ONGC has ventured into Shale Gas exploration by spudding the first Shale Gas well RNSG-1 in Ichapur village near Durgapur in Burdwan District of West Bengal on September 21, 2010. The well is targeted to a depth of 2000 mts and will be assessing the Shale Gas potential of about 700 mts thick shale. of Permian age which is about 250 to 300 million years old. As its R&D efforts, ONGC plans to drill three more wells in Damodar Valley by end of XI Plan.
The government is planning to raise the price of state-administered, or APM, gas sold to sectors other than power and fertilizer by over 10% to $5.25 per million British thermal unit. US, the cost of shale gas production varies from $3.3 per mmbtu to $6.4 per mmbtu Oil and Natural Gas Corporation has approved a research and development plan for the exploration of shale gas at CBM blocks at Raniganj and North Karanpura in the Damodar Basin, at a cost of $27.1m.
India's Energy Sector - How to increase Oil Supply
Tomorrow’s Consulting Guru Challenge <br />“ India’s unmet energy demand: Increase Oil supply by 10%”<br />1<br />
Energy Needs & Growth<br /><ul><li> India & China are the major drivers for energy growth
By 2030, India & China would need around 28% of world energy consumption
Energy demand in India expected to grow at a rate of 5.2% </li></ul>Production<br />Consumption<br /><ul><li> Importance of oil as a source of energy is still increasing
Enhanced extraction requires more energy input than the output oil contains
Extraction from oil shale and tar sands is slow, expensive, heavily polluting and resource- (e.g. water) and time-consuming</li></ul>4<br />
Energy Scenario: Oil & Gas<br />Consumption of Gas increasing at a higher rate<br />Total Energy Consumption = 469.5 Mtoe<br />Oil Consumption = 148.5 Mtoe <br />Gas Consumption = 46.7 Mtoe <br />Mtoe- Million Tonne Oil Equivalent<br />195.2 Mtoe<br />Source: BP Statistical Review of Energy 2010<br />5<br />
Problem<br />“ India’s unmet energy demand: Business model to increase Oil supply by 10%”<br />“Assume you have been hired by the Government of India to provide a series of recommendations on developing a business model to increase India’s oil production potential by 10 %”<br />6<br />
3 Pronged Approach <br /><ul><li> Tendering process
CBM Reservoirs is water saturated & requiring dewatering in initial phase& gas takes time to come on to the surface</li></ul>Gas Hydrate<br /><ul><li> Methane molecules trapped in ice, found in deep sea
Estimated 66,900 TCF of gas hydrate reserves in the country
NGHP (National Gas Hydrate Program) for achieving commercial production
Discoveries in KG-Basin, Andaman Islands, Mahanadi Basin
Shale Gas: India Potential<br />Unconventional Sources <br />Jharkhand<br />Assam<br /><ul><li>India has tremendous potential of Shale Gas. Reserves are estimated to be higher than natural gas.
The shale rock found in India is similar to those in the U.S. The cost of producing the gas may be different because the rocks are found deeper in the ground in India than in the U.S.
India’s largest gas field of Reliance Industries in the KG basin —estimated to hold some 10 tcf of gas.
The resource estimation of all potential shale gas areas has not been carried out except the preliminary one for Damodar and Cambay Basin.
