New Delhi, Dec 13 (PTI) State-owned ONGC thought the discovery is too small to make economic sense. But Hindustan Oil Exploration Company (HOEC) in two years of taking over the B-18 block has not just discovered more resources but has invested enough to start oil and gas output from April next year.
In an interview to PTI, HOEC Managing Director P Elango said the company will start producing 8,500 barrels per day of oil and oil equivalent gas from the B-80 block in April next year.
HOEC in September 2017 won the block in India's first auction round of small discovered fields that the state-owned firms had not developed for a variety of reasons.
Oil and Natural Gas Corporation (ONGC) had made an oil discovery in one of the five well it had drilled on the B-80 block that sits in Arabian Sea, off the Mumbai coast, but did not find economics to develop it. ONGC had established a 3,500 barrels per day production from one well.
'We carried out exploration work and studies, kept cost low and optimised production facilities,' Elango said.
HOEC drilled a well in February this year and another in April. Soon, it was able to establish that two wells already drilled on the block can support 5,500-6,000 barrels per day of oil production and 12-15 million cubic feet per day of gas output, he said.
HOEC kept a tight leash on costs and did process optimisation.
It converted an old jack-up rig into a mobile offshore process unit (MOPU) to produce and store oil offshore and transfer to refiners.
'This was cheaper than the option to build a fixed platform on the block,' he said.
The MOPU can store 900,000 barrels of oil. Gas, on the other hand, will be delivered to the Gujarat market by tapping into an existing gas pipeline system of ONGC, he said.
HOEC held 50 per cent stake in the block while the remaining was with Adbhoot Estates. Last week, HOEC increased its stake in the block to 60 per cent.
'Adbhoot was facing financial problems and so HOEC decided to carry it (or bear its share of cost) till first oil. In return, it will transfer a 10 per cent share to HOEC,' Elango said.
The company has also tied up a Rs 150 crore loan. These transactions, he said, will ensure 100 per cent funding of the project with all facilities such as pipelines, installation and commissioning of MOPU and installation of Single Point Mooring/ Floating Storage & Offloading (FSO) unit to commercialize the production of oil and gas by April 2021.
MOPU and FSO will be 100 per cent owned by the subsidiaries of HOEC, which would also be in revenue mode effective first oil.
The loan facility of Rs 150 crore will primarily be used for capital spending and will also leave the company with cash reserves to meet unforeseen contingent costs, if any, during installation, he said.
'We are convinced that B-80 Block holds a larger resource base and has potential for a longer plateau of production,' he said. 'We have built a track record on execution and are committed to deliver first oil in April 2021. Once on production, the Block will generate more revenue than the current revenue with increased share of oil.' PTI ANZ MR