Oil India ready 'to kill' wells as demand drops

Vol 23, PW 11 (09 Apr 20) Exploration & Production

Oil India managers in the northeast have issued a stark warning they may have to start "killing" wells as the company grapples with a sharp decline in production and drilling operations grind to a halt.

"Our fields are old and so are many of the wells," says a visibly worried source. "If we have to kill wells, there's a slim chance of reviving them."

Oil India tells us it has suspended drilling at 15 of 18 exploration and development wells across the northeast as critical staff stay at home because of the Coronavirus pandemic and service providers are unable to deliver components or supplies to remote well-sites. "Only three wells are being drilled," we hear.

"Two at Lakwagaon (in the Moran PML) and one at Baghjan." Workover operations are also continuing at a fourth well.

By March 23, Oil India was producing approximately 8400 t/d (61,600 b/d) across the northeast. "That rate of production is under threat," adds our source.

"It will go down." At present rates, Oil India managers say production has dropped to 2.2m t/y from 3.32m t/y, recorded in its 2018-19 results.

Blamed for the sharp decline are problems at the refineries which offtake Oil India's crude, in particular Numaligarh Refinery, which takes around 1m t/y. "NRL is telling us its tankage (for refined products) will be full any day," we hear.

Oil India expects further "demand shocks" as industrial activity slumps.