New Delhi: Putting immediate oil production needs ahead of future oil finds, India’s largest oil and gas exploration and production company plans to convert its offshore drilling rig into an offshore production facility.
The Oil and Natural Gas Corporation(ONGC) plans to convert the Sagar Samrat rig to take over oil production duties, replacing the Bombay High north platform that was lost in a July 2005 fire.
The Bombay High fire was one of the worst disasters in the history of India’s petroleum industry, crippling the platform, which was about 160 km from the coast.
ONGC is also trying to overcome two problems with its conversion plan. Primarily, new production rigs are very expensive—between $250 million (Rs1,103 crore) and $300 million—and there is also a long lead time in getting one, given a global shortage of such rigs. By comparison, the original Bombay High rig cost about Rs40 crore.
Sagar Samrat has a drilling depth of 18,000 feet (5,486 metre), and has already been turned over to Bombay High operations for a feasibility study on converting it into a production rig.
While analysts say that the move makes sense given it is critical to main production of oil, they also point out that ONGC’s huge drilling commitment may have a hole because of the transfer.
Sagar Samrat has a long history with oil discovery in India. “This was the first rig that discovered oil in Bombay High in 1974 and is in service for 32 years,” said U.N. Bose, director, drilling and field services, ONGC. The rig has drilled 125 wells and has been associated with 14 major discoveries adding more than 3 billion tonnes of oil and gas reserves.
The conversion itself will not come cheap, and ONGC is preparing a feasibility report. “The investments will depend on the specifications that we require. A study is on to calculate the investments involved,” Bose added.
A fully floating rig will require higher investments as compared to a partially floating one. The investments will also depend upon the number of oil wells that will be connected to the platform.
There is a global shortage of rigs. ONGC has a total of 100 rigs, out of which 30 are offshore rigs. Some 10 of the offshore ones are company-owned and the rest have been leased in by ONGC.