India's DGH Refuses to Approve 3 ONGC's Gas Finds in Bay of Bengal

India's Directorate General of Hydrocarbons (DGH) refused to approve three of the 11 gas discoveries in the Krishna Godvari block KG-DWN-98/2 (KG-D5) in the Bay of Bengal, India that were submitted by state-owned Oil and Natural Gas Corp. (ONGC) for a Declaration of Commerciality, sources told local daily The Economic Times Sunday.

DGH rejected ONGC's application for the three gas discoveries, namely D, E and UD-1, as they did not meet its prescribed conformity tests, including the absence of surface flow data and drill stem test (DST) data. 

ONGC has reportedly proposed to develop gas finds D and E in the KG-D5 block together with a discovery in neighboring G4 block as Cluster I, while the UD-1 discovery, which holds an estimated 2.386 trillion cubic feet (Tcf) of in-place gas reserves, was to be develop as Cluster III. The UD-1, which was ONGC's first deepwater discovery, was located at a record depth of 9,320 feet (2,841 meters).

The D and E gas discoveries contained around 587.6 billion cubic feet (Bcf) of in-place reserves, the Economic Times added.

In a related development, the DGH is believed to have agreed to ONGC's declaration of commerciality for the Cluster II, comprising the other eight discoveries. Reserves in Cluster II were estimated at 1.42 Tcf of gas and 140.891 million barrels of oil, with capital expenditure for the development pegged at $4.07 billion, the sources added.

The DGH has previously rejected Indian conglomerate Reliance Industries Ltd.'s application for recognition of its D-29, 30 and 31 gas discoveries in the KG-D6 block, which togther holds reserves of around 345 Bcf as no DSTs were carried out. Although the company eventually agreed to carry out the required tests, the DGH refused permission for Reliance to do so, citing the expiry of timelines for developing the discoveries.

Meanwhile, India's new government, led by Prime Minister Narendra Modi of the Bharatiya Janata Party, is currently working on a number of schemes, considerations and plans to revamp current contracts for exploring the country's hydrocarbon resources, a senior DGH official told Rigzone recently.

"We are looking at a new model of contract to fast pace hydrocarbon exploration and production [E&P] in India,” DGH’s Chief Technical Officer Rajeev Kumar Sinha said.