ONGC Plans to Drill 17 Exploration Wells in India's Shale Oil, Gas Blocks

ONGC Plans to Drill 17 Exploration Wells in India's Shale Oil, Gas Blocks
ONGC intends to drill up to 17 shale oil and gas exploration wells in India for around $105 million.

India's state-owned Oil and Natural Gas Corp. Ltd. (ONGC) intends to spend approximately $105 million (INR 7 billion) to drill up to 17 shale oil and gas wells located on the country's east and west coasts, local media The Economic Times reported Sunday.

ONGC has approached the Ministry of Environment and Forests for its approval to prepare the terms of reference for the exploration wells, the Economic Times said, citing minutes of a recent meeting of the Ministry's Expert Appraisal Committee (EAC).

If the proposal is approved by the government, it will be the first time that ONGC has embarked on shale exploration on such a large scale, a senior company official told The Economic Times. The state-owned firm will engage in shale gas exploration in India's Krishna-Godavari basin – located on India's east coast – for the first time.

The daily revealed that the minutes indicated that ONGC is seeking permission to drill 11 exploratory wells for shale oil and shale gas in Cambay basin at Mehsana, Ahmedabad and Bharuch districts of Gujarat, 1 prospect in Cauvery basin at Nagapattinam in Tamil Nadu and five wells in Krishna-Godvari Basin at East and West Godavari districts of Andhra Pradesh.

"ONGC Ltd. has proposed for exploratory drilling of 11 wells for shale oil/shale gas in Cambay basin at Mehsana, Ahmedabad, Bharuch in Gujarat. Total cost of project is $54.9 million (INR 3.66 billion)," according to the minutes of the meeting.

Meanwhile, the Indian oil and gas company is likely to allocate $32.6 million (INR 2.17 billion) and $6.8 million (INR 450 million) for the exploration projects in Krishna Godavari Basin and Cauvery Basin, respectively.

"ONGC was given a mandate to identify a minimum of 50 nomination blocks where it will take up shale gas and oil exploration in Phase-I ... ONGC will have to drill at least one (two in blocks having area more than 77.2 square miles or 200 square kilometers) well for assessment of shale gas and oil in each of these blocks by 2017," the official cited said, as quoted in The Economic Times.

The Indian government has shown greater interest in tapping domestic shale oil and gas resources amid rising petroleum consumption in the country. Statistics from BP Review of World Energy 2015 indicated a 3 percent increase in India's year-on-year oil consumption in 2014 to 3.846 million barrels per day, while natural gas demand stood at around 1.7867 trillion cubic feet (Tcf).

Indian Petroleum and Natural Gas Minister Dharmendra Pradhan, who assumed office in May 2014, is keen to ensure that the South Asian country is self-sufficient in energy resources. In 2013, Pradhan's predecessor, Veerappa Moily, had announced that the ministry would work on an action plan to make India energy independent by 2030 through increased fossil fuel production, development of resources such as coal bed methane and shale gas, foreign acquisitions by domestic Indian companies of upstream hydrocarbon reserves, reduced subsidies on motor fuels, and oil and natural gas pricing reforms.

The U.S. Energy Information Administration estimated in its 2013 assessment of global shale gas reserves that India has 96 Tcf of technically recoverable shale gas reserves, the organization said in its June 2014 update on the country's petroleum sector. The government announced policy guidelines in October 2013, whereby national oil companies ONGC and Oil India Ltd. (OIL) were allowed to take up shale gas and oil exploration activities in their nomination blocks.

Chee Yew has covered the upstream and downstream sectors of the oil and gas industry in Asia for more than 15 years. Email Chee Yew at cheeyew.cheang@rigzone.com

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