3D seismic trouble for IndianOil at Gujarat block

Vol 15, PW 25 (28 Jun 12) Exploration & Production
     

Beware the perils of bidding too low, a mistake IOT Infrastructure & Energy Services must be regretting the day it bid for a contract to shoot 199-sq km 3D at an onland Gujarat block for parent company IndianOil.

Better known as IndianOil Tanking, IOT won the job for CB-ONN-2005/7 on November 25, 2010 quoting Rs15cr ($3m). “But they’ve spent almost double that amount and still haven’t finished,” we hear.

“They’re losing money fast.” IOT is a joint venture between parent IndianOil and Oiltanking GmbH of Germany, no doubt one of the reasons it was hired, despite its zero experience as a seismic contractor.

Shooting began late in February 2011 because of equipment delays. Work should have finished in one season but till date IOT has shot just 120.168-sq km of the 199-sq km contracted.

What’s holding up work IOT underestimated the depths to which it needed to drill holes for explosives – a critical miscalculation as explosives holes make up the bulk of the cost in a 3D shoot. “Sub-contractors who drill explosives holes make most of the money in onland seismic jobs,” we hear.

An explosives hole is typically drilled to 20 metres but IOT needed to drill to more than 48 metres. Monsoon rains forced IOT to suspend work this month and shooting can resume only in October.

IOC has optimistically issued a tender to hire contractors who can process and interpret 3D even though the 3D shoot is incomplete. Submit bids by early July.

Drilling of 10 explorations wells, committed under the four-year Phase-I is unlikely before December 2013. IOC signed the PSC for this NELP-VII block on December 22, 2008.

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