ONGC Inks Deal for Development of Marginal Fields

ONGC has entered into a service contract for development of three offshore marginal fields with the consortium of Prize Petroleum Company Ltd (Prize), Hindustan Petroleum Corporation Ltd. (HPCL) and Trenergy (Malaysia).

The contract was signed in the presence of Mr. R. S. Sharma, C&MD, ONGC and Mr. M. B. Lal, C&MD, HPCL, here at New Delhi, today. With the signing of the contract, ONGC and consortium partner HPCL, look for more synergy in upcoming opportunities.

Development of Marginal Fields is one of the strategic business pursuits of ONGC, for increasing production by unlocking small pools of discovered hydrocarbon reserves. ONGC has identified 153 Marginal Fields out of which 38 fields have been monetized and 94 fields are under monetization.

The consortium of Prize Petroleum, HPCL, and M3Energy (Trenergy) Bhd, a Malaysian FPSO operator, has been awarded this service contract under an international competitive bid by ONGC for Development of three Offshore Marginal Fields under Cluster-7 (B-192, B-45 and WO-24) in southwest of Mumbai High field of ONGC.

A capital investment of about US$166 million and operational expenditure of US$ 313 million have been planned by the consortium, for the development of all the fields in the cluster. 13 wells are to be drilled during assessment period of three years from two platforms. The envisaged peak oil production is 18865 bopd and gas 0.887 MMm3/day with cumulative oil production of 46.42 MMbbl and gas production of 2.7 BCM.

The participating interest of the consortium partners are 70% and 30% for HPCL-Prize and M3Energy respectively. Prize Petroleum is the consortium leader and is responsible for G&G activities, Log & Seismic interpretations, Reservoir management and Production facilities for the development of the fields. Trenergy will be looking after the production and processing related operations. HPCL will do the project management and related activities.

Fast track development plan as per the modern international practice for offshore marginal fields has been envisaged which will include innovative ideas and advanced drilling methods.

The Project will be completed in two phases:

An initial development phase of three years,
Final development phase till end of field's economic life.

The development plan will be as per the standard industrial practice and will meet Health, Safety and Environmental standards.

Marginal Fields

Marginal fields have low oil and gas reserves which are economically viable when produced with low capital cost and overheads. This is best possible when outsourced to smaller companies.

The marginal fields throughout the world contribute around 40% of total oil produced. With the changing world oil price scenario, innovative technologies and liberal Government regulations, the development of marginal fields has assumed importance for increasing production and profit.

A substantial amount of hydrocarbon is locked up in New and Marginal Fields of ONGC, as these fields can not be produced economically on a stand alone basis, or with a conventional approach. The fields are considered marginal as:

They have lesser quantity of in-place hydrocarbons, distributed in several layers,
Their extent is limited,
They are located far from existing infrastructure facilities,
The economics for the development of these fields are marginal.

Outsourcing of Marginal Fields

ONGC has laid strategic emphasis by leveraging technology for development of New and Marginal Fields:

through in-house efforts as well as,
through out-sourcing on service contract.

In September 2002, ONGC decided to outsource the development of Onshore Marginal Fields in phases. In the first phase 18 fields were offered and 46 companies responded for this offer. A data room was opened for these Companies in Mumbai to study the potential of these fields. After studying the data 70 tender documents were purchased by 19 companies.

Outsourcing of Onshore Marginal Fields

In 2004, 8 Onshore Fields were awarded for development through service contract: Three fields viz. Khambel, West Bechraji, Hirapur were awarded to M/s Prize Petroleum Company Limited and,

Three fields viz. Bihubar, Barsilla, Laxmijan were awarded to M/s Assam Company Limited on 6th February 2004,

Two fields viz. South Patan and Kamboi were awarded to M/s Gujarat State Petroleum Corporation Limited on nomination basis.

The second round of out-sourcing of 17 Onshore Marginal Fields is underway.

Outsourcing of Offshore Fields

In the first round of out sourcing of offshore fields, 19 Offshore Marginal Fields were identified for development through service contract with participation of National and International companies.

A record number of tender documents were purchased by a number of Indian and foreign companies. A total 16 companies including 10 foreign companies from USA, Malaysia, UK, Canada, Hong Kong, Russia purchased 66 tender documents.

Bids were received for two clusters,

After evaluation of bids, Cluster-7 has been awarded to Consortium of M/s Prize Petroleum, M/s HPCL and M/s Trenergy, Malaysia.