UPSC IAS Interview 2017-18

Augmenting Oil & Gas Production

*PIB Features. Inputs from the Ministry of Petroleum & Natural Gas

India’s energy needs are growing with rising income levels, burgeoning population and a rapidly growing economy. Indigenous energy resources may not be sufficient in the long run to sustain a GDP growth rate of 9%. The country’s energy supply system continues to be dependent on fossil fuels, which are finite. Oil and gas share in the energy consumption basket has reached a level of about 41%. Average per capita energy consumption in India is about 358 kilogram of oil equivalent (kgoe) as against 1681 kgoe world wide indicating high energy requirement in future in order to maintain the pace of economic development in the country.

The total primary energy mix for India comprises Coal 51%, Crude oil 32%, Natural Gas 9%, Hydro 7% and Nuclear energy 1%. Whereas the crude oil consumption of India is about same as global average share of natural gas in primary energy mix i.e. 9% in the country is significantly lower than the world average of 24%, indicating huge potential of growth in the natural gas sector. Import dependence accounts for about 30% of our Total Primary Commercial Energy Supply (TPCES). However, oil imports constitute more than 70% of our total oil consumption.

Oil & Gas Demand Supply Scenario
Consumption of petroleum products in the financial year 2007-08 was about 129 million metric tonnes (MMT), which puts India as fifth largest consumer after USA, China, Japan and Russia. Domestic crude oil production in the country is about 34 MMT per annum. Although total imports of crude oil and petroleum products in 2007-08 were of the order of 144 MMT including 121 MMT of crude oil amounting to nearly US$ 83.2 billion (Rs.3,34,203 crore), India has also exported petroleum products amounting to 39 MMT, earning foreign exchange worth nearly US$ 26.7 billion (Rs.1,07,603 crore). After exports, our net imports amount to nearly 105 MMT of crude and petroleum products worth nearly US$ 56.473 billion (Rs.2,26,600 crore).
In 2007-08, natural gas supply was of the order of 114 Million Metric Standard Cubic Metres per day (MMSCMD), out of which 88 MMSCMD was through domestic production and remaining supply of 26 MMSCMD was through import of Liquefied Natural Gas (LNG). However, gas supply position in the country is likely to improve on production of additional 40 MMSCMD of natural gas in 2008 and rising to 80 MMSCMD in 2011.

Enhancing Oil & Gas Production
In order to increase oil & gas security for the country, Ministry of Petroleum & Natural Gas along with PSUs have adopted a multi-pronged strategy, which inter-alia, includes: increasing exploration efforts through the New Exploration Licensing Policy (NELP). Under the Six rounds of NELP, 162 blocks have been awarded and 62 discoveries have already been made.

In seventh round of NELP, 45 exploration blocks are likely to be awarded; improving the recovery factor from existing major fields by implementing Enhanced Oil Recovery (EOR)/Improved Oil Recovery (IOR) schemes. Oil and Natural Gas Corporation Limited (ONGC) has taken up 15 fields for this purpose at an estimated investment of Rs. 13,651 crore, which would also help in accelerating oil production from these fields; acquiring acreages abroad and tapping alternate sources of energy such as Coal Bed Methane.

New Exploration Licensing Policy (NELP)
The Government approved a policy called New Exploration Licensing Policy in 1999 with the objective to attract significant risk capital from Indian and Foreign companies, state of the art technologies, new geological concepts and best management practices to explore oil and gas resources in the country. 100% Foreign Direct Investment (FDI) is allowed in E&P sector under NELP regime. Companies either Indian or Foreign may bid for one or more blocks, alone or in association with other companies, through an unincorporated or incorporated venture.

Licenses for exploration are being awarded only through a competitive bidding system and National Oil Companies (NOCs) are required to compete on an equal footing with Indian and foreign companies to secure Petroleum Exploration Licences (PELs). Six rounds of bids have so far been concluded under NELP, in which Production Sharing Contracts (PSC) for 162 exploration blocks have been signed.

Under NELP, 62 oil and gas discoveries in 17 blocks have already been made in Cambay onland, North East Coast and Krishna-Godavari deepwater areas, for which, development plans by the operators, viz., Cairn, RIL and Niko are in progress. The NELP investment commitments are of the order of US$ 8 billions on exploration alone, out of which, about US$ 4 billons has already been made. This investment in E&P sector will increase manifolds once development of discoveries progresses. With Exploration and development efforts made under NELP, Natural Gas production in the country is likely to be doubled from the present level of gas production of about 90 million standard cubic metres per day by end of 11th Five Year Plan. Commercial production of oil and gas from two blocks from Gujarat has already commenced.

Improved Oil Recovery/Enhanced Oil Recovery Projects
Work programmes have been undertaken primarily by ONGC for IOR/EOR in its 15 largest fields, which account for 80% of ONGC’s reserves and production. The challenge for ONGC is to arrest the decline of crude oil production at the rate of 7-8% per annum. To do so, ONGC has made an investment of about Rs. 13,434 crore on Improved Oil Recovery and Enhanced Oil Recovery projects. Through these efforts, incremental crude oil gain for ONGC was of the order of 40.1 MMT till 2007-08. The incremental production over the base case is expected to increase significantly from about 5 MMT in 2002-2003 to 11 MMT in 2007-2008.

The total work incorporating innovative technological solutions include installations/upgradation of production facilities, laying of pipelines, drilling of about 650 new development wells, side tracking of existing wells, zone transfers, optimization of artificial lift systems etc. In addition, private sector /JV companies and Oil India Limited (OIL) are also implementing Improved Oil Recovery /Enhanced Oil Recovery schemes in a few select reservoirs of the producing fields.

