Unique Range of Products for Oil & Gas Industry

Mr P K Sharma
Director Operations
Quest to Acquire Mixed Portfolio
OIL is operating in Upper Assam Basin most of which are more than 25 years old. The PSU has announced increase in crude oil production with a marginal decrease in the production of natural gas for the year 2017-18. This year, the company signed an agreement with Assam Petrochemicals and Government of Assam, signed MoU agreement with HPCL, and achieved success in production of heavy oil in Baghewala Field in Rajasthan using chemical simulation process. Mr P K Sharma, Director Operations, OIL shares insights into the recent achievements and future plans of Oil India Ltd in an exclusive interaction withOffshore World

What factors have led to an increase of 3.57% increase in crude oil production but a marginal decrease in natural gas production during the fiscal 2017-18 for OIL? How does the company plan to fur ther increase the production of crude oil & natural gas in the current fiscal?

OIL is operating in Upper Assam Basin since 1959 which is our major producing asset. Almost all fields are more than 25 years old. However, our expertise in operating in such challenging environment helps us to deal with the problem of declining production. Though a dip is production may be experienced in a cyclic fashion, never theless, we have increased our production on consideration of long term span. During the fiscal 2017-18 some proactive measures were taken which paid the dividends. Asset based restructuring of operations created an atmosphere of focused attention to individual fields. Optimized liquid withdrawal pattern, prioritization of high potential areas for well intervention and completion added to better performance. Making a few discoveries in already matured field and quick monetization helped us to reverse the declining trend in crude oil production and register an increase of 3.57 percent.

In gas production front, although we started with fairly high note some unforeseen changes in production behavior of high producing gas wells, presence of corrosive carbon dioxide which was hither to not present, affected gas production. Moreover, prolonged plant shut downs of a few major customers also contributed to less production during the year. In order to address the issues, we are in process of creation of more infrastructures in gas related operations, mainly pipe lines, to optimize production potential of new fields to enhance production. A significant upside change in gas production will be visible in three years' time.

Please share insights into the production of heavy oil in Baghewala Field in Rajasthan using chemical simulation process.

Recently the chemical simulation job was carried out in one of the wells in Baghewala field and well is producing 30 bbls of oil daily. Initially about 3000 ltrs of Chemical formulation was pumped through casing and displaced by pumping water and kept shut-in well for 24 hours. Continuous chemical injection is being done to the production string. The well is in operation on SRP. The well is under production without any rod floating problem. However, it is too early to comment on the success of the chemical simulation job carried out in well.

Tell us about the pilot project initiated using Cyclic Steam Injection Technology for production of heavy oil. What are the challenges in implementing this technology and how does the company plan to leverage this technology further?

It is planned to apply CSS in newly drilled vertical well. Installation of necessary surface infrastructure is in progress. The main challenges are mainly technical which will be overcome by application of suitable technologies. Well completion requires major change in comparison to conventional completions. More sophisticated down hole jewelries will be required to successfully complete CSS project. CSS would simulate the reser voir to make the otherwise immovable oil to well bore which will be pumped out using suitable artificial lift methods.

Give us an overview of seismic surveys in PML & NELP blocks to identify new prospects? What has been the progress so far in KG Basin exploratory wells, especially the one where HPHT technology is deployed ?

Seismic surveys have been primary tools of hydrocarbon exploration. 2D can be termed as a reconnaissance tool, in medium to large sized structures for structural interpretation. 3D seismic can be termed as a development tool used for structural and stratigraphic interpretation. OIL's PML blocks are extensively covered with 2D and 3D surveys and fur ther surveys are being done selectively to identify new oil in the old fields. And we had quite good surprises in our existing old fields.
In case of OIL operated NELP blocks, 2D/3D surveys have been completed. Wherever, normal survey operations were difficult due to logistical problems OIL has adopted cable less and seis loop surveys for exploratory activities. At present OIL is pursuing post survey exploration activities in 5 blocks, where good prospects exist.

