Oil and Natural Gas Corp (ONGC), India's largest vertically integrated oil company, is looking at production enhancement contracts (PECs) and enhanced oil recovery techniques to boost oil and gas output from old and matured fields that are faced with natural decline, its chairman Shashi Shanker said.
The company plans to bring in service providers with advanced technology in operation of its oil and gas fields by offering them a PEC where they would get a pre-determined fee for incremental production over a baseline.
Field operators would be selected through a competitive bidding process where those offering higher growth in output would be chosen, he said.
Under the PEC, the service provider will also be responsible for maintaining Base Production Profile for which fees will be paid.
Shanker said the service providers are required to bid incremental production profile and also maintenance profile for base oil production. They shall also provide the FDP (Field Development Plan) for the fields.
Concurrently, the company has already initiated major enhanced oil recovery (EOR) activities in order to enhance the recovery of oil from the matured fields.
"In Cambay and Cauvery basins, unique EOR projects called Carbon Capture, Utilisation and Storage (CCUS) have been planned," he said.
The EOR model through CCUS will not only help increase production but also provide impetus to environmental management to a great extent.
"These initiatives -- PEC and EOR -- have been taken up with an objective to bring in new technology infusion for increasing production particularly from the matured fields which are faced with the sharp natural decline," he said.
"ONGC is leaving no stone unturned to increase the production in line with the clarion call given by the Prime Minister for 10 per cent import reduction."
Under the PEC Business Model, the contract will remain valid for 20 years and the service providers will have to take care of entire capital and operational expenditures related to the fields to meet the committed production.
ONGC, he said, has already identified two onshore fields -- Kalol under Ahmedabad Asset and Geleki under Assam Asset for implementation of PEC model.
The baseline production profile under business as usual (BAU) prospect, has already been mapped by ONGC considering prevailing field conditions and routine operations which shall be binding on the service providers.
ONGC has also got the baseline production profile vetted by the third party, he said.
The company has seen almost flat growth in crude oil production in the last five years. It stood at 22.31 million tonnes in 2017-18. Gas production at 23.48 billion cubic metres was higher than 22.09 bcm of 2017-18.
PECs, to begin with, will be implemented in onshore fields.
ONGC's onshore crude oil production increased 2 per cent to 6.064 million tonnes (MT) for 2017-18 as compared to the previous fiscal. Its natural gas production from onshore fields rose 8 per cent to 6 billion cubic metres (BCM) last fiscal.
Key features of the PEC are that the service providers shall bring comprehensive technologies to improve production at their cost whereas the ownership of the fields shall remain with ONGC, he said.
EC model is being followed worldwide by various E&P industries to enhance production from matured oil fields.
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.