Behind gas crisis
The country would not have faced any gas crisis now if the government paid a little attention to capacity building and modernising the companies under Petrobangla instead of becoming over-dependent on foreign oil companies to produce gas, experts say.
"International oil companies (IOCs) with fewer gas reserves are producing much higher volume of gas because they have installed bigger production wells. They have done so because they have detailed information about their gas fields," said a senior official of Petrobangla.
"In contrast, the wells of the big national companies like Bangladesh Gas Fields Company Ltd (BGFCL) or Sylhet Gas Field Ltd (SGFL) are old and much narrower. They never modernised their gas fields to increase production capacity, neither did they try to gather detailed information about the gas fields' health," he added.
This has not happened because the government did not have fund to run the national gas companies. On the contrary, Petrobangla and its affiliates have been earning thousands of crore taka each year -- all of which goes to the national exchequer and for payment for gas produced by foreign oil companies.
Until recently, Bangladeshi companies possessed 78 percent of proven gas and foreign companies only 22 percent. In terms of reserve this means, national oil companies had 5.38 trillion cubic feet (TCF) gas and foreign companies 1.53 TCF. This estimate has drastically changed after Chevron submitted two studies on its Bibiyana gas field's reserve.
The Bibiyana field was initially estimated to have 2.4 TCF recoverable gas (with 952 billion cubic feet proven reserve). Following studies and reassessment, Petrobangla recently increased its recoverable reserve to 5.76 TCF with its proved and probable reserve estimated at 7.43 TCF.
This is important because this bigger reserve allows higher gas production from the Bibiyana field, which is now pumping more than 650 million cubic feet of gas a day into the national grid.
"This shows the importance of having information about gas fields," said a Petrobangla official.
"For example, our Titas gas field has all the signs of being even bigger a gas field than Bibiyana."
As per latest official estimation, total recoverable gas at Titas gas field is 4.740 TCF, of which 65 percent has been already recovered. This field is currently producing around 400 million cubic feet of gas a day. All 15 wells of this field use 3.5 inch casings to extract gas. Whereas, the wells of Bibiyana are installed with 5 to 6 inch casings. Therefore Bibiyana can produce more gas from each well.
Experts say, this production level can be increased as they believed that the field's actual recoverable reserve would be much higher and a new study is required to understand this gas field's actual health.
Although the Titas field is producing gas since 1968, gas flow pressure from most of its 15 wells hovers around 2,700 to 2,800 pressure per square inch (psi). Normally, gas from a new well flows at 3000 psi. If the gas pressure falls below 2,200 psi, installing a bigger casing would not increase gas production.
"There is no alternative for us but to conduct a three dimensional seismic survey in the Titas field. If they find a bigger reserve, we can think about 5-inch tubing. Times have changed and we need more gas," said an expert.
The gas demand in 2012-13 would rise between 2,500 million cubic feet of gas a day and 2,873 million cubic feet of gas a day and in 2014-15 between 2,669 million cubic feet of gas a day and 3,087 million cubic feet of gas a day.
To meet such demands, the country has no option but to involve oil companies for offshore exploration and increase onshore activities as well as tap other resources or import energy. But this does not mean that the national gas companies would not be geared up for more exploration and production, experts opine.
Financial implications of over-dependence on oil companies
Petrobangla's companies have earned during 2008-09 around Tk 5,400 crore from the sale of gas, condensate, coal and hard rock and bear an expenditure of around Tk 3,500 crore without paying the oil companies their bills. A chunk of this expenditure is paying the government Tk 1,500 crore as Vat and supplementary duty.
Petrobangla already has a cumulative loss of Tk 1,300 crore due to purchase of costly gas from oil companies.
On the other hand, the foreign oil companies are taking around $40 million as monthly payment and tax benefits from Petrobangla for their gas sales. This totals an annual bill of around $480 million or more than Tk 3,300 crore. This payment will gradually increase, putting pressure on the national exchequer, unless the national companies themselves boost their production.
The Petrobangla has also been receiving millions of dollars from the oil companies under Production Sharing Contracts (PSCs) for its own capacity development. But these funds have largely remained unutilised.
Right now, there is a gas supply shortfall of around 400 million cubic feet per day, causing severe gas crisis across the country and affecting not just power generation or industrial production but also household use of gas for cooking.
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