seismic data in India.
OTHER E&D PROGRAMS
Among other action, ONGC has drawn up a development plan for Beghraji field in North Gujarat, which it considers the best discovery in the state after the find at Gandhar.
Plans call for drilling an additional 140 wells to push production to 7,500 b/d by 1992-93.
The field, discovered in September 1987 in the Mehsana heavy oil belt, has been delineated with 20 wells since July 1988.
Beghraji produces about 400 b/d of oil from six wells.
In the Cauvery basin's Narimanam field in the Thanjavur district of Tamil Nadu, ONGC has installed a sour crude stripping plant, India's first such facility onshore.
Six of the Narimanam wells proved to have high levels of hydrogen sulfide, spurring the addition of a stripping plant in ONGC's early production scheme. Yield of sweet crude from the facility is about 1,500 b/d, expected to climb to about 4,000 b/d in a few months.
ONGC also has proposed a $150 million project to develop the Tatipaka-Pasarlapudi structure in the onshore Krishna-Godavari basin. Production is estimated to climb to about 88 MMcfd, with much of it destined for feedstock for Nagarjuna Fertilizers & Chemicals Ltd.
Elsewhere, ONGC is stepping up the pace of wildcat drilling in the onshore and offshore Krishna-Godavari basin.
A recent ONGC discovery in the eastern offshore basin, GS-38-1, flowed about 5 MMcfd of gas on a test last month.
Spudded in January, the well was drilled to 11,483 ft on a structure believed to cover 6 sq km.
ONGC plans to increase the number of rigs working in the Krishna-Godavari basin to 11 onshore and four offshore by 1995 from the current eight onshore rigs and two offshore.
ONGC also has identified seven wildcat sites in new areas in the Vindhyan, South Rewa, Satpura, and Pranhita-Godavari basins.
Copyright 1990 Oil & Gas Journal. All Rights Reserved.
