DGH puts conditions on GSPC for CB-ONN-2000/1

Vol 10, PW 15 (16 Nov 06) Exploration & Production

GSPC wants a two-year extension to its five-year work programme at prized onshore block CB-ONN-2000/1 in Gujarat.

On 2nd November, the DGH wrote to GSPC with "in-principle" agreement, albeit with several critical riders, among them that GSPC agrees to relinquish all the areas in the block bar those that hold the discovery wells and might form the nucleus of a development area. Another surprising condition from the DGH is that it can offer the field in any future licensing round, something it can in theory do anyway because GSPC is living on borrowed time by not drilling the committed number of wells within the work programme.

GSPC signed a PSC for CB-ONN-2000/1 on 17th July 2001 and the five-year work programme with an 11-well commitment ended on 16th July this year. But GSPC is only now drilling its 11th well.

GSPC tells us if it agrees to the DGH conditions it will be the first time in India such a model is accepted. Spread across 1424-sq km, GSPC and GAIL each hold 50% in this block, the most fiercely contested of NELP-II.

Look to its 11th well PK-2A/2, which has just been completed, to understand why GSPC wants to keep this block at any cost. On 8th November, well PK-2A/2 flowed 1500 b/d to surface during testing at a wellhead pressure of 1000-psi.

"The flow is unlikely to remain at this level, says a source. We hope the flow will stabilise at anywhere between 700b/d to 900b/d." Oil from PK-2A/2 was encountered at 1900 meters depth from a 125-metre oil column.

Its results are similar to those from earlier appraisal well PK-2A/1, spud on 30th June, where oil flowed 1400 b/d to surface during testing. TD for both wells was 2000 meters.

Both wells were drilled using Dalma Energy's 800 horsepower rig MR-1, which GSPC contracted in May 2006 till December 2007. GSPC hopes that these two finds will help it raise production from 700 b/d to 5000 b/d.

GSPC estimates in-place oil between 40m to 80m barrels.