India, US Sign Cooperation Pact To Tap Shale Gas Potential on Nov 8th 2010. US Geological survey will carry out studies on shale gas resources and will provide the report to India.</li></ul>Damodar Basin<br />35 TCF<br />Cambay Basin<br />90 TCF<br />Factors favouring rapid development of gas shales: <br /><ul><li> Advances in horizontal drilling
The experience with the case of coal bed methane is not inspiring — India has reserves of some 480 BCM , production only .5 BCM</li></ul>http://www.financialexpress.com/news/shale-gas-cant-do-without-us/711108/0<br />10<br />
Marginal Oil Fields & Oil Recovery<br />A field that may not produce enough net income to make it worth developing at a given time, if technical or economic conditions change such a field may become commercial<br />Fields will be marginal under following consideration:<br /><ul><li>Reservoir Size
Reduces well counts, costs & improve economics</li></ul>Development of Marginal Fields is one of the strategic business pursuits of ONGC, for increasing production by unlocking small pools of discovered hydrocarbon reserves. <br />By 2012, ONGC plans to spend US$2.7 billion on the development of four clusters on the western offshore marginal fields<br />11<br />Unconventional Sources <br />Total Fields–104<br />Fields–32<br />Fields–72<br /><ul><li>Expected Peak Oil Rate ~ 160,000bopd in next 2-3 years
Total Oil Production by 2012 950 + 160* = 1110 (000b/d)</li></ul>* Source : J C Chaturvedi - ONGC<br />
Challenges & Actions in Award & Execution of Projects<br />Licensing & Tendering<br />Challenges<br />Action to be taken<br />Tendering Process<br />Contract Terms & Conditions<br />Award to the lowest bidder<br />Lack of Alliances<br />Local Barriers<br />12<br />
13<br />Upstream Operations Improvement<br />Operational Improvement<br />Improvements in these areas can result in upto 30% higher NPV<br />World Class performance on one dimensions typically goes hand-in-hand with world class performance in all.<br /><ul><li>World-class operational execution can add up to 30 percent of value to the production asset base.</li></ul>Opportunities for Operational excellence<br /><ul><li> Total Maintenance Reliability
World class well management system – Extracts more than 15% of the oil in comparison to the industry average </li></ul>Good Well management can have a big impact<br />Additional Volume delivered by well & reservoir management <br />17<br />GAP =16<br />1<br />4th Quartile 1st Quartile<br />$10 $2<br />Cost per barrel of oil equivalent<br />Source: Mckinsey Quarterly<br />
Securing Global Supplies & Energy Storage<br />Global Supply - Diversify<br />Crude Import – Country wise share (FY 09)<br />India relies significantly on Saudi Arabia, Nigeria, Iran, Iraq and Kuwait. About 64% of India’s oil come from West Asia.<br />Need to diversify energy sources:<br /><ul><li> Make inroads for oil in Africa, Central Asia and South America, both in terms of trade and equity investments
Explore possibilities for trade in both liquefied and piped natural gas.
Deepening of ties with energy supplying countries</li></ul>Energy Storage<br />Our economy is highly vulnerable to supply disruptions<br />Following in the footsteps of all superpowers, we should build up reserves for 90 days of net oil Import<br />Government of India is in the process of setting up Strategic storage of crude oil in collaboration with gulf countries, at proposed locations like Mangalore, Maddur & Vishakhapatnam<br />The proposed setup capacity is around 15MT whereas our minimum requirements are around 30 MT<br />Considerations for Storage site selection:<br /><ul><li>Strategic & Safe location
Cluster of refineries to be supplied oil</li></ul>16<br />
Recommendations: Increasing Oil Supply by 10%<br />Action at Upstream:<br /><ul><li>Tapping unconventional oil reserves</li></ul> - Gas hydrates<br /> - Coal bed methane<br /> - Underground coal gasification<br /> - Shale gas exploration<br /><ul><li> Tapping from marginal fields
Adopting OALP (Open Acreage Licensing Policy) instead of NELP
More R&D funding in E&P (exploration & production) New methods of oil recovery</li></ul>Action at Downstream:<br /><ul><li> Coke to Natural gas: The coke that is received from the coker unit can be converted into natural gas by coal gasification upon Catalytic Cracking.
Flare Recovery system in the downstream of CDU: A recovery system to be placed in the downstream of CDU, to recover the gas & oil that are passed for flaring. On an average 8% of the fuel gets wasted in flaring .
Setting up more SEZ: As it is economical to put the recovery system at the large refinery rather then in the refinery of smaller capacity</li></ul>Preventive Steps:<br /><ul><li> Reducing T&D losses: Transmission & Distribution Losses takes away 29% of the total generation Energy need of 13 states like Delhi.
Strategic Storage & Diversify Imports</li></ul>T&D loss in China 6%, in US it is 7%<br />17<br />
In order to attract them GOI is coming with Open Acreage Licensing Policy (OALP), which will enable companies to bid round the year</li></ul>Indian Sedimentary basin: level of Exploration<br />Need to look for other unconventional sources of oil & gas - CBM, Shale Gas, Gas Hydrates<br />20<br />
Annexure - Natural Gas: India<br /><ul><li> Production of natural gas has increased over 3 times in the last two decades
Natural gas accounts for 9% of the India’s energy mix. Projected to reach at 15-16% by next decade
Huge uncertainty in trans national pipelines: Iran, Myanmar, Bangladesh, Oman & Turkmenistan</li></ul>Energy resources diversification and overall energy security Increase in Natural Gas consumption. At present 8%.<br />Investment in building LNG( Liquefied natural gas) terminals. LNG demand projected to double by 2015.<br />21<br />