Massive Oil Discovery in Pakistan: Hype vs Reality

Prime Minister Imran Khan has recently raised Pakistanis' hopes of ExxonMobil and ENI being on the verge of a massive discovery of offshore oil and gas reserves in Pakistan. Is this real? Or mostly hype? What is the size of these reserves? Will it be more than sufficient to meet Pakistan's current needs of over 200 million barrels of oil per year? Will Pakistan become a net exporter of oil and gas like major OPEC nations?

Top 3 Offshore Drilling Sites in Asia-Pacific. Source: Bloomberg


Why is it taking so long to get confirmation from the companies involved? What are the technical issues in getting confirmation of these huge reserves? Why is there such a big concern about blow-out? Is it because the 1.5 billion barrels pre-drill estimate of Kekra-1 well in block G of the Indus basin off the Karachi coast? Could such a large reserve cause a major blow-out accident like the one British Petroleum had in Gulf of Mexico near Louisiana in the United States? How long will it take to fix the blow-out preventer (BOP) and complete drilling of the remaining 600-800 meters of the total depth of over 5,500 meters deep in the Arabian Sea?


Offshore Blowout Preventer Stack. Courtesy: British Petroleum

Azad Labon Kay Sath host Faraz Darvesh discusses these questions with Misbah Azam and Riaz Haq (www.riazhaq.com)

https://youtu.be/02oKLNPmUdk





Related Links:

Haq's Musings

South Asia Investor Review

Pakistan's Insatiable Appetite For Energy

US EIA Estimates of Oil and Gas in Pakistan

Pakistan's Debt Crisis

Can Pakistan Avoid Recurring IMF Bailouts?

Pakistan is the 3rd Fastest Growing Trillion Dollar Economy

CPEC Financing: Is China Ripping Off Pakistan?

Information Tech Jobs Moving From India to Pakistan

Methane Hydrate Release After Balochistan Quake

Thar Coal Development

Why Blackouts and Bailouts in Energy-Rich Pakistan?

Riaz Haq's Youtube Channel

Comments

Riaz Haq said…
#Exxon to report Kekra-I #oil #gas drilling results within 3-4 weeks, #Pakistan Senate told. A major drilling ship “Mother of All Rigs” along with three supply vessels is drilling offshore at the site 280 kilometers off the #Karachi coast.
https://www.pakistantoday.com.pk/2019/05/03/report-on-kekra-i-drilling-within-3-4-weeks-senate-told/#.XMzJx92qt_I.twitter

Federal Minister for Energy Omar Ayub Khan on Friday said that the report on any discovery of energy reserves at Kekra-I offshore drilling site will come within three to four weeks.

Speaking during the question hour in Senate, Ayub said that the offshore drilling for oil and gas has been underway at Kekra-I site near Karachi.

Replying a question the minister said the drilling has currently reached to 4,800 meters and the well will be drilled up to the total depth of 5,660 meters in ultra-deep waters.

It is to mention here that a delegation of Exxon Mobil informed Omar Ayub Khan in a recent meeting that the company was hopeful of finding energy resources at Kekra-I site.

The delegation was headed by Alex Volkov, chairman of LNG Market Development Exxon Mobil.

Exxon Mobil President Irtiza Syed briefed the minister about the status of offshore drilling at Kekra-I that started in January 2019. He added that Exxon Mobil is also interested in the drilling of more offshore blocks.

Drilling has now entered in its final phase where it will be easy to ascertain the presence of oil or gas deposits.

Recently international energy research agency Rystad Energy in a report said that the Eni-led Kekra project for oil and gas reserves in Pakistani waters is among three highly prospective wells in the world.

The research agency in its report on the prospective new discoveries of energy resources said that Kekra well in Pakistan has pre-drill prospective resource estimates of 1.5 billion barrels of oil or equivalent.

A group of multinational companies had started offshore drilling in January for exploration of oil and gas.

A major drilling ship, “Mother of All Rigs” along with three supply vessels started the drilling at the site.

The companies are drilling Kekra-1 well in Indus-G block, which is located some 280 kilometres away from the Karachi coast.

Riaz Haq said…
I have seen a claim that the cost of extracting offshore oil in Pakistan would be $60 a barrel.

If the cost of extraction offshore in Pakistan waters was really $60, no company, much less ExxonMobil, would drill there given that the price per barrel on world market is around $60. Dutch Shell says average for offshore is $30 a barrel. It's lower for larger finds because the initial cost is spread over more barrels of oil extracted. In Pakistan's case, we're talking about estimated 1.5 billion barrels at Kekra-1 well.

