Innovate in oil and gas

Posted on July 12, 2010 | View 543 | Comment : 2

Needed: new licensing norms.

The decision of the Cabinet committee on economic affairs to okay a three-year moratorium on exploratory and appraisal drilling for oil and gas in Indian waters suggests pragmatism. There is a global shortage of deepwater rigs, and the sheer lack of resources would affect operators across the board.

But the move points at scope for proactive policy in the high-risk and capital-intensive upstream oil and gas sector. Specifically, there’s case for a new ‘promote licence’ in prospecting for hydrocarbon finds, sans the commitment levels for seismic and drilling activity required in the usual oil and gas production licences.

The idea is to provide a period, say 2-3 years, during which licensees would be able to gauge geological prospects, largely using existing data sets, without having to undertake substantial seismic or drilling operations at an early stage.

Our large and extensive sedimentary basins offer a wide range of investment opportunities for exploration and development activity, with tens of billion tonnes of hydrocarbon resources known to be in situ as per ‘raw’ geological data. Recent gas finds in the Krishna-Godavari basin also present ample possibilities of large finds.
However, the fact of the matter is the geo-technical challenges and risks presented by the available opportunities — complex geological structures and limited or even outdated data — can be considerable.

And turning the risk opportunities into drillable prospects or workable projects does call for dedicated geophysical study and analysis, but also innovation in licensing norms. The point is that with sparse data, potential bidders may not always be keen to carry out extensive seismic surveys or drilling of new wells, termed works programme.

It is true that in recent auction rounds, the weightage for the works has been reduced. But the fact remains that there’s provision for steep penalties on not sticking to the works schedule.

The concept of promote licence would likely enthuse more bidders, including smaller upstream specialists, to explore specific blocks without onerous financial commitment. In any case, it would be pointless to keep drilling more wells simply to keep to a prior timetable.

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Comments (2)

  • With the world going through an intense turbulences which may gather more and more strength over time instead of flowing reverse on our behalf, we must take quicker action to explore the Ocean as soon as possible to offset the tremendous pressure of unbearable intensely that it might put on the Country nonetheless the cost of exploration is very high at the moment. If not today, we may plan it for tomorrow but cannot afford to ignore it. We however doubt the quality of data already in hand as collected by both PSUs through conducting of seismic surveys being possibly became outdated.

    We always strongly feel that somewhere within the area, we should strike good reserve, enough to see us through decades. With very limited knowledge of Drilling in such areas, we require a ...See More

    Posted by Dr.MRIDUL MOHAN HAZARIKA,PhD | 12 Jul, 2010

  • NLP-off shore exploration policy is very funny-beauraucrates makes this more complicated and two or three BIG industrial houses are ONLY beneficiaries ministry should allow even small explorers in off shore as well as on shore oils and gas exploration activities
    standards are hig and other requirements are many times out of reah to over seas joint exploration partners
    it should be simple
    submit your reports
    select the location
    get rights in writting
    approach and explore

    Posted by Dr Dinesh Kumar Jani,ceo at Indo-American Management group|12 Jul, 2010

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