ONGC Begins First Oil Production From The Ultra-Challenging Deepwater Block KG-DWN-98/2

Oil and Natural Gas Corp (ONGC) has begun production from the First Oil project in the deepwater block KG-DWN-98/2 on the eastern Indian continental shelf. Indian Minister of Petroleum and Natural Gas Hardeep Singh Puri announced this on January 7, 2024 on his page on the social network X (formerly Twitter).

First M-field oil on KG-DWN-98/2

Abstracts from H. S. Puri:

• as India becomes the fastest growing economy under the leadership of Prime Minister N. Modi, our energy production will also grow at the deepest levels,
• First Oil production begins with the challenging deepwater block KG-DWN-98/2 in the Krishna Godavari Basin (KG, Krishna-Gadavari), located off the coast of the Bay of Bengal,
• production is expected to be 45 thousand barrels/day of oil and more than 10 million m3/day of gas,
• this project will add 7% to current national oil production and 7% to national natural gas production.

With the commencement of first oil production from the M-field on January 7, 2024, ONGC completes Phase 2 of the development of block KG-DWN-98/2. The flagship project is currently underway, with the final phase of the project scheduled to be completed by June 2024. Next, the company plans to begin a gradual increase in production to reach a production plateau of 45 thousand barrels/day of oil and more than 10 million m3/day of gas at the KG-DWN-98/2 block.

The M field was the first to be connected to the Armada Sterling-V floating production storage and offloading unit (FPSO), which was installed offshore at a point in water depth of approximately 400 m. The FPSO will serve cluster 2 of the KG-DWN-98/2 project. At the 1st stage, oil will be supplied from 5 wells at the M field, then wells at the A and P1 fields will be connected to the FPSO. Ultimately, a total of 13 wells producing oil and associated petroleum gas (APG) will be connected to Armada Sterling-V.

The development of cluster 2 involves the commissioning of 35 wells, including 15 oil production, 12 water injection and 8 gas production. The project infrastructure will include:

• FPSO;
• an offshore platform (OP) for gas processing connected to the residential block platform;
• 10 manifolds together with riser manifolds.

Transportation:

• It is proposed to transport oil from the fields to the FPSO via 2 oil pipeline lines with a length of 21.5 km and a diameter of 18 inches. Oil and APG will be treated at the FPSO, from where it will be transported to the onshore terminal.

A 430 km long subsea pipeline with diameters ranging from 6 to 22 inches and 150 km of pipelines will be used. The 20-inch diameter subsea pipeline will be used to transport hydrocarbons from the fixed FPSO, and the 22-inch diameter pipeline will be used to transport hydrocarbons from the FPSO to the landfall point at the Odalarevu onshore terminal.

Block KG-DWN 98/2

Block KG-DWN 98/2 is located in the river delta. Godavari in the Bay of Bengal, 35 km from the coast of the state. Andhra Pradesh on the east coast of India. The block area is 7,294.6 km2, sea depth is 300-3200 m.

Features of the project:

• is the largest and one of the most complex subsea projects in the Asia-Pacific region,
• the block’s stratigraphy includes both slope and deep-sea sediment systems,
• the Pliocene section is mainly composed of clay and contains some deep-water channel and fan deposits,
• the basin is composed of Archean and Proterozoic rocks, and the age of the sediments varies from Lower Permian to modern,
• the western part of the basin is formed by Permo-Triassic, Late Jurassic-Cretaceous and Tertiary rocks.

Block KG-DWN-98/2 or KG-D5 contains a number of deposits, which are combined into 3 clusters – 1, 2 and 3:

1. Cluster 1:

• 3 discovered fields,
• in 2019 2 more discoveries were added to them, for which development plans have already been adopted;

1. Cluster 2 is the first to be put into operation; it is divided into 2 blocks:

• oil 2A: includes deposits A2, P1, M3, M1 and G-2-2, oil reserves – 94.26 million tons of oil, APG – 21.75 billion m3,
• gas 2B: includes deposits R1, U3, U1 and A1, natural gas reserves 51.98 billion m3;

1. Cluster 3 contains 1 ultra-deepwater gas field, which, when monetized, will become the 2nd deepest hydrocarbon field in the world, the development plan is planned to be submitted by January 2026.

The launch of cluster 2 fields was repeatedly postponed.

Reasons for delays:

• geological complexity of blocks;
• relocation of wells;
• relocation of onshore facilities/processing platform;
• irregularities in the project supply chain due to the COVID-19 pandemic and difficult weather conditions.

The planned oil production period for cluster 2 is November 2021. Postponement of the start of production: May 2023, August 2023, September 2023, October 2023. Finally, mining has now begun.

Oil and Gas in India

India’s economic growth is closely linked to energy consumption, and the need for oil and gas will increase.

In 2022 in India:

• maintained 3rd place in terms of oil consumption in the world;
• oil production – 779 thousand barrels/day (about 105 thousand tons/day);

In 2023, production amounted to 29.2 million tons of oil per year.

According to IEA 2021, India’s primary energy demand is expected to nearly double to 1,123 million tonnes of oil equivalent (MTE) as India’s gross domestic product (GDP) is expected to increase to US$ 8.6 trillion by 2040 As of April 2023, India’s crude oil refining capacity stood at 253.91 MMTPA, making it the 2nd largest crude oil refining capacity in Asia. Private companies owned about 35% of the total refining capacity.

India FY 2023 results:

• consumption of petroleum products – 222.3 million tons/year, about 4.44 million barrels/day compared to 4.05 million barrels/day YoY;
• diesel fuel was the most consumed petroleum product – 38.6% of total petroleum product consumption;
• crude oil production in April-July amounted to 1.59 million barrels per day;
• LNG import – 20.1 million tons/year;
• LNG production in January 2023 amounted to 2.883 billion m3;
• natural gas consumption will increase by 25 billion m3.

India imported about 82% of oil in 2022. The country’s oil demand is expected to increase by 40% to 6.7 million bbl/d by 2030 and to 8.3 million bbl/d by 2050. That is why India is counting so much on Block KG-DWN 98/2.

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