Drilling in Bay: a new frontier in the making
Thursday, 31 May 2012
Shahiduzzaman Khan
The process of new gas discoveries appears to move at a snail's pace in Bangladesh. Already the country is facing a severe gas supply shortage. But no serious activities are being witnessed in its efforts, as of now, to explore hydrocarbon both in its onshore and offshore fields.
The government, however, has announced recently the discovery of new gas fields in Koilashtila and Sylhet fields. Briefing newsmen in two consecutive press briefings, the Petrobangla chairman was upbeat when stating that Bangladesh Petroleum Exploration and Production Company Ltd (BAPEX) has found 137 million barrels of new oil resources. But the earlier estimate about the recoverable gas reserves was then revised down by 35.63 per cent to 1.53 trillion cubic feet (tcf) in Koilashtila and Sylhet fields.
Are these new discoveries at all? In fact, the Koilashtila and the Sylhet gas fields are among the oldest ones, having been discovered as far back as in 1962 and 1965 respectively. Until 1994, these two fields produced enough gas from five producing fields. The government ceased production from those fields in 1994 as gas reserves there came to a zero level then. And BAPEX recently found more gas at nearby these fields. These are being treated as new discoveries.
During the last 12 years, Bangladesh discovered only one new gas field -- Tullow-operated Bangura in 2004 with reserves at only around 500 billion cubic feet (bcf). The Bangura discovery was made six years after the previous discovery of Chevron's Bibiyana gas field in 1998. Due to such lean discovery, natural gas supply shortage throughout the country has kept on widening amid the people's mounting sufferings.
Country's total recoverable gas is estimated at 33 tcf by the US Geological Survey. Bangladesh signed the latest Production Sharing Contract (PSC) with the US-based Conocophillis in 2011, one decade after the signing of the previous PSC with British Shell Oil and Cairn Energy in 2001. All these were very minimum activities going on around. In fact, the country requires massive exploration and drilling activities to increase its overall gas output. There is no alternative but to offer more contracts to the international oil companies (IOCs) to help accelerate exploration and drilling activities to ensure the country's future energy security as the state-run firms have otherwise been facing financial and technological constraints.
The government is now reportedly considering to import gas from Myanmar in order to reopen the gas-based fertiliser factories of the country, closed earlier on account of severe gas supply constraints. A move has thus been taken to work out a possible deal with the Myanmar government on the issue. Besides, the government is now importing Liquefied Natural Gas (LNG) from Qatar to meet the gas supply shortage. A project to build an LNG terminal was also taken up earlier to receive LNG containers from Qatar and transmit gas to the national pipeline, but its work is being delayed due to various constraints.
According to geologists, the Bangladesh territory in the Bay of Bengal holds the biggest oil and gas prospect. Although country's gas and oil sector is apparently vulnerable to regional politics, the government needs to take some prompt actions for facilitating a massive exploration drive. If IOCs are readily engaged in the offshore exploration drives, the country can expect to reap some quick gains. A modest discovery of hydrocarbon in the offshore fields may usher in a new era for Bangladesh. As such, no time should be wasted for making such a spirited drive.
On its part, the energy ministry has recently instructed Petrobangla to move with the exploration drive and expedite the process for the next offshore bidding round. Bangladesh could not arrange offshore bidding round so far as the move was marred by protests from neighbouring Myanmar and India over the maritime boundary disputes. Also the offshore bidding round was deferred due to procedural delays as the country wants to reserve some shallow blocks for its sole oil and gas exploration company -- BAPEX.
The maritime boundary with Myanmar, however, is still to be clearly drawn after the verdict of the international tribunal. A flurry of activities was otherwise expected after the verdict, having relevance to exploration-related activities in the offshore fields. But such moves are still limited to preparing 'plans' and taking expert help from the US, the UK and Australia for the job. Bangladesh had initially planned to offer eight shallow water gas blocks in the bidding round, but following the verdict, it moved for a fresh demarcation of its offshore gas blocks in the Bay of Bengal. The tribunal based in Hamburg, Germany, upheld Bangladesh's claim to an exclusive economic zone of 200 nautical miles in the Bay of Bengal, and to a substantial share of the outer continental shelf beyond, thus ending its maritime boundary dispute with Myanmar.
According to a conservative estimate, the national demand for gas will be at around 50,000 mmcf by 2020, if the target of 7.0 per cent growth rate of its gross domestic product (GDP) is to be achieved. For that reason, around 24 trillion cubic feet (tcf) of hydrocarbon resources need to be discovered by 2025. Unless BAPEX makes major stride for exploring gas in the Netrokona-Sunamganj belt soon, the chances of overcoming the severe gas shortage problem within 2014 are very slim. The Magnama and Hatiya structures have reportedly a large presence of gas which was evident after conducting a 3D survey there.
Both Myanmar and India began oil and gas exploration in their offshore zones in the Bay several years ago and succeeded in discovering large gas fields. Bangladesh remains miles away in the race and has failed to find its deep sea emerging as a new frontier. A proper utilisation plan was never worked out and unplanned growth took place, mostly on political considerations. By the time, the system's flaws were detected, the government realised that simply adding wells to existing fields would not meet the future gas demand.
The country urgently needs massive investments from international oil and gas companies, given the financial and technological constraints of its own state-run firms. Investment worth $25 billion is needed to tap the gas potential in the Bangladesh part of the Bay of Bengal. Extensive exploration drive should start on both the country's onshore and offshore blocks soon in the wake of soaring gas crunch, caused mainly by lack of drilling in prospective fields. Harnessing gas along with power is of crucial importance at this critical time of a huge energy crunch.
szkhan@dhaka.net
The process of new gas discoveries appears to move at a snail's pace in Bangladesh. Already the country is facing a severe gas supply shortage. But no serious activities are being witnessed in its efforts, as of now, to explore hydrocarbon both in its onshore and offshore fields.
