Ready to explore

New Delhi, April 4: The directorate general of hydrocarbons (DGH) has finally acknowledged the discoveries of ONGC in the Krishna-Godavari (KG) deepwater block, softening its earlier stand that had caused a run-in with the PSU.

Sources said the DGH has now accepted ONGC’s discovery in the Krishna-Godavari and Mahanadi basins. However, the DGH is still awaiting further appraisal reports from ONGC before announcing the estimates of the in-place gas reserves. ONGC is drilling more appraisal wells to get firmer estimates of the reserves.

DGH had disallowed ONGC’s gas discovery on the grounds of the PSU abandoning the gas bearing well without doing conventional testing which requires the hydrocarbon to flow to the surface.

ONGC claimed it had done the universally accepted modular dynamic testing (MDT) method to establish the presence of reserves in the well UD-1 in Krishna Godavari basin block KG-DWN-98/2. The oil major said MDT is the latest method and is considered both accurate and cost-effective.

The DGH had followed the norms of the production sharing contract (PSC) which acknowledges a discovery only if the gas flows to the surface. ONGC, however, said this approach was obsolete.

The company said it stood by its assessment of 2.09 to 6.73 trillion cubic feet (TCF) initial in-place reserves in the northern structure and 2.61 to 8.03 TCF in the southern structure in the UD-1 well.

The well was abandoned as per the industry’s standard practice with a provision for re-entry by placing a corrosion cap, so that it is possible to start production at a future date. The well was under control, and the decision to abandon it was taken after fulfilling all the objectives of the well.

ONGC will drill four or five more appraisal wells and then announce a firmed-up estimate of the size of the discovery and the reserves it holds, according to a company official.