Oilex to start gas production from Cambay field next year

Australia's Oilex Ltd plans to start natural gas production from the huge discovery it made south of Ahmedabad, which is being billed as the next big thing after Reliance Industries' KG-D6 gas find and Cairn India's Rajasthan oil discovery.

"First gas production is planned in less than a years time from now," Oilex Managing Director Bruce McCarthy said here.

Inplace reserves in the Cambay basin block near the town of Khambat (160-km south of Ahmedabad in Gujarat) is 16-21 Trillion cubic feet (Tcf). Of these, 10 per