ONGC to produce oil from $5bn deep-water project this November
What's the story
The Oil and Natural Gas Corporation (ONGC) is preparing to initiate oil production from its long-awaited flagship deep-sea project in the Krishna Godavari basin, located in the Bay of Bengal.
ONGC Director (Production) Pankaj Kumar stated that this development aims to counteract the decline in output experienced in recent years.
The state-owned enterprise intends to gradually increase production from the Cluster-2 project in the KG-DWN-98/2 block.
Details
Initial production rate anticipated to be around 8,000-9,000 bpd
Kumar disclosed that ONGC will initially produce oil from three to four wells, gradually connecting more wells over time.
The initial production rate is anticipated to be between 8,000 and 9,000 barrels per day (bpd).
The company is determined to avoid the mistakes made in the adjacent KG-D6 block by Reliance Industries, which include issues such as sand and water infiltration in wells if oil valves are opened too rapidly.
This necessitates drilling additional wells and maintaining optimal production levels.
What Next?
First consignment of crude oil will be sent to MRPL
The first shipment of crude oil will be sent to ONGC's subsidiary, Mangalore Refinery and Petrochemicals Ltd (MRPL), for testing. The test results will establish the crude's grade and pricing.
ONGC has enlisted the services of Armada Sterling-V, which is 70% owned by Shapoorji Pallonji Oil & Gas (SPOG) and 30% owned by Malaysia's Bumi Armada, to extract oil from beneath the seabed.
Insights
Gas production is expected to start in May 2024
Kumar stated that alongside oil production, around two mmscmd (million metric standard cubic meters per day) of gas will be produced, starting in May 2024.
The gas output is projected to reach a rate of 7-8 mmscmd. McDermott, the contractor, is installing the delayed Control and Process Platform, and Malaysia's Sapura Energy is manufacturing it.
The structure is set to depart from Malaysia and arrive in Indian waters early next year.
Facts
Production estimates are lower than originally projected
The current production estimates are more conservative than the initial projections made when the project was first conceived in April 2018.
ONGC had estimated a capital expenditure of $5.07 billion (Rs. 42,240 crore) and operational expenditure of $5.12 billion (Rs. 42,655 crore) over a 16-year field life.
Kumar expressed optimism that the company will be able to halt the decline in crude oil production during the next fiscal year, while natural gas output is expected to increase.