ONGC to spend Rs15,300 cr on K-G gas discovery

Oil and Natural Gas Corp (ONGC) is reportedly planning to invest $2.894 billion (about Rs15,340 crore) in developing its ultra-deep sea UD-1 gas discovery in the Krishna-Godavari basin by 2016-17.

The UD-1 gas discovery can produce for 14-15 years with peak of about 20 million cubic metres per day (mmcmd) lasting for five years. It may hold 4.257 trillion cubic feet of gas reserves. 

The company detailed the production profile and the likely investment in the revised proposal for declaring the UD-1 find as commercially viable (called declaration of commerciality).

Block KG-DWN-98/2 sits next to Reliance Industries' KG-D6 block where drop in reservoir pressure and water/sand ingress has seen output dip by over 35 per cent to just over 39 mmcmd.

Of the inplace reserves, ONGC estimates 2.55 Tcf can be recovered while DGH puts the figure at 2.315 Tcf. The Times of India cited unnamed sources as saying ONGC plans to drill 11 wells to bring the field to production by 2016-17 with an output of 585 million cubic feet per day (16.5 mmcmd).

The production would rise to 715 mmcfd (20.24 mmcmd) in the second year and stay there for five years. Output from the seventh year would start dipping and it would be 86 mmcfd (2.4 mmcmd) in year 15. DGH, they said, found the discovery commercial after considering cumulative production of 2.315 Tcf with recovery of 58.5 per cent for 15 years. It estimated a net present value (NPV) yield for ONGC at $200 million.