Oil production from the much-delayed flagship deep-sea project in the Krishna Godavari basin of the Bay of Bengal has begun, according to state-owned Oil and Natural Gas Corporation (ONGC), which will help reverse years of output decrease.
According to a statement from the company, the “first oil” from the deep-water KG-DWN-98/2 block in the Bay of Bengal began to flow on January 7.
In a post on X, Oil Minister Hardeep Singh Puri also declared the commencement of production; however, neither he nor ONGC disclosed the volume of oil being produced.
According to ONGC’s announcement, “this 98/2 project is likely to increase ONGC’s total oil and gas production by 11% and 15%, respectively.”
During 2022–2023 (April 2022 to March 2023), ONGC produced 18.4 million tonnes of crude oil and almost 20 billion cubic meters of gas per day.
According to Puri, the Cluster-2 finds in the block are projected to produce “over 10 million standard cubic meters of gas per day and 45,000 barrels of gas per day.” He did not, however, provide an estimated time frame for achieving such production levels.
The Minister of State for Petroleum and Natural Gas, Rameswar Teli, said last month in a written response to a query in the Rajya Sabha that ONGC will begin commercial production of crude oil from the block in May 2024.
In the KG basin, the KG-DWN-98/2 or KG-D5 block is next to Reliance Industries’ KG-D6 block and has many finds that have been grouped together.
The finds in the block, which are 35 kilometers off the coast of Andhra Pradesh and at ocean depths between 300 and 3,200 meters, are grouped into three clusters: 1, 2, and 3. Production is starting with Cluster 2.
The Covid epidemic caused a delay in Cluster-2’s oil production, which was originally scheduled to start in November 2021. After that, ONGC declared that the first deadline for producing Cluster-2 oil would be May 2023. However, this deadline was then extended to August 2023, and from then on, the first oil flow was prolonged each month until December 2023.
“ONGC has successfully completed Phase 1 of the project in March 2020, achieving the commencement of gas production from U field of the KG-DWN-98/2 Block in record time of 10 months, despite valiantly combating various technological and Covid-related challenges.” With the start of this first oil on January 7, 2024, ONGC is getting close to completing Phase 2, which will lead to the start of oil production from the KG-DWN-98/2 “M” field, the company stated.
It continued by saying that the waxy structure of the crude presented special technological difficulties for the development of this area.
“ONGC used cutting-edge pipe technology—a first-of-its-kind endeavor in India—to overcome difficulties. The bulk of the fabrication work for this development was done at ONGC’s modular fabrication facility in Kattupalli, which highlights the company’s commitment to promoting “Made in India” and working towards an independent energy sector in India. However, some subsea hardware required for this development had to be sourced internationally in order to meet certain requirements.
According to the statement, the project is on pace for its final phase, with the remaining oil and gas resources in the block expected to begin production by the middle of 2024. “Peak production of the field is anticipated to be over 10 mmsmd of gas and 45,000 barrels of oil per day (bopd).” For the purpose of extracting oil from the seabed, ONGC has chartered the floating vessel Armada Sterling-V, which is owned by Malaysia’s Bumi Armada and 70% by SPOG (Shapoorji Pallonji Oil & Gas).
After being connected up on December 27, 2022, the Armada Sterling-V, a floating production, storage, and offloading vessel, has been waiting for oil since January 2, 2023.
Cluster-1 in the KG-D5 block has three finds. In 2019, the field development plans (FDPs) for two finds were authorized. We are presently in the development phase of this project.
One ultra-deep water gas find in Cluster-3, if it were to be commercialized, would rank as the world’s second-deepest hydrocarbon discovery. The deadline for submitting the FDP is January 2026.
In April 2018, ONGC submitted an FDP proposal for Cluster-2, estimating capital costs of USD 5.07 billion and operating costs of USD 5.12 billion over a 16-year field life.
The Cluster-2 field is split into two blocks, 2A and 2B. During the course of the field’s existence, 23.52 million metric tons of oil and 50.70 billion cubic meters (bcm) of gas were predicted to be produced, according to the initial investment decision.
Cluster 2B is thought to have 51.98 bcm of gas reserves, while Cluster 2A is expected to host deposits of 94.26 million tonnes of crude oil and 21.75 bcm of associated gas.
It was projected that during a 15-year period, Cluster 2A would produce 3.81 million metric standard cubic meters per day (mmscmd) of associated gas and 77,305 barrels of oil per day (bopd).
With a 16-year lifespan, Cluster 2B was predicted to generate 12.75 mmscmd of free gas from eight wells.
However, the production that ONGC is now anticipating is lower: 45,000 bpd of oil and up to 2.5 mmscmd from Cluster 2A and around 9 mmscmd from Cluster 2B.
