DGH claims itآ’s "economically unattractive"

Vol 5, PW 16 (26 Sep 01) Exploration & Production

More striking is the DGH's unprecedented criticism of the economic viability of ONGC's Mumbai High redevelopment programme.

Until now most criticism centred on abstract geological concerns. A source tells Petrowatch Chandra's harsh criticism of the redevelopment programme as "economically unattractive" is akin to opening a new front in his war.

To buttress his argument Chandra produces the numbers below: Field Post-tax NPV in US$ (DGH figure) IRR% (DGH figure) Capital investment in US$ Extra oil prodn in million tonnes by 2030 (DGH figure) MHN 36.41m (-4.96m) 20.06 (14.9) 640.18m 22.32 (19.84) MHS 37.27m (-23.84m) 18.78 (14.28) 1118.31m 32.36 (28.76) Total 1758.49m 54.68 (48.6) In notes obtained by this report the DGH claims that such a "major" investment by ONGC should lead to incremental oil recovery of up to 8% -not 4% predicted by ONGC. "It may not be prudent to make such heavy investments till fundamental issues are studied and taken into consideration for the additional development of the field," says Chandra.

So, what next Petrowatch learns the DGH suggests the following remedial action: Drill 15-20 wells every year in Mumbai High as is being done now till the revised geological/reservoir model is prepared and fresh reservoir simulation studies carried out for Mumbai High Avoid multi-zone completions until "proper redevelopment programme" is approved and the 15-20 wells referred to above ought to recover oil from undrained/poorly drained zones/layers Drill additional producers and injectors from (the proposed) ZA platform, given encouraging results from three new horizontal wells and worked over wells in the vicinity Of the 140 wells planned for MHS, ONGC data indicates some 60 wells (43%) would give 64% of total estimated incremental oil. "This is a crucial point," we are told Compress the time frame for refining existing reservoir models and simulation studies by deploying additional staff or even hiring overseas experts