ONGC’s Deepest Gas Find Hits Regulatory Hurdle

The upstream oil regulator has refused to review the commerciality of India's deepest gas discovery by the Oil and Natural Gas Corp citing technological challenges.

ONGC plans to invest Rs 21,528.10 crore to develop the ultra deep sea discovery in its Bay of Bengal block by 2022-23. This find would have helped the explorer double the output from the Krishna Godavari block.

While ONGC had approached the DGH seeking go-ahead for declaring that the discovery is of potential commercial interest, the regulator declined to review its request saying there was no technology available to produce gas from such depths, said persons with direct knowledge of the development.

A senior ONGC official said it is beyond the mandate of the regulator to not review a discovery and look into technology. “We are the operator and are confident of technology being available to develop the discovery.” The company has replied to DGH over its concerns, said the official.

ONGC plans to drill nine wells on the discovery that lies in water depths of 2,400-3,200 metres in the KG- DWN-98/2 (KG-D5) block and will produce a peak output of 19 million standard cubic metres per day. The ultra-deep sea reserve (UD-1) holds some 75 billion cubic meters.

The official said that there are consultants who have showed to ONGC that discoveries deeper than its find have been put to production in recent times, particularly in Gulf of Mexico. ONGC is in the process of appointing a consultant who will assist in developing (UD-1) the discovery, the official said.

The 7,294.6 sq km KG-D5 block, which includes 11 oil and gas discoveries and UD-1, sits next to Reliance Industries' KG-D6 fields. Last year, ONGC finalised a Rs 34,012-crore (USD 5.076.37 billion) plan for developing few wells. First gas production is expected by June 2019 and oil would start flowing from the next year 2020, the official said.