Oil India Limited (OIL) operates 1(one) onshore NELP Block KGONN-2004/1 in KG Basin. Of the 8(eight) exploratory wells drilled in the Block, 5(five) are shallow wells and 3(three) are deep HPHT wells. All the 5(five) shallow wells have been tested for establishing presence of hydrocarbon and the well Dangeru-1 has tested positive. 1(one) HPHT well, Thanelanka-1 has been tested and presence of hydrocarbon has been established there. The other 2 (two) HPHT wells will be taken up for testing soon. Hydrofrac jobs will be carried out in two HPHT wells to establish the full production potential of the wells.

OIL signed an MoU with Assam Petrochemicals Ltd (APL) and Government of Assam to take 49% stake in the 500TPD Methanol & 200 TPD Formaldehyde project in February,2018 during the Advantage Assam summit. How does this move fit into the company's growth strategy in short and long term?

OIL has committed APL for the supply of Natural Gas which is an assured natural gas customer. OIL will be expanding its business portfolios in oil & gas value chain as per its vision. The proposed project is expected to give good economic return. Through investment in this project OIL will gainfully diversify into the petrochemical sphere.

The investment will help the state PSU, APL to sustain its business through a larger and more competitive plant. This will also generate both direct and indirect additional employment for the people of the region.

During the 8th & 9th bidding rounds of CGD, OIL bagged two projects in consortium to develop CGD network in geographical areas of Ambala & Kurukshetra & Kolhapur with HPCL and Cachar Hailakandi- Karimganj districts and Kamrup-Kamrup Metropolitan Districts in Assam with AGCL & GAIL Gas. Tell us about the progress made so far on these projects and when will these lines be commissioned.

OIL in Consor tium with HPCL has been authorized by PNGRB to develop CGD network in Ambala-Kurukshetra and Kolhapur Districts under 8th round of CGD bidding in Feb-Mar, 2018 with completion of minimum work program target by 2023. The project covers laying, building, operating or expanding city or local natural gas distribution network for supplying piped natural gas for Transpor t (CNG), Domestic (PNG), Commercial and Industrial customers. A Joint Venture Agreement(JVA) was signed between OIL and HPCL in July, 2018. The process for incorporation of Joint Venture Company (JVC) between OIL and HPCL with equity ratio of 50:50 is currently going on. The detailed project report is completed and the planning for implementation work is presently going on. Debt tie -up is also completed for the project. Gas Sale agreement signed with GAIL for supply of gas to Kolhapur and Ambala-Kurukshetra.

A tripar tite MoU was signed between Assam Gas Company Ltd, Oil India Ltd, and GAIL Gas Ltd to take part in 9th round of CGD bidding with equity stake of 48%: 26%:26% respectively. The Consortium of AGCL, OIL and GAIL Gas won the bids for development of CGD network in Kamrup-Kamrup Metropolitan Districts and Cachar, Hailakandi and Karimganj Districts. Grant of authorisation from PNGRB received for both the Geographical Areas in Sept, 2018. Planning for pre-project activities is in progress.

Tell us about the start-up development fund earmarked by OIL and two projects viz. development of a commercial bio - electrochemical prototype for treatment of produced water and concurrent production of value added products and effluent treatment plant through electrolytic technique. How does OIL plan to engage with the student fraternity at large to encourage them for developing new ideas and how can the students benefit?

In response to Start-up initiative of Govt. of India, the Board of Oil India Limited (OIL) in its 469th meeting held on 30.09.2016, approved a corpus of 50 crore towards OIL Star t-up fund to foster, nur ture and incubate new ideas related to E & P Industry.

