Blowout Concerns Delay Confirmation of Pakistan Offshore Oil Discovery
|Offshore Blowout Preventer Stack. Courtesy: British Petroleum|
Blowout Preventer Problem:
The drilling was stopped on April 8 at the depth of 4,810 meters for cementing and casing process which took almost 12 days to complete. Now there are concerns about the proper functioning of the blowout preventer (BOP). Once the BOP repair is completed, Mobile Exxon and ENI as joint operators at Kekra-1 well will resume drilling of the remaining 650-800 meters.
Time required to drill the remaining 650-800 meters will depend on the rate of penetration (RoP). Pakistan petroleum ministry officials were quoted by The News as saying that they "don’t yet have precedents to form a reliable estimate for the RoP for offshore Indus-G, where Kekra-01 is being drilled. An RoP of 10 meters per hour (generally considered low) would mean that it would take 80 hours or a little more than three days to reach the target depth.’’
|Top 3 Offshore Drilling Sites in Asia-Pacific. Source: Bloomberg|
Exxon-Mobil's Entry in Pakistan:
American energy giant Exxon-Mobil has joined the offshore oil and gas exploration efforts started by Oil and Gas Development Corporation (OGDC), Pakistan Petroleum Limited (PPL) and Italian energy giant ENI, according to media reports.
Each company will have 25% stake in the joint venture under an agreement signed at the Prime Minister’s Secretariat in May among ExxonMobil, Government Holdings Private Limited (GHPL), PPL, ENI and OGDC.
Exxon-Mobile's entry in Pakistan brings deep offshore drilling technology, its long experience and financial resources to the country. It is expected to accelerate exploration and more discoveries.
Pakistan Oil Basins:
A Pakistan Basin Study conducted in 2009 found that the country has six onshore and two offshore basins; offshore basins being the Indus basin and the Makran basin in the Arabian Sea.
The Indus offshore basin is a rift basin that geologists say developed after the separation of the Indian Plate from Africa in the late Jurassic period. It is believed to be the second largest submarine fan system in the world after the Bay of Bengal with high probability of hydrocarbon discoveries.
The Makran Offshore basin is separated from the Indus Offshore basin by Murray ridge, according to Syed Mustafa Amjad's report in Dawn. It is an oceanic and continental crust subduction zone with deepwater trenches and volcanic activity. The basin consists of oceanic crust and periodic emergence of temporary mud islands along the coast suggesting strong evidence of large hydrocarbon deposits.
Pakistan Hydrocarbon Potential:
The United States Energy Information Administration (EIA) estimates that Pakistan has 586 TCF (trillion cubic feet) of gas in Pakistan of which 105 TCF is technically recoverable.
In addition to gas deposits, US EIA estimates there are 227 billion barrels of oil in Pakistan with 9.1 billion barrels being technically recoverable.
Pakistan also has 185 billion tons of coal deposits in Thar desert which are just beginning to be extracted by Sindh Engro Coal Mining Corporation.
Oil and Gas exploration and production companies are currently planning to drill 90 wells in different parts of the country. Under the plan, as many as 50 exploratory and 40 development wells would be drilled in a bid to make the country self-sufficient in the energy sector, according to media reports.
During the last five years, the sources said the exploration and production companies drilled 445 new wells, out of which 221 were exploratory, adding that the increased exploration activities resulted in 116 new oil and gas discoveries.
Current Account Deficits:
Energy imports make up a big chunk of Pakistan's total imports. Bulk of the annual 200 million barrels of oil demand has to be imported. Rising oil prices worsen the current account deficit and put pressure on Pakistan's reserves, forcing the country to seek periodic IMF bailouts.
Pakistan's trade deficit is nearly $40 billion a year and debt service costs are about $11 billion a year. How can Pakistan fund this balance of payments deficit of about $50 billion? Remittances of $21 billion in current FY2019 from Pakistani diaspora are expected to reduce it to $30 billion. PTI government has taken on billions of dollars in loans from Gulf Arabs and China. Given the low rates of foreign investments in the country, a big chunk of the remaining deficit will have to be met by borrowing even more funds which will further increase future debt service costs.
|Pakistan's Current Account Deficit. Source: Trading Economics|
As a result, Pakistan is now battling massive twin deficits, deteriorating foreign currency reserves, low exports, diminishing tax revenues, a weak currency, onerous external debt payments, and soaring sovereign debt. This crises has forced the country to seek IMF (International Monetary Fund) bailout, the 13th such request in Pakistan's 72 year history.
Blowout concerns have stopped offshore drilling in Pakistan yet again. It was underway to confirm discovery of oil and gas in at Kekra-1 well in G-bloc with pre-drill estimate of over 1.5 billion barrels. Pakistan made 2 key oil and gas discoveries in 3rd quarter and another 3 discoveries in the 4th quarter of 2017. These discoveries appear to have prompted US-based Exxon-Mobil to join off-shore drilling efforts in Pakistan. American energy giant's entry in Pakistan brings advanced ultra deep sea drilling technology, its long experience in offshore exploration and financial resources to the country. It is expected to accelerate exploration and lead to more discoveries. US Energy Information Administration (EIA) estimates that Pakistan has technically recoverable deposits of 105 trillion cubic feet (TCF) of gas and 9.1 billion barrels of oil. Reducing energy imports by increasing domestic production will likely ease Pakistan's current account deficits and reduce its need to seek repeated IMF bailouts.
Here's a discussion on the subject:
Here's a video explaining offshore drilling for oil and gas:
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