CHALLENGES IN EXPLORATION AND PRODUCTION IN INDIA

SUBMITTED BY SUMIT KUMAR BANDUNI SAURAB SWATI GHAI SNEHA THAMBI

UPSTREAM SECTOR OVERVIEW OF INDIA

OVERVIEW UPSTREAM SECTOR

India had 5.5 billion barrels of proved oil reserves at the end of 2012 India had 43.8 trillion cubic feet of natural gas reserves at the end of 2012, mostly located offshore. The Indian oil & gas industry pegged at US 110 BN - which is about 19% of Indias

gross domestic product

Upstream exploration and production activities-1.On land, Offshore & Deepwater E&P, Coal Bed Methane(CBM) , National Gas Hydrate(NGH),Shale gas Crude oil production of India : 38 MMT and Natural gas production: 47 BCM Directorate General of Hydrocarbons.

INDIA OIL AND GAS RESERVES

UPSTREAM COMPANIES
Upstream: Exploration and production

ONGC

Oil India Limited

Private E & P players: Cairn, RIL, Niko etc.

ONGC Videsh Limited (Overseas E & P)

EXPLORATION
Oil and gas industry is risky business the cost of exploration for hydrocarbon resources is very high. In spite of technological developments in establishing oil finds, the uncertainties involved in finding commercial quantities of oil and gas is large. The successful ventures have to generate sufficient profits for the unsuccessful ones to keep the business going.

THE RISKS EXIST BECAUSE:

In spite of high level of technology involved, methods are not precise. Methods are indirect and they do not indicate the presence of petroleum itself they only indicate geological situations with probability of oil find. We can not see what is happening below the earth. We conclude only by interpretation of the data. Variables are numerous and the interpretation may go wrong. Thus many dry holes are drilled.

PRODUCTION
Once the exploration and assessment stage is over and the reservoir is found suitable for commercial exploitation decision is taken for commercial exploitation. The method of production depends on: Location of the field Field life Size of the field Quality of oil and gas Pressure/ Temperature profile over the field life Use of artificial methods of production Customer specification of oil and gas, market location

TYPICAL UPSTREAM VALUE CHAIN

UPSTREAM PROCESS

CHALLENGES IN EXPLORATION AND PRODUCTION

Every challenge represents an opportunity. India presents significant unexplored opportunities for the exploration and production (E&P) industry. So far only 73 billion barrels of oil and oil equivalent gas could be established through exploration, out of 205 billion barrels of prognosticated hydrocarbon resources. Thus, about 133 billion barrels of prognosticated resources remain to be unlocked through exploration. On an average, India drills about 200 exploratory wells every year while the US drills about 2,000. Factoring in the geological risks, this pace needs to be accelerated to identify and drill out each prospect in the 26 sedimentary basins that provide the hydrocarbon base for India spread over 3 .14million sq.km. The Ministry of Petroleum & Natural Gas recently set the ball rolling with a vision to reduce oil imports by 50 per cent (2020), 75 per cent (2025), and 100 per cent (2030) and a roadmap is being evolved. The first significant step in this direction is the policy decision to allow exploration in all producing blocks, even as the industry awaits further procedural clarity.

Source-At Kearney Research Paper

CHALLENGES IN EXPLORATION AND PRODUCTION

TECHNOLOGY- Oil companies must continually seek to develop new technologies, for example to enhance recovery from mature oil fields and deep offshore locations. Technological developments have already brought important changes in the industry in the past. The following provide critical challenges which call for huge investment in capital and technology: A) Exploration in Deep-water Sedimentary Basins; B) Exploration in Frontier areas viz., Himalayan Fold Belts, sub-basalt zones etc. C) New Technology in Old Fields, specially EOR SUCCESS RATE The success is only 18% out of 100%in India is the biggest challenge in current scenario. HUMAN CAPTIAL DEFICIT Shortage human resource is another big challenge specially in areas of harsh weather and deep water. Now day facing deficit of human resource in field of upstream due various hazard prone areas . CASING WEAR The wells in Mumbai High field on the western coast are approx. 40 years old and so are the casing pipes Frequent requirement of patching the casing pipes in the areas of thinning or rupture

CHALLENGES IN OIL AND GAS UPSTREAM INDUSTRY

TIME-Over 50 per cent of the time from discovery-to-delivery is wasted in the lengthy I dont trust you approval process a non-value adding component in any project development As we seek to scale up exploration programme, there is a need to simultaneously fast-track the project development RISING EXPLORATION AND PRODUCTION COST -Past we could easily find oil in 50-100 meters .now in order to explore we need drill thousand of meters do various expensive survey which in turn led to increase cost exploration Another challenge facing the industry is that of the rising costs of projects: drilling costs alone have increased by 5% since 2003, with steel prices rising by 40% since 2004

ENVIRONMENT Debate poses another challenge,. NOCs have been active in combating local pollutionfor example through initiatives that prevent oil spills and reduce gas flaringas well as tackling the larger issue of global warming., which hold great promise for making the use of fossil fuels more environmentally friendly.

INCREASED SAFETY AND ENVIRONMENTAL LEGISLATION As number of accidents our increasing happening in oil and gas industry of India government has increased safety of people and and environment legislation . The company now have to invest billion rupees to avoid accidents and restore environment in case of any accident occurrence.

Source-Ernst&Youngr pdf.

 Unconventional Hydrocarbon Resources major part of the worlds hydrocarbon resources are entrapped in unconventional reservoirs which are difficult to develop economically but are extremely large in volume. Among these, maximum importance has been given to exploitation of shale gas reservoirs, as new technology developed has now made it economical. Other proven source for unconventional hydrocarbon for the future are Coal Bed Methane (CBM), Gas hydrate, Shale oil etc LACK OF PROPER INFRASTRUCTURE present infrastructure are not up to standards Present infrastructure are outdated one Eg Recent incident of reliance kg block which caused as blowout preventer used was not according particular standards. HIGH DECLINE RATES(law diminishing return)-Most of oil field in India are in maturity stage. Krishna Godavari production has decreased 70-75%.The reliance kg-d6 gas has decreased by going at peak of 62mmcmd in august 2010 to 26.1mmcmd 2012 and currently is has gone to less 14 mmcmd. It has decreased 65-70 % of pervious years.
Source-August 8 2013 times of India

RELIANCE KG BLOCKS

OTHER CHALLENGES IN EXPLORATION AND PRODUCTION

OPERATING HARSH CONDITIONs Working extreme cold weather and deep water is the most difficult task as substantial oil percent is found cold areas deep water, ultra deep water. INCREASING MAINTENANCE COSTS MANAGING RESOURCES-drilling costs alone have increased by 5% since 2003, with steel prices rising by 40% since 2004 . Capital project logistics & freight forwarding. Rig move management to maximize drilling time Transportation management Inbound-to-operations or maintenance repair operations (MRO) service The above lead increase in cost which need to be manage in accordance by employing best agencies to hardly .

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Source-Ernst&Youngr pdf.

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