The government, however, has announced recently the discovery of new gas fields in Koilashtila and Sylhet fields. Briefing newsmen in two consecutive press briefings, the Petrobangla chairman was upbeat when stating that Bangladesh Petroleum Exploration and Production Company Ltd (BAPEX) has found 137 million barrels of new oil resources. But the earlier estimate about the recoverable gas reserves was then revised down by 35.63 per cent to 1.53 trillion cubic feet (tcf) in Koilashtila and Sylhet fields.
Are these new discoveries at all? In fact, the Koilashtila and the Sylhet gas fields are among the oldest ones, having been discovered as far back as in 1962 and 1965 respectively. Until 1994, these two fields produced enough gas from five producing fields. The government ceased production from those fields in 1994 as gas reserves there came to a zero level then. And BAPEX recently found more gas at nearby these fields. These are being treated as new discoveries.
During the last 12 years, Bangladesh discovered only one new gas field -- Tullow-operated Bangura in 2004 with reserves at only around 500 billion cubic feet (bcf). The Bangura discovery was made six years after the previous discovery of Chevron's Bibiyana gas field in 1998. Due to such lean discovery, natural gas supply shortage throughout the country has kept on widening amid the people's mounting sufferings.
Country's total recoverable gas is estimated at 33 tcf by the US Geological Survey. Bangladesh signed the latest Production Sharing Contract (PSC) with the US-based Conocophillis in 2011, one decade after the signing of the previous PSC with British Shell Oil and Cairn Energy in 2001. All these were very minimum activities going on around. In fact, the country requires massive exploration and drilling activities to increase its overall gas output. There is no alternative but to offer more contracts to the international oil companies (IOCs) to help accelerate exploration and drilling activities to ensure the country's future energy security as the state-run firms have otherwise been facing financial and technological constraints.
The government is now reportedly considering to import gas from Myanmar in order to reopen the gas-based fertiliser factories of the country, closed earlier on account of severe gas supply constraints. A move has thus been taken to work out a possible deal with the Myanmar government on the issue. Besides, the government is now importing Liquefied Natural Gas (LNG) from Qatar to meet the gas supply shortage. A project to build an LNG terminal was also taken up earlier to receive LNG containers from Qatar and transmit gas to the national pipeline, but its work is being delayed due to various constraints.
According to geologists, the Bangladesh territory in the Bay of Bengal holds the biggest oil and gas prospect. Although country's gas and oil sector is apparently vulnerable to regional politics, the government needs to take some prompt actions for facilitating a massive exploration drive. If IOCs are readily engaged in the offshore exploration drives, the country can expect to reap some quick gains. A modest discovery of hydrocarbon in the offshore fields may usher in a new era for Bangladesh. As such, no time should be wasted for making such a spirited drive.
On its part, the energy ministry has recently instructed Petrobangla to move with the exploration drive and expedite the process for the next offshore bidding round. Bangladesh could not arrange offshore bidding round so far as the move was marred by protests from neighbouring Myanmar and India over the maritime boundary disputes. Also the offshore bidding round was deferred due to procedural delays as the country wants to reserve some shallow blocks for its sole oil and gas exploration company -- BAPEX.
The maritime boundary with Myanmar, however, is still to be clearly drawn after the verdict of the international tribunal. A flurry of activities was otherwise expected after the verdict, having relevance to exploration-related activities in the offshore fields. But such moves are still limited to preparing 'plans' and taking expert help from the US, the UK and Australia for the job. Bangladesh had initially planned to offer eight shallow water gas blocks in the bidding round, but following the verdict, it moved for a fresh demarcation of its offshore gas blocks in the Bay of Bengal. The tribunal based in Hamburg, Germany, upheld Bangladesh's claim to an exclusive economic zone of 200 nautical miles in the Bay of Bengal, and to a substantial share of the outer continental shelf beyond, thus ending its maritime boundary dispute with Myanmar.
According to a conservative estimate, the national demand for gas will be at around 50,000 mmcf by 2020, if the target of 7.0 per cent growth rate of its gross domestic product (GDP) is to be achieved. For that reason, around 24 trillion cubic feet (tcf) of hydrocarbon resources need to be discovered by 2025. Unless BAPEX makes major stride for exploring gas in the Netrokona-Sunamganj belt soon, the chances of overcoming the severe gas shortage problem within 2014 are very slim. The Magnama and Hatiya structures have reportedly a large presence of gas which was evident after conducting a 3D survey there.
Both Myanmar and India began oil and gas exploration in their offshore zones in the Bay several years ago and succeeded in discovering large gas fields. Bangladesh remains miles away in the race and has failed to find its deep sea emerging as a new frontier. A proper utilisation plan was never worked out and unplanned growth took place, mostly on political considerations. By the time, the system's flaws were detected, the government realised that simply adding wells to existing fields would not meet the future gas demand.
The country urgently needs massive investments from international oil and gas companies, given the financial and technological constraints of its own state-run firms. Investment worth $25 billion is needed to tap the gas potential in the Bangladesh part of the Bay of Bengal. Extensive exploration drive should start on both the country's onshore and offshore blocks soon in the wake of soaring gas crunch, caused mainly by lack of drilling in prospective fields. Harnessing gas along with power is of crucial importance at this critical time of a huge energy crunch.
szkhan@dhaka.net