DGH refuses to review commerciality of ONGC's deepest gas find

A technician is pictured inside a desalter plant of Oil and Natural Gas Corp (ONGC) on the outskirts of Ahmedabad. Photo: Reuters
Upstream oil regulator DGH has refused to review the commerciality of India's deepest gas discovery made by Oil and Natural Gas Corp (ONGC) on grounds that developing the find poses technological challenges.

ONGC plans to invest Rs 21,528.10 crore to develop the ultra deepsea UD-1 discovery in its Bay of Bengal block KG- DWN-98/2 (KG-D5) by 2022-23. The find would have helped double the output from the KG block.

It had earlier this year submitted to the Directorate General of Hydrocarbons (DGH) for approval a declaration of commerciality (DoC) of UD-1 find, sources with direct knowledge of the development said.

DGH, however, refused to review the DoC on grounds there was no technology available to produce gas from such water depths, they said.

A senior ONGC official said it is beyond the mandate of the regulator to not review a discovery and look into technology.

"We are the operator and are confident of technology being available to develop the discovery," he said adding the company has replied to DGH over its concerns.

ONGC plans to drill nine wells on the discovery that lies in water depths of 2,400-3,200 metres and will produce a peak output of 19 million standard cubic metres per day.

UD-1 holds some 75 billion cubic meters of in place reserves.

The official said that there are consultants who have shown to ONGC that discoveries deeper than UD-1 have been put to production in recent times, particularly in the Gulf of Mexico.

"An expression of interest (EoI) meeting we had earlier this year for developing the KG finds saw several consultants offering solutions for such water depths," he said.

ONGC is in the process of appointing a consultant who will assist in developing the UD-1 discovery.

The 7,294.6 sq km deepsea KG-D5 block, which sits next to Reliance Industries' flagging KG-D6 fields, has been broadly categorised into Northern Discovery Area (NDA - 3,800.6 sq km) and Southern Discovery Area (SDA - 3,494 sq km).

The NDA has 11 oil and gas discoveries while SDA has the nation's only ultra-deepsea gas find of UD-1. These finds have been clubbed into three groups - Cluster-1, Cluster-II and Cluster-III.

Last year, the company finalised a Rs 34,012 crore (USD 5.076.37 billion) plan for developing the Cluster-II finds by 2019-20. First gas production is envisaged by June 2019 and oil would start flowing from March 2020, he said.

From Cluster-II, a peak oil output of 77,305 barrels per day is envisaged within two years of start of production. Gas output is slated to peak to 16.56 million standard cubic metres per day by end-2021.

The official said that Cluster-1 field will be developed at an additional investment of Rs 4,259.59 crore and will produce about 3 mmscmd of gas.

Cluster-2A mainly comprises oil finds of A2, P1, M3, M1 and G-2-2 in NDA which can produce 77,305 bpd (3.86 million tonnes per annum) and 3.81 mmscmd of gas.

Cluster 2B, which is made up of four gas finds -- R1, U3, U1, and A1 in NDA -- envisages a peak output of 12.75 mmscmd of gas.

Peak output is likely to last seven years, he said.

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel