Chevron to invest $500m at Bibiyana

US oil company Chevron yesterday announced it is ready to supply another 300 million cubic feet daily (mmcfd) gas from Bibiyana field from 2014, shifting from its earlier proposal to supply 940 mmcfd.
The announcement waters down the government's hope of a solution to an acute gas crisis that has affected home burners to power plants. It would, however, ease the persisting crisis.
Chevron President Geoff Strong announced at an event in the capital that the company would invest over $500 million to expand the production capacity of Bibiyana natural gas field in Sylhet.
This investment will be recovered from the gas sales from the field. Presently, major part of Bibiana gas is free for Petrobangla since the company's original investment has been recovered over the years.
"The project will provide more affordable energy that will not only increase Chevron's business in Bangladesh, but also help drive economic growth of the country," strong said.
The investment will cover expansion of the gas plant to process increased natural gas from the Bibiyana field, additional development wells, and an enhanced gas liquid recovery unit.
Bibiyana field's daily production will increase to more than 900 mmcfd with the implementation of this project. Combined with production in the other fields of Jalalabad and Moulavibazar, Chevron's total natural gas production capacity will be 1.4 billion cubic feet per day, and 4,000 barrels per day of natural gas liquid.
Production of the condensate will save the money needed for import of liquid fuel with a current market value of $200 million per year, said Strong.
The new investment came as the country suffers from a chronic gas shortage, which has affected not only power generation but also industries including fertiliser factories.
The country's gas supply stood at 2,239 mmcfd yesterday against an estimated demand for 2,500 mmcfd to 2,600 mmcfd.
Speaking as the chief guest at the event, Finance Minister AMA Muhith said Bangladesh needs more gas since it is not being able to supply gas to many industries, including four fertiliser factories, which are now closed because of a shortage of supply.
He said this would be the beginning of large investments in the energy sector.
Chevron is the largest producer of natural gas in Bangladesh, accounting for 50 percent of the country's daily gas production. Bibiyana is the largest producing gas field in the country.
Energy Adviser Tawfiq-e-Elahi Chowdhury, State Minister for Energy Muhammad Enamul Huq, US Ambassador Dan W Mozena, Power Secretary Abul Kalam Azad and Petrobangla Chairman Hussain Monsur also spoke on the occasion.
Two years back, based on a three-dimensional survey in three fields -- Moulavibazar, Bibiyana and Jalalabad -- Chevron had proposed to increase gas production by 940 mmcfd, saying that these had additional gas reserves. All that Chevron needed was a countrywide pipeline to transmit this gas.
But Chevron's three-dimensional survey proved to be wrong when the company last year drilled two wells in Moulavibazar and found no additional gas. Following this failure, the company slashed down its projection to 500 mmcfd. But now it revised the plan further down.
On the basis of its 2010 proposal, the Gas Transmission Company Ltd (GTCL) opted for a restricted tender to quickly install a 190- km pipeline at a cost of more than Tk 2,000 crore. Besides, this pipeline's diameter was extra large 36 inches, instead of the required 24 inches, which contributed to this cost.
Now, as the Chevron announcement cuts down the production projection, this pipeline proves to be excessively costly and it will be severely under-utilised.
In April last year, Petrobangla Chairman Hussain Mansur presented a plan for gas production increase that shows a rise of the supplies by 1,785 mmcfd by mid-June next year and another 680 mmcfd by December 2015.
This would mean the country's gas supplies would stand at around 4,500 mmcfd in 2015 as against a demand for 4,162 mmcfd.
Chevron's gas was expected to contribute a major part here. But now this has become a far cry.