Petrobangla counts on Indian company

An aerial shot of a rig in the Bay of Bengal lying idle 35km off Chittagong. Photo: File

With the death of the offshore Sangu gas field, its excessively costly production platform has been lying idle in the Bay of Bengal for last two years, awaiting probable discovery of any new field around it in next couple of years.

British company Cairn had discovered the small Sangu gas field in 1996 and invested a staggering $1.2 billion to set up the platform 35 km off Chittagong coast and a high capacity gas processing station onshore.

The rationale for such a big investment, already recovered by Cairn in full from gas sales to the government, was its location (offshore).

In its best times, the field produced around 160 to 180 million cubic feet a day (mmcfd) of gas and fed the Chittagong region. The death of the field has left the region energy starved. In contrast, Chevron has so far invested $1.5 billion to pump out around 1,400 mmcfd of gas from three onshore gas fields.

The costly offshore installation is now being maintained by the state-run Petrobangla.

The onshore gas production station of the Sangu gas field. Photo: File

A high official of Petrobangla said, “We've not scrapped the platform as it could help us save huge costs in near future if gas is found in the new blocks around the Sangu field. We shall maintain the installation for two-three years. As part of the maintenance, we send operators there every two months to fuel the platform equipment.”

Last year Indian company ONGC was awarded a production sharing contract (PSC) to explore offshore blocks SS-4 and SS-9, which cover the area of former block number 16, the location of the Sangu field.

“If the ONGC finds a gas structure around the Sangu, we could easily utilise its existing structure and save cost-recoverable investment to get new gas,” added the official.

As per the PSC, ONGC is expected to conduct a seismic survey during the upcoming winter season. It will also reprocess the old seismic data (generated by Cairn).

However, Petrobangla believes the Indian firm would not be able to begin its field works before late next year due to slow bureaucratic process within the company to get approval for the tasks. “We expect the ONGC to drill one well in 2017 in that area,” mentioned the Petrobangla official.

The ONGC's blocks also include Kutubdia where a small gas field was discovered long ago. The area had three to four potential gas reserves. A detailed survey of the area and more drilling can make a viable commercial discovery there.

If enough gas is found in Kutubdia, again, the Sangu platform could be utilised, he pointed out.

Australian company Santos had bought Sangu from Cairn at the fag end of its life and tried its best to keep it operative. Santos had proposed that the government allow it developing the Kutubdia field and installing a 50-km pipeline to bring in gas up to the Sangu platform and thus save cost. However, the proposal was turned down.

Santos, along with KrisEnergy and Bapex, is currently working in block SS-11 beyond Teknaf under a new PSC signed in March this year. The company is set to conduct a seismic survey from December and aims to complete it by March next.

The discovery of gas in Sangu in 1996 had created tremendous interest among the oil companies. Later it was learnt that the field had just around 400 billion cubic feet of gas. After drilling more than a dozen wells, no new gas was found there.

“Whatever mistakes were made in case of Sangu in terms of excessive spending, the mistakes happened within the first two years of its development. The Cairn itself was inexperienced and it continued the project spending aggressively. We were also inexperienced to understand the implications and didn't stop the spending. Petrobangla was inflexible and it could not imagine revising the contract based on the Sangu discovery, which was the country's first commercial discovery,” noted the Petrobangla official.

The Sangu field is capable of processing 300 mmcfd gas, but it produced a maximum of around 180 mmcfd only for a while.

While Sangu lasted for just 14 years, the offshore gas field of Platong in Thailand, discovered in the early eighties, is still going strong. Unlike any of the Sangu fields, Platong consists of hundreds of small fields in shallow depth, prompting its operator Chevron to drill 60 wells a year to produce around 500 mmcfd.