Oil And Gas From Abroad
In view of unfavourable demand – supply balance of hydrocarbons in the country, acquiring equity oil and gas assets overseas is one of the important components of enhancing energy security. The Government is encouraging national oil companies to aggressively pursue equity oil and gas opportunities overseas. Oil & gas production from overseas can be swapped, sold or brought to Indian refineries on commercial considerations. ONGC Videsh Limited (OVL) today has presence in 18 countries, viz. Russia, Sudan, Vietnam, Iran, Libya, Syria, Myanmar, Iraq, Egypt, Qatar, Cuba, Nigeria, Sao-Tome-Principe Joint Development Zone, Venezuela, Colombia, Brazil, Turkmenistan and Republic of Congo. OVL has a target to acquire 20 MMTPA of O+OEG production by 2020 but efforts are on to achieve it even earlier. OVL produced about 8.76 Million Metric Tonnes (MMT) of oil and equivalent gas during the year 2007-08 from its assets abroad in Sudan, Vietnam, Russia, Syria and Colombia. In 2007-08, OVL acquired 11 blocks and OIL-IOC acquired one block. So far, Oil PSUs altogether have presence in 22 countries.

Alternate Sources of Oil and Gas
The national endeavor to bridge the ever-increasing gap between demand and supply of petroleum products in India by intensifying exploratory efforts for oil and gas in the Indian sedimentary basins and abroad need to be supported by other alternate sources of energy like Coal Bed Methane, Gas Hydrates, Under ground Coal Gasification.

Coal Bed Methane
Coal Bed Methane (CBM) is a natural gas (Methane) adsorbed in coal and lignite seams and is an eco-friendly source of energy. Coal is both the source and reservoir rock for CBM. CBM production is done by simple depressurization and dewatering process. To harness this new source of energy in the country, the Government approved a comprehensive CBM policy in July, 1997 for exploration and production of CBM gas. As of now, 23 CBM Blocks were awarded through competitive international bidding in first three rounds of CBM policy, under which blocks are being operated by technically competent companies. 2 blocks were awarded on nomination basis and one block through FIPB route. Thus a total of 26 CBM exploration blocks are under operation. So far, 6 Trillion Cubic Feet (TCF) reserves have already been established in 4 CBM blocks. First commercial production of CBM has commenced from July 2007.

Underground Coal Gassification
ONGC entered into an Agreement of Collaboration (AOC-MOU) with National Mining Research Centre-Skochinsky Institute of Mining (NMRC-SIM), Russia. In the selected Vastan mine block, ONGC carried out seismic survey was carried out and 18 boreholes were drilled for detailed UCG site characterization. Based on geological hydrological and geo-mechanical data analysis, Vastan in Gujarat and Hodu Sindri in Rajasthan have been found suitable for UCG station. Pilot production of Underground Coal Gasification (UCG) at Vastan by ONGC would commence in 2009-10.

Gas Hydrates
Gas hydrates, generally found in deep sea, are basically methane molecules trapped in ice. At present, there is no commercial production of gas hydrates in any part of the world and the technology is only at research and development stage. The Ministry of Petroleum and Natural Gas has a roadmap regarding exploration of gas hydrates, which is under implementation. Prioritization of areas of operations have since been made and a road map for National Gas Hydrate Programme (NGHP) has been prepared. The Directorate of Hydrocarbons is the nodal agency. In accordance with the R&D efforts, the drill ship “JOIDES Resolution” has collected good quality gas hydrates samples in the sedimentary basins in India. Results from the second site in KG basin are particularly remarkable. These have shown the presence of a 128 m thick gas hydrate layer indicating massive to dispersed gas hydrates. The gas hydrate samples were physically collected for the first time in India, which is the third country in the world after USA and Japan to do so in its deep waters. The resource estimation of gas hydrates is in progress.
Achievements In E&P Sector
The achievements made in exploration and production during the last four years are --
 121 oil and gas discoveries have been made from 2004-05 to 2007-08 in various States, Shallow water and Deepwater areas in Eastern & Western offshore. In the financial year, 2007-08, 48 oil and gas discoveries have been made.
 The position of balance recoverable reserves was of the order of 1573 MMTOE in 2003-04, which has increased to a level of 1843 MMTOE, maintaining positive reserve replacement ratio in last 4 years.
 Overseas oil and gas production in 2003-04 was of the order of 3.86 MMTOE which has doubled in the last 4 years and reached a level of 8.76 MMTOE in 2007-08.
 ONGC Videsh Limited and other PSUs have a presence in 22 countries world wide as against 7 countries in 2003-04.
 First CBM gas production in India started from July 2007 from a CBM block in West Bengal.
 During X plan period, crude oil production was about 33 MMT per annum. Projection of average crude oil production during XI plan period (2007-12) has been targeted at 41.35 MMT per annum, which is 24% higher than X plan actual.
 First natural gas production of 40 MMSCMD from deepwater areas is likely to commence in 3rd quarter of 2008.
 Under NELP, Government has awarded 72 exploration blocks in the last 4 years which has increased area under exploration by 30%. In the seventh round, 57 exploration blocks were offered, out of which, 45 exploration blocks are likely to be awarded.

No comments:

Related Posts Plugin for WordPress, Blogger...
Related Posts Plugin for WordPress, Blogger...

The Hindu - Opinion

Trusted name in IAS Interview Training