For implementation of the initiative, it was decided that initially the process of developing Start-ups will be taken up through Technology Incubation Centre of IIT Guwahati (TIC-IITG). Accordingly, OIL signed a MoU with Indian Institute of Technology, Guwahati (IITG) in December, 2016. The objective of this initiative of OIL is to create an effective Start-up ecosystem. Technical Incubation Centre (TIC) of IIT, Guwahati, is already active for its alumni and faculties. IITG would provide their facilities in their TIC and their laboratory and other services for promotion of Start - ups of North East at a mutually a greed cost to OIL. Support of IITG will primarily be in the following activities:
  • a. Assisting OIL in the Screening process of the proposals for Star tups received by OIL.
  • b. Providing space and facilities of TIC and mentoring the Start-ups
  • c. Certifying milestone achievement of the Start-ups, with their due diligence on the progress of the project.
Regards the status of the 2 (two) Start-up projects initiated during the first phase of funding viz:
  • a. Development of a commercial bio-electrochemical prototype for treatment of produced water and concurrent production of value added products
  • Effluent Treatment Plant (ETP) for waste water from Drilling Effluent Pits through electrolytic technique.
Both the proponents have completed their respective laboratory work and have also developed prototype, which are being tested at field locations of OIL .

OIL has also recently signed Tripar tite agreements with another 2 (two) Start-up companies for funding in the 2nd phase of screening. The 3rd phase of screening has also been completed and 1 (one) star t-up company has been found to be technically qualified. OIL has initiated the process of getting approvals for funding. OIL is also the part of common platform recently formed by MoP & NG to take the Start-up initiative forward in a progressive manner.

OIL in the recent past had conducted a workshop at IITG for students from various universities of North East on its Start-up initiative. In the workshop, challenges being faced by E & P Industry in general and OIL in particular were highlighted. Students from several universities of NE participated in the workshop including few through VC. OIL also continues to participate in various Start-up programs being held in NE, where students do participate. Similar workshops are also planned in near future in various premier institutes of the country.

Share with us an over view of OIL's international footprint in activities spanning from E & P to pipelines and other related activities .

OIL have par ticipating interests internationally in 13 exploration, development and producing blocks covering 46294 square kilometres of exploration acreages in Gabon, Libya, Myanmar, Nigeria, Bangladesh, Venezuela, the United States, Mozambique, Yemen and Russia. It is the operator in respect of the block in Gabon and is a joint operator in Venezuela, and non- operator in other blocks. Internationally, OIL plans to seek to continue acquiring mixed portfolio of producing and exploration assets. OIL intends to implement this strategy both through joint ventures with other leading industry participants, as well as through its MoU with IOCL. In addition to its MoU with IOCL, OIL has entered into certain other MoUs, with various companies in the upstream and downstream sectors in order to pursue exploration and production oppor tunities both in India and overseas. I am happy to mention that Russian assets have become now cash positive and company is receiving dividends.

In November 2004, OIL entered into a par ticipation agreement with OVL to form a joint venture where OIL holds a 10.00 percent interest and OVL holds a 90.00 per cent interest for the construction of a product pipeline in Sudan under a contract from the Sudanese government. This project was awarded by the Ministry of Energy & Mining ("MEM") and involved a construction of a 12" x 741 kilometres cross-country multiproduct pipeline from Al-Rawyan to Port Sudan. The pipeline was built on a "Build, Operate, Lease and Transfer" basis and after its completion was leased back to the MEM. The consortium engaged Dodsal Pte Ltd. as the EPC contractor for the project. Construction was completed in September 2005.

How does OIL plan to expand the renewable energy portfolio?

OIL established 5 wind turbine set ups in 3 states viz Rajasthan, Gujarat and Madhya Pradesh with an installed capacity of 174 MW. Similarly 2 solar installations in Rajasthan are generating 14 MW. Even though no immediate plans are at hand for expansion, we would like to adopt the policy of wait and act in the case of RE portfolio.

Which are the key focus areas for OIL in the foreseeable future ?

Our key exper tise is in exploration and production. Therefore, these will remain as our main focus areas now and in foreseeable future as well. In the recent reassessment of basin potential there has been substantial increase in the prognosticated Hydrocarbon resources of India par ticularly in Upper Assam Basin area and KG Basin. There is lot of undiscovered potential in these basins. We are operating in both areas. This will give us fur ther impetus to focus on exploration and production in an enhanced way. Through these efforts only a quantum jump in the production is expected in near future.