GSPC claims natural gas find in two more KG basin wells

GSPC claims natural gas find in two more KG basin wells

Ahmedabad: The Gujarat government-owned hydrocarbon company, Gujarat State Petroleum Corp. (GSPC), has struck natural gas at two more wells in its Krishna Godavari field in eastern coast of India off Andhra Pradesh, known as Deendayal block, according to company officials who didn’t want to be identified.

GSPC has informed the director general of hydrocarbons (DGH), an upstream advisory and technical regulatory body, about the new gas find last week. GSPC managing director D.J. Pandian couldn’t be reached for comment.

The natural gas from KG basin is important for GSPC as it is forced to buy natural gas for its customers from liquefied natural gas (LNG) market at a price of $12-14 (Rs473-552) per million British thermal unit (mBtu) equivalent.

Its existing gas source at Hazira is depleting and GSPC requires its own natural gas source to keep its customer base and grow.

GSPC is the only state government owned company in India that has ventured into oil and gas exploration within and outside the country to Yemen, Australia and Egypt.

It had announced its biggest ever discovery of 20 trillion cubic feet (tcf) of natural gas from this field at the Deendayal block in mid-2005 but DGH had officially put the reserves figure at 3.6tcf—less than 20% of what GSPC had claimed. Instead of challenging the claim, DGH had asked the corporation to drill more wells to prove its claim of the field having 20 tcf of natural gas.

“Striking gas in these two wells would help GSPC prove its claim of higher quantity of natural gas in this field, which it was struggling to do for long," said a ministry of petroleum and natural gas official who also didn’t want to be named.

India has a demand of around 185 million standard cubic metres per day (mscmd) of natural gas but only 74mscmd is available from domestic sources and 28mscmd is imported as LNG, leaving a shortage of around 83mscmd.

The demand for gas has been growing at around 8% every year.

Through the finds in these wells, GSPC would be able to strengthen its claim for higher quantity of gas than that has been approved by DGH.

“Both these wells have proved that the gas is spread continuously across the zone and is present in sufficient quantity in the field," the GSPC official said.

DGH had recently asked GSPC to revise its development plan for KG basin.

The development plan is a document that a hydrocarbon company submits to DGH outlining the roadmap for future development of a field for commercial exploitation of hydrocarbon.

The commercial production begins 30 months after the submission and clearance of the development plan.

“GSPC wanted DGH to approve additional reserves of 1.1tcf of gas reserves in the KG block but after studying the results, DGH is now learnt to have expressed confidence and asked GSPC to come out with a new development plan with reserve estimates of anywhere between 6tcf and 8 tcf," the GSPC official said.

That would also be in line with the estimates provided by Schlumberger Ltd, which had estimated gas reserves in the field, apart from deepwater fault, at 6-8tcf.

GSPC now plans to go to its consultant DeGolyer and McNaughton for a seal of approval on its finds and submit a new development plan to DGH in six months.

GSPC holds 80% of equity in the Deendayal block with 10% held by Jubilant Enpro Ltd, which is part of the Jubilant Corp.

(Members of the family that owns Jubilant also have a significant stake in HT Media Ltd, the publisher of Mint.)