Read the following:

https://oilprice.com/Energy/Energy-General/Is-Deepwater-Drilling-More-Profitable-Than-Shale.html

"The reason why deepwater drilling is so exciting to Shell is that the cost of new projects has fallen significantly in recent years. “Deepwater can compete if not demonstrate higher returns because of fundamental cost reduction,” Brown said. “Break-even prices in deepwater — we are now talking $30 per barrel.”

That compares favorably to a lot of onshore shale plays, and in fact, it would beat out just about everywhere that shale companies are drilling. For instance, the SCOOP in Oklahoma has a breakeven price in the mid-$60s per barrel, according to data from Bloomberg New Energy Finance from earlier this year. That is on the upper end, but even more competitive areas are much costlier than the figures that Shell is citing. The Eagle Ford breaks even at between $48 and $61 per barrel, the Bakken at $53 to $56, the Niobrara at $63 and the Delaware basin (Permian) at $57 per barrel. Even the Midland Permian, arguably the most prized shale region in the country, breaks even at about $37 per barrel, BNEF says."
Riaz Haq said…
Drilling resumes for #oil #gas at Kekra-1 well (pre-drill est 1.5 billion barrels) offshore from #Karachi in #Pakistan. Now at 5,148 meters depth with 312 m still left to be spudded to reach almost 5,500 meters for final confirmation of massive reserves. https://www.thenews.com.pk/print/467995-final-phase-of-drilling-at-kekra-1-continues

ISLAMABAD: At last the drilling at Kekra-1 well in G-bloc, Pakistan’s ultra-deep sea has begun after a long pause of over almost 23 days and entered the final phase by reaching the depth of 5,148 meters and will reach at the required depth of 5,460 meters within days, a senior official told The News.


The joint venture headed by ENI is operator comprising Exxon Mobile, OGDCL and PPL started the drilling on January 13, 2019 at the cost of sunk money of $75 million, which has increased to $90 million so far.

When the drilling reaches the depth of 5,460 meters, the official said, the operator will likely do wire line logging which could take another three or four days. This will likely be followed by another casing and cementing exercise that can take four to six days. At this stage a substantial amount of information regarding the well prospects will be known, however, the results (discovery or dry well) will require completion of proper testing.

Spokesman for the Petroleum Division Additional Secretary Sher Afgan confirmed that the drilling has entered the final phase and reached the depth of 5,148 meters and only 312 meter is left to be spudded as it has to reach almost 5,500 meters. He said after reaching the required depth the operator will get the specimen that will be sent to Italy for information if there is a reservoir of oil and gas in the well or not.

The last snag hit the drilling when the blowout preventer (BOP) that prevents from any blow out or any kick pressure that can result into eruption of fire, had gone out of order and its repair took some days and then its testing took the reasonable time. Before it, the drilling stopped on April 8 because of the cementation and casing continued owing to which the drilling could not start.

So far the drilling witnessed many upheavals starting from January 2019 up till now and it has got delayed by one month as it was earlier scheduled to get completed by April end which is now rescheduled up to the middle of May at the maximum.

The drilling was initiated with 19 percent probabilities, which, according to the experts, get reduced when side tracking starts taking place. In Kekra-1 well case, second side tracking was underway. Officials said when side tracking process is initiated, this means that first plan of drilling was not well worked out.

Earlier when at Kekra well vertical drilling reached at depth of 4,799 meters on February 21, a high pressure was felt causing huge mud loss and because of unsafe operation the well was plugged by March 23. Then the first side tracking started and when it reached down to 3,100 meters, it again met failure, which is why the hole was also blocked. After that the second side tracking began which is still underway and may reach at the required depth within days.
Riaz Haq said…
#Oil, #gas reserves found in district Tando Muhammad Khan, #Sindh, #Pakistan in a well drilled 2,676 meters deep . It has tested 10.44 million cubic feet per day of gas and 120 barrels per day of oil condensate. https://www.dawn.com/news/1482184

Oil and Gas Development Company Ltd (OGDCL) told the stock exchange on Monday that gas and condensate was discovered from its exploratory cum appraisal Mangrio Well 1, which is located in district Tando Muhammad Khan, Sindh.

The well was drilled down to the depth of 2,676 metres. It has tested 10.44mmscfd gas, 120 barrels per day condensate through choke size 32/64 inches at wellhead flowing pressure of 2,085 Psi from lower Guru B-Sand.

PPL terminates contract with SPEC Energy

Pakistan Petroleum Limited (PPL) terminated Engi­neering, Procurement, Construction and Comm­issioning Contract with SPEC Energy DMCC, for the construction of a Gas Processing Plant for processing 60 MMScfd gas from the company’s Shahdadpur field.
Riaz Haq said…
#ExxonMobil, #ENI complete offshore drilling 280 km off #Karachi coast in #Pakistan. Initial tests indicate availability of around 9 trillion cubic feet of #gas with a large quantity of #oil in the Kekra-1 well- Xinhua | English.news.cn http://www.xinhuanet.com/english/2019-05/14/c_138058229.htm#0-twi-1-43110-7250227817ecdff034dc9540e6c76667

A consortium of four major oil exploration companies has completed the offshore drilling process near the southern port city of Karachi in Pakistan after a hard work of four months.

