Olpad to begin producing 200,000 cm/d by June

Vol 11, PW 22 (20 Mar 08) People & Policy

Olpad is a curious field.

In 1963 the discovery well flowed an impressive 15,000 cm/d, but bar small-scale production today of less than 1000 cm/d to local chemical producer Cyanide & Chemicals Company, Olpad has laid largely dormant, despite the installation of an Early Production System in 1982. Since then most of the sub-surface gas appears to be more intent on migrating to neighbouring blocks – no doubt to escape the crossfire in the BJP-Congress proxy war above ground.

Olpad’s misfortune is its location near producing gasfields at the Cairn-operated CB-OS/2 block and the Niko-operated Bheema gasfield within NELP-II exploration block CB-ONN-2000/2. Any future production at Olpad hinges on a six-year Gas Balancing Agreement with Niko and a similar agreement ONGC is planning to sign with Cairn.

Under the proposed agreement with Cairn, both sides can produce an equal quantity of gas from the Babaguru sands. Cairn began producing its share in May last year.

Under its agreement with ONGC, Niko began producing gas three years ago from a separate reservoir in Olpad and three months from now in June, ONGC will begin producing a total 200,000 cm/d from the same reservoir as Niko. Out of this, 150,000 cm/d is for GSPC, in line with a 10-year agreement signed in May last year.

This contract, initialled on November 20, 2006, escaped unscathed from the oil ministry directive to abort talks for an additional 150,000 cm/d to GSPC (see above). ONGC’s decision to begin producing 200,000 - instead of only 150,000 cm/d for GSPC - is to make up for the last three years’ â€کlost production’ Under their agreement both sides were to start production three years ago.

Niko began producing from Bheema on schedule, but ONGC did not. Niko produced 36,000 cm/d in the first year, 26,000 cm/d the second year and is now producing about 20,000 cm/d.

ONGC has not yet found a buyer for its additional 50,000 cm/d from Olpad, but in a market where demand outstrips supply, that will change.