DGH nod to commerciality of ONGC’s D5 block discoveries

Upstream oil regulator DGH has approved commerciality of the oil and gas discoveries in the northern area of state-owned ONGC's prolific KG-D5 block in Bay of Bengal.

Oil and Natural Gas Corp (ONGC) has so far made 11 oil and gas discoveries in the Krishna Godavari basin block KG-DWN-98/2 or KG-D5 which sits next to Reliance Industries' KG-D6 area. The discoveries in KG-D5 are divided into northern and southern areas, with the former having a total of 10 finds and the later the ultra-deep UD-1 discovery.

Sources said ONGC had divided these and a couple of finds in a neighbouring block, into three clusters. The gas discoveries D and E in the northern part of KG-D5 will be brought to production together with G-4 find in a neighbouring KG block at an investment of $1.92 billion. The remaining eight discoveries in the Northern Development Area (NDA) will be brought to production as Cluster-II.

The Directorate General of Hydrocarbons (DGH), the technical advisory arm of the Oil Ministry on upstream oil and gas exploration and production issues, has approved the Declaration of Commerciality (DoC) of Cluster-II, they said. DoC is a pre-requisite before investments can be made in developing any discovery. Over $4.07 billion is planned to be invested in bringing to production the Cluster-II finds. NDA, they said, holds a total inplace reserves of 78 billion cubic meters of gas and another 121 million tonnes of oil.

The Southern Development Area, compromising of UD-1 find, has a total inplace gas reserves of 80.8 bcm.

Sources said Cluster-I is likely to start production in 2017 with over 8.5 million standard cubic meters per day of output, which will peak to 14.5 mmscmd in two years thereafter will begin to slide. This cluster will remain in production for 15 years.

From Cluster-II, ONGC will produce over 90,000 barrels per day of oil (4.5 million tonnes a year) from 2019. This set of discoveries would also give a gas output of 11.09 mmscmd in the first year and touching a peak of 18 mmscmd in the second year. SDA is technologically challenging because of the water depth of more than 2,500 meters and the UD-1 find in the area would be taken up for development later, sources said.

ONGC bought 90 per cent interest in Block KG-DWN-98/2 from Cairn Energy India Ltd in 2005. Cairn subsequently relinquished its remaining 10 per cent interest in favour of ONGC. Before selling most of its stake and giving away operatorship of the block, Cairn made four discoveries in the area —Padmavati, Kanakdurga, N-1 and R-1 (Annapurna).

Subsequently, ONGC made six significant discoveries - E-1, A1, U1, W1, D-1 and KT-1 in NDA and the first ultra-deepwater discovery UD-1 at a record depth of 2,841 metres.

Block KG-DWN-98/2, comprising 7,294.60 square kilometres, was originally awarded to Cairn in the first round of auction under New Exploration Licensing Policy (NELP) in April 2000.