Passage to India
  from: Offshore Engineer
  by: Darius Snieckus
  Thursday, April 03, 2008

India’s hydrocarbon resource base is put at between 29-33 billion tonnes of oil equivalent, but with only eight of its 26 sedimentary basins having seen drilling to-date some analysts suggest more than 80% of the country’s reserves may still lie unexplored. On the eve of the inaugural Indian Oil & Gas conference in Mumbai, Darius Snieckus sounds out technical committee chairman Shri Niladri Kumar Mitra on the challenges presented by this rapidly emerging region.

Transformation of the economic fundamentals of the Indian oil and gas market is picking up tempo. Internally, the nation is now enjoying a better than 9% GDP growth rate, industrial production rising at 11%, and a primary energy requirement forecast to climb by some 7% – this in a country already the world’s fifth largest energy consumer, accounting for nearly 4% of global demand, and one that expects to need a ‘substantial’ increase in the current per capita rate of energy consumption to support sustained economic development over the next 25 years. Outwith import strategies, the Indian government’s answer to this energy supply issue has centred on the six NELP (New Exploration Licensing Policy) rounds that have angled at striking a balance between greater investment in its deepwater exploration plays and greater enhanced recovery from existing mature oil and gas fields.

Next month’s SPE Indian Oil & Gas conference and exhibition in Mumbai, themed ‘The changing landscape: emerging opportunities in the Indian E&P industry’, promises to hold a mirror up to the fast-evolving realities of the region. ‘India has now had six rounds of successful bidding completed under NELP and discovery of major gas fields off the east coast in deepwater, but only 8 billion tonnes of reserves have been discovered so far out of a resource base of 30 billion tonnes,’ notes technical committee chairman and ONGC offshore director Shri Niladri Kumar Mitra. ‘So ample opportunities exist for exploration by major oil companies in India.’

‘The NELP efforts are yielding results and many additional blocks have come under extensive exploration recently,’ he emphasises. ‘Opening up new exploration and development areas in the Mahanadi basin and onshore Rajasthan is changing the landscape for E&P.’

There is little disputing the success of NELP, with 49 discoveries thought to represent around 600 million tonnes of oil equivalent having been made by private and joint venture companies in 15 blocks, supported by investment in the order of $8 billion, since 1999.

And though it remains true to say that the competitive bidding process espoused by the Indian ministry of petroleum and natural gas to spur on liberalisation of the national oil and gas industry has not shaken the domination of India’s ONGC and Reliance Industries, international operators with a proven nous for deepwater, such as StatoilHydro, Petrobras and Eni, have farmed into large stakes on blocks off the east coast of the country in the last year, and 20 ‘foreign’ companies have been awarded exploration acreage to this point.

That India is in the international ascendancy is evidenced by attendance at next month’s conference in Mumbai. Presentations are promised by western operators including BP, Shell, BG, and Cairn Energy, with Weatherford, Schlumberger, Halliburton, Baker Hughes, Inteq, Japan Drilling Company, GlobalSantaFe, and BJ Services among the contractors that will be contributing papers to 13 technical sessions arranged over two-and-a-half days.

A ‘very successful’ call for papers, says Mitra, has laid the groundwork for a conference that will range over areas including brownfield development, reservoir management, drilling, deepwater E&P, IOR/EOR, HSE, HR/training and non-conventional resources. ‘These will all address the technology challenges now facing the Indian oil and gas industry and explore the technological advances needed to meet this country’s increasing demands for energy,’ he underlines.

Breaking with tradition, Indian Oil & Gas has planned plenary sessions for the first two mornings of the three-day event. The opening session will deal with what Mitra calls the ‘big challenges’ facing the global E&P industry in India, highlighting the technologies required for deep and ultra-deepwater exploration and development as well as those IOR techniques that will help the country see off its many brownfield developments with optimum recovery percentages. ‘We expect participation from oilfield operators, service providers, government officials and academics in sharing their thoughts and visions of India’s emerging opportunities in E&P,’ he states.