According to the local media reports on Tuesday, ExxonMobil, ENI, Oil and Gas Development Company, and Pakistan Petroleum Limited are conducting the drill stem test to determine the real size of the oil and gas reserves in the Kekra-1 well, located around 280 km away from Karachi.

The joint venture of four oil giants spudded the Kekra-1 well to the depth of 5,470 m at a cost of 14 billion Pakistani rupees.

According to the officials in the Ministry of Petroleum, the Drill Stem Test would be completed in the next three days. After the completion of the Drill Stem Test, a report will be prepared about the total quantity of the oil and gas reserves within a week.

They further stated that the initial tests had estimated the availability of around 9 trillion cubic feet of gas with a large quantity of oil in the Kekra-1 well, which had excited the nation, including Prime Minister Imran Khan who openly spoke about it on numerous occasions.

The four-firm joint venture had started the offshore drilling process on Jan. 11, 2019, which was expected to be completed by March. However, the process was delayed by critical issues, but ENI stayed committed to the completion of the offshore drilling.

The technical problems during the offshore drilling forced the drilling team to spend an additional 100 million U.S. dollars to procure surplus steel and cement because the team had to change the direction of the drilling process of the Kekra-1 well.

The Petroleum Ministry officials informed the local media that changing the direction of the drilling was a challenging task because the joint venture was running out of time to complete the drilling process as sea waves generally become unstable by the end of May. The stability of a drilling ship by the end of May would have been quite a daunting task, they added.

They informed that within the next 10 days, the joint venture team would be able to determine the actual size of the oil and gas discovery. According to senior officials of the Petroleum Ministry, the necessary infrastructure would be erected in the sea for oil and gas exploration only if the price of total reservoir quantity was worth more than 10 billion U.S. dollars.

The economic experts believe that if the four major oil exploration companies are able to find the reservoir quantity according to the estimates, it would cut down Pakistan's oil import bill by 6 billion U.S. dollars every year.

Riaz Haq said…
PPL Finds Largest #Gas Reserves in #Pakistan Since Sui. Drill Stem Test (DST) reveal these gas reserves might potentially exceed 1 trillion cubic feet. For comparison, #Sui has estimated reserves of 2 trillion cubic feet.

https://propakistani.pk/2020/02/07/ppl-finds-largest-gas-reserves-in-pakistan-since-sui/

Pakistan Petroleum Limited (PPL) has found huge gas reserves in Margand block at Kalat, Balochistan.

According to details, PPL owns 100% of the drilling rights of the block and had been drilling at Margand X-1 block since 30 June 2019.

Last year, PPL carried out a Modular Dynamics Testing (MDT) at a depth of 4,500 meters at the block. MDT proved the presence of large gas reserves.

PPL further conducted a Drill Stem Test (DST) which revealed that these gas reserves might potentially exceed 1 trillion cubic feet.

For comparison, Sui has estimated reserves of 2 trillion cubic feet with a daily output capacity of about 604 million cubic feet.

DST of only Margand X-1 suggests that the entire block has the potential to supply 10.7 million cubic feet of gas per day (mmcfd) at a choke size of 64/64 inches and flowing wellhead pressure of 516 pounds per square inch (psi).

This is the first significant discovery of gas reserves in Balochistan since 2000. Companies such as British Petroleum, Petronas, and Niko Resources had tried to tap unexplored reserves since then. However, all companies failed to discover reserves this large and pulled out of the country.

Furthermore, little to no attention was given during the tenures of previous successive governments to exploit the domestic wealth of minerals and fulfill the energy needs of the country.

Instead, questionable contracts like rental power plants and LNG power plants were signed, which the NAB has been investigating.

Pakistan can save more than $900 million on the import bill if Margand gas reserves replace LNG, which costs domestic consumers 100% more than Sui gas, according to an ex-PPL board director.
Riaz Haq said…
MOL Discovers Significant #Oil-#Gas Reserves in #Pakistan. Mamikhel South-1 exploratory well in TAL Block achieved a flow rate of 6,516 barrels of oil a day.
This is the #Hungarian Co's 13th discovery in Pak, 10th discovery in TAL since 2000 https://www.rigzone.com/news/mol_discovers_significant_reserves_in_pakistan-14-jul-2020-162712-article/?utm_source=GLOBAL_ENG&utm_medium=SM_TW&utm_campaign=SHARE_DESKTOP via @rigzone

MOL revealed Tuesday that it has discovered “significant” gas and condensate reserves in Pakistan.

