Gujarat State Petroleum Corporation (GSPC) may witness a “marginal” increase in its KG offshore development cost

Gujarat State Petroleum Corporation (GSPC) may witness a “marginal” increase in its KG offshore development cost from the initially estimated $1.7 billion (approximately Rs 8,800 crore at the current exchange value) due to recent amendments in drilling technology to manage the high pressure and temperature of the reservoir.

First gas from KG-OSN-2001/3, the field has been rechristened as “Deen-Dayal,” is expected in 2013. Peak output from the find is estimated to reach 5.7-8.6 million metric standard cubic metre a day (mmscmd).

Though located in shallow water, development of the gas find is considered “challenging” due to twin hurdles of temperature and pressure. The field development plan (FDP) was approved by the Directorate General of Hydrocarbons in November 2009.

According to sources, GSPC has already drilled the “top-hole” section of the four production wells, out of the proposed 15, by using a jack-up rig Deep Sea Driller – I, costing $ 100,000 a day. To drill the final section of the reservoir wall by using a cheaper ($62,000 a day) platform-rig, GSPC has roped in Blade Energy to adopt managed pressure drilling (MPD) technology, which was not part of the original FDP.

Source: Business Line

KG D6 on Wiki

Read http://en.wikipedia.org/wiki/KG-D6_Gas_Scam

Chawla committe finds fault with Production Sharing Contract (PSC)

Chawla committee notes the fault line is the PSC between operator RIL and Government.The relationship between the pre-tax investment multiple (PTIM) and the share of contractor profit petroleum changes dramatically once the PTIM crosses 2.5, with the government's share increasing from 28 per cent to 85 per cent. There is thus an incentive for bidder higher PTIM in the bid but work towards lower in actual.
Source: Economic Times

CAG questions enhanced capital expenditure of RIL

What is this controversy about?


Government is the owner and RIL is the contractor of KG gas.Government gets its share of revenue after deduction expenditure of the operator, the higher the expenses lower will be plus to share. RIL claimed increase in capital expenditure from $2.4 billio to $8.8 billion DG Hydrocarbons and Minsitry approved the same between September and December 2006. Analysts were puzzled with this claim as there was no corresponding increase in out put, which plateaued (for D6 block) at 55mmscmd as against production target of 80mmscmd.   

The draft CAG report makes three significant charges:

• First, that the Government gave RIL and Cairn unjustified deadline extensions for the completion of exploration, ranging from three months to 12 months at a time.
• Second, the Government allowed RIL and Cairn to retain unexplored contract areas which ought to have been returned to the Government, and re-auctioned, after a given (in the contract) point in time.
• Third, RIL inflated its capital expenditure requirements by 117 per cent between 2004 and 2006, which cost the Government revenue.

Source: India Today

Power cuts in AP and KG gas availability

AP is reeling under power cuts. Where is the problem?
As per reports, Andhra Pradesh has gas-based power generation capacity of 2,700 MW but due to inadequate pipeline infrastructure produces only about 1900 MW. At the same time there is news on Reliance and GAIL swapping deal valid May 31-  Reliance will supply nearly 2.6 million cubic metres a day (mmscmd) of gas, currently used by customers in Gujarat, to power producers in Andhra Pradesh. This will result in generation of 600MW of power.

If pipe line capacity is a constraint, how  is this additional quantity distributed. If this additional quantity is coming thru existing pipeline, why make this a temporary arrangement? 

Reliance gets $7.2 billion mostly for KG gas.What did Andhra get?

BP said on Monday it will pay Reliance Industries $7.2 billion and performance payments of up to $1.8 billion if the tie-up leads to the development of commercial discoveries. 

The company's key production asset is its KG D6 block in the Krishna-Godavari basin off India's east coast. Its output is around 52-53 million cubic metres of gas a day and it could reach peak capacity of 80 million cubic metres in 2013. 

Read more: BP and Reliance in $7.2bn oil and gas alliance - The Times of India http://timesofindia.indiatimes.com/business/india-business/BP-and-Reliance-in-72bn-oil-and-gas-alliance/articleshow/7540225.cms#ixzz1Ey6SlRqM


Discovery of gas transformed economies of several nations - what did Andhra get? 

Did A.P miss an opportunity to build wealth and enterprise with KG gas?

Oil and Natural gas discoveries are the real game changers- they dramatically transformed economies of several countries. Few examples:
The discovery of large quantities of oil and gas in the North Sea has been one of the most dramatic events in the post-war history of the UK. The direct and indirect effects have permeated the whole country. The balance of payments and the public finances have benefited greatly since the 1970s. Locally the economy of the whole of the North-East of Scotland has been transformed as a result of the coming of oil. For many years prior to its discovery the regional population had been falling from 468,000 in 1951 to 455,000 in 1961, 450,000 in 1966, and 436,000 in 1971. Total employment also fell through the 1950s and 1960s.

The first commercial oil field dates to 1969 when what is now the Arbroath field was discovered. It was the discovery of the giant Forties field the following year that confirmed the exploration potential of the waters off Scotland and led to a rapid succession of further substantial discoveries in the first half of the 1970s.

The North-East economy shared in this boom. The population trend was dramatically reversed, with Grampian region exhibiting a growth from 436,000 in 1971 to 480,000 in 1981, and 533,000 in 1995. Unemployment rates became extremely low and average male earnings rose from 85% of the UK national in 1972 to well over 100% by 1978. 

Many of the traditional industries were not inherently very profitable and their ability to withstand increased costs was very limited. The textiles, papermaking, traditional engineering, fishing and fish processing industries all experienced declines in the period since the 1970s. The continued growth of the oil-related sector countered the loss of employment elsewhere. 

Israel us the last to discover vast reservoirs of gas and what is it planning to do? They decided to set up gas wealth fund , invest it wisely globally and use the returns to support education and defense.

Andhra Pradesh seems to have showed little imagination is utilising Krishna Godavari gas for economic development of Andhra. Radia tapes show that Rajeskar Reddy tried invain. Is all lost on economic gains to the region from discovery of KG gas? 

The 2011 State of the Union Address

National Seminar on "Development and sustainability of Earth Resources and Environment"

National Seminar on "Development and sustainability of Earth Resources and Environment"  is scheduled on 12-13 March 2011.Topics: Mineral resources (Opencast and underground mining),   Hydrocarbon (Coal, Oil and gas, shale gas and Gas hydrates) and Geothermal resources,   Surface and Groundwater and its management in River basin/watershed,  Dams & Reservoir area problems,   Sustainable management of earth resources and environment,   Applications of Remote sensing and GIS.

Contact: Dr. Y. Srinivasa Rao, Convener: DSERE -2011 &

Head: Geoinformatics & Petroleum Exploration

School of Earth and Atmospheric Sciences

Adikavi Nannaya University, Jayakrishnapuram

RAJAHMUNDRY – 533 105, A.P.

Ph: 0883 – 2472616 (o), Fax: 0883 – 2472615

Mobile: +91 9440801165

Email: dsere2011@gmail.com, yammani@gmail.com