Deepwater deliberations

A second plenary session will examine exploration and development of deepwater fields ‘wherein the pioneering efforts of ONGC and Reliance will be showcased and the experience of major players operating in such water depths will be shared to add value to the Indian deepwater programme’, explains Mitra, who notes that the country’s 1.34 million km2 ‘deepwater sector’, though equal to only one-third of the basinal area of India, ‘has a prognosticated resource of about 10 billion tonnes of oil equivalent’. AsOE went to press, Petrobras, Shell, StatoilHydro, Chevron and BP were marked down as ‘likely’ to take part in the session.

And much as the conference technical committee – like the wider Indian oil and gas industry – has aimed to attract western oil companies, the drive toward greater internationalisation is seen as being doubly beneficial. For, to Mitra’s mind, Indian Oil & Gas will not only provide a perception-changing window onto the market for foreign companies, it will also serve to alter the outlook of national companies. ‘Indian oil companies are entering into development of deepwater fields off the east coast of India and may move further toward development of ultra-deepwater discoveries in the future,’ he suggests. ‘It is strongly felt that one of the outcomes of this conference may be to change the horizon of thinking of Indian oil companies with regard to deepwater E&P.’

‘It is an old saying that the new oil in mature fields can only be found with a novel idea,’ Mitra continues, ‘and it follows that exploitation of new fields must be sparked off with available technologies. The deliberations of the conference are expected to meet both those ends – as well as satisfying the technical hunger of the participants.’

With activity levels off India mushrooming, the exhibition side of Indian Oil & Gas is expected to be ‘a very important part’ of the event. ‘The upstream sector in India is witnessing huge investment in terms of facilities, engineering, software, exploration, and exploitation of on- and offshore areas,’ Mitra underscores. ‘The exhibitors will have ample opportunity to showcase their capabilities to the Indian and international E&P operators, which have first-hand knowledge of the various technologies needed to help and develop the upcoming enhanced opportunities in India.’

A further outgrowth of the event, Mitra hopes, will be that of ‘technology transfer and knowledge exchange’. Building on the past practice of ONGC of hiring ‘domain experts’ in areas ‘including water flood management, reservoir management and simulation, well completion, produced water treatment, and rotary equipment management’ to identify technology gaps, he says, the conference and exhibition aims to provide ‘a suitable platform for further strengthening of technology transfer with international oil majors and service providers’.

‘This event will also help India’s upstream sector to chart a course of future action for finding ways and means to enhance our reserve base, improve recovery rates, build up overseas oil equity, and address a host of interrelated strategic issues connected to the E&P;sector and energy security in the country,’ reckons Mitra.

All to play for in India then, and not least in NELP VII with the government promising to offer acreage ‘in the coming years’ that should increase exploration in India’s sedimentary basins from 44% to 80%, and see ‘the whole sedimentary basinal area’ being put to the drillbit by 2015. The latest licensing round is putting 57 blocks – 19 in deepwater, nine in shallow water, and 29 onshore – under the gavel.

General consensus is that the next five years are liable to be ‘critical’ in determining the ultimate potential of India’s offshore waters. Upcoming exploration wells by Reliance, ONGC and Santos in the Krishna Godavari and Mahanadi basins will be key, as will spuds in the Kori-Comorin, 85E and Andaman deep offshore areas. Also crucial to the long-term future of offshore India will be the redistribution of acreage wealth, as 68 of 78 currently licensed blocks are in the hands of ONGC and Reliance.

‘There are enough opportunities in India for international oil companies to share the risk and reward through joint ventures and acquisitions of participating interests and fast-track exploration & development of those areas with the help of new technologies,’ concludes Mitra.

‘An environment of heavy investment does exist in the Indian oil industry scenario and industry leaders should come and discuss the challenging areas further together to resolve the problems and discover and produce more hydrocarbons.’ OE

Organised by the Society of Petroleum Engineers and Reed Exhibitions, Indian Oil & Gas (www.indianoilgas.org) runs 4-6 March at Mumbai’s Bandar Kurla complex.

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