The Mamikhel South-1 exploratory well, which is located in Pakistan’s TAL Block, achieved a flow rate of 6,516 barrels of oil equivalent per day during testing, according to the company, which noted that further testing of the well is currently ongoing.

Mamikhel South-1 marks MOL’s 13th discovery in Pakistan and the 10th discovery in the TAL Block. MOL’s 13 oil, gas and condensate finds have all been made since the year 2000.

“I am delighted to announce that we have made another discovery in Pakistan,”  Berislav Gaso, MOL Group’s exploration and production EVP, said in a company statement.

“This new discovery has de-risked an exploration play in deeper reservoir in the TAL Block, leading to new upside opportunities. The Mamikhel South-1 discovery will also help to improve the energy security of the country from indigenous resources,” he added.

“We are thankful to our Joint Venture partners as well as the Government of Pakistan for their continued support,” Gaso continued.

MOL is the operator of the TAL Block. The company is Pakistan’s second largest producer of LPG, crude oil and condensate and currently addresses around nine percent of the natural gas needs, 25 percent of the oil and condensate needs and 22 percent of the LPG needs of Pakistan, according to its website.

Back in March this year, MOL announced that it had discovered oil and gas in an offshore field located about 120 miles west of Stavanger in the Norwegian part of the North Sea. The potential resources discovered in the main formation of the asset were said to be between 12 and 71 million barrels of oil and gas equivalent.

MOL describes itself as an integrated, international oil and gas company. The business is headquartered in Budapest, Hungary, but is active in over 40 countries.
Riaz Haq said…
#Pakistan confirms large #oil-#gas discovery in #KPK. Pakistan imports 80% of its oil-gas needs costing $13 billion a year. Pakistan's total oil production is 89,000 barrels per day & 3,936 million cubic feet per day (mmcfd). Annual demand is rising 8%. https://gn24.ae/a2e28c2962dc000

Pakistan has discovered new deposits of oil and gas in the Kohat district of Khyber-Pakhtunkhwa province.

The discovery was reported by state-owned firm, Pakistan Oilfields Ltd. (POL), at the exploratory well in Tal Block, Mamikhel South-01. Tal Block is considered one of the largest hydrocarbon producing blocks in the country.

“Well test has shown 3,240 barrels of condensate per day, 16.12 mmscf (million standard cubic feet) of gas per day, and 48 barrels of water per day,” POL announced in a notification on Pakistan Stock Exchange (PSX). “Actual production may differ significantly from the test results.”

POL holds 21 per cent stake in the Tal Block while Pakistan Petroleum Ltd. (PPL) and Oil and Gas Development Company (OGDC) each own 28 per cent.

MOL Pakistan, a fully owned subsidiary of Hungarian multinational oil and gas exploration firm MOL Group and which has about 8.4 per cent in the Tal Block also shared the news of “significant” gas and condensate reserves in Pakistan.


“I am delighted to announce that we have made another discovery in Pakistan,”  Berislav Gaso, MOL Group’s exploration and production Executive Vice-President, said. “This new discovery has de-risked an exploration play in deeper reservoir in the Tal Block, leading to new upside opportunities. The Mamikhel South-1 discovery will also help to improve the energy security of the country from indigenous resources.”

PROMISE OF MUCH MORE
The Mamikhel South-1 exploratory well in the Tal Block, achieved a flow rate of 6,516 barrels of oil equivalent per day during testing, the company said. This marks MOL’s 13th discovery in Pakistan and the 10th discovery in the Tal Block. MOL is one of the key LPG and gas producers in Pakistan.
The current discovery comprises about 15 per cent and 5 per cent of Tal Block’s present total oil and gas production respectively, reports suggest. Mamikhel South is soon expected to be added to production due to its proximity to another field.

Experts have welcomed the news of recent discovery, but also called for the exploitation of unconventional oil and gas assets - such as shale oil and shale gas - as well as inviting foreign companies to boost the country’s oil and gas sector.

Pakistan relies on imports for about 80 per cent of its energy requirements, spending nearly $13 billion a year on crude oil and gas. The country’s total oil production stands at 89,000 barrels per day (bpd) and 3,936 million cubic feet per day (mmcfd). Demand is increasing by 8 per cent a year.

Popular posts from this blog

Declining COVID19 Reproduction Rate in Pakistan Now Among the World's Lowest

Karachi's NED University Alum Raises $100 Million For Silicon Valley FinTech Startup

Antibodies Testing in Karachi Reveals COVID19 Exposure Runs in Double Digits