ONGC opens well in Krishna Godavari basin, Hardeep Puri says ‘Major milestone achieved’

State-owned Oil and Natural Gas Corporation (ONGC) on Sunday said it has opened another well on its flagship deep-sea project in Krishna Godavari basin in Bay of Bengal, which will help augment production of crude oil and natural gas.

In January this year, ONGC had started producing oil, which is converted into fuels like petrol and diesel in refineries, from the KG-DWN-98/2 or KG-D5 block.

"On August 24, 2024, ONGC marked a significant milestone by starting production from its fifth oil well in the Block KG-DWN-98/2 Cluster-2 asset," the firm said in a stock exchange filing on Sunday.

“Leveraging the floating production, storage, and offloading (FPSO) vessel, ONGC has begun transporting and sale of associated gas, all the while underscoring its commitment to achieving zero gas flaring.”

It, however, did not state how much the new well was producing.

With this, ONGC also successfully commissioned its gas export line from the offshore-to-onshore terminal.

"Earlier in January, oil production commenced from the same asset, with 4 of 13 wells already flowing. Gas production is also advancing, with 3 of 7 wells online," it added.

The block, which sits next to Reliance Industries' KG-D6 block in the KG basin, has a number of discoveries that have been clubbed into clusters.

Located 35 kilometres off the coast of Andhra Pradesh in water depths ranging from 300-3,200 metres, the discoveries in the block are divided into Cluster-1, 2 and 3. Cluster 2 is being put to production first.

As per original plans, oil production from Cluster-2 should have begun by November 2021, but was delayed because of the Covid pandemic.

Thereafter, ONGC set May 2023 as the first Cluster-2 oil production deadline but then extended it to August 2023 and thereafter extended the flow of first oil every month, with the last deadline announced being December 2023. Oil started flowing from January 7, 2024.

At the time of start of production in January, ONGC had stated that peak or maximum production from the field is expected to be 45,000 barrels of oil per day (bopd) and over 10 million standard cubic meters per day (mmscd) of gas which is used to make fertilisers, generate electricity, turned into CNG for use as fuel in automobiles and piped to household kitchens for cooking.

In an investor call on August 6, ONGC Director (Finance) Vivek Tongaonkar had stated that the firm was producing 12,000 bopd and 0.4 mmscmd of gas from the eastern offshore block.

This production was from four wells and one more well was planned to be opened in August, he had said.

This well would not just raise the oil production but also help increase the amount of natural gas which flows out with oil, to 1.5 mmscmd.

"And subsequently, from the third quarter (October-December 2024), we expect to open further wells, which would add to our oil production as much. So, from the third and fourth quarter (January-March 2025), we expect to have a production rate of about 30,000 bopd plus as the wells open up."

The envisaged peak of 45,000 bopd was likely in subsequent quarters, he had said.

Gas output is expected to reach 6 mmscmd by March 2025.

ONGC has drilled 26 wells on the field. Out of these, 13 are oil producing and seven gas producing. The firm expects to open all 13 oil producing wells plus six gas wells by the end of March.

ONGC has hired floating vessel Armada Sterling-V, owned 70 per cent by SPOG (Shapoorji Pallonji Oil & Gas) and 30 per cent by Malaysia's Bumi Armada, for producing oil from below seabed.

The FPSO (floating production, storage and offloading vessel), Armada Sterling-V, had been waiting to receive oil since January 2, 2023, after she was hooked up on December 27, 2022.

In the KG-D5 block, Cluster-1 consists of three discoveries. FDPs (field development plans) of 2 discoveries were approved in 2019. This project is currently in the development stage.

In Cluster-3, there is one ultra-deep water gas discovery which would be the second deepest hydrocarbon discovery in the world, when monetised. The FDP is scheduled to be submitted by January 2026.

ONGC had proposed a FDP for Cluster-2 in April 2018, with an estimated capital expenditure of USD 5.07 billion and operational expenditure of USD 5.12 billion over a field life of 16 years.

The Cluster-2 field is divided into two blocks namely 2A and 2B, which as per the original investment decision were expected to produce 23.52 million metric tonnes of oil and 50.70 billion cubic metres (bcm) of gas over the life of the field.

Cluster 2A was estimated to contain reserves of 94.26 million tonnes of crude oil and 21.75 bcm of associated gas, while Cluster 2B is estimated to host 51.98 bcm of gas reserves.

Cluster 2A was anticipated to produce 77,305 barrels of oil per day (bopd) and associated gas at a rate of 3.81 million metric standard cubic metres per day (mmscmd) over 15 years. Cluster 2B was expected to produce free gas of 12.75 mmscmd from eight wells and has a 16-year life.

But ONGC later revised the output downwards - 45,000 bopd of oil and up to 2.5 mmscmd from Cluster 2A and around 9 mmscmd from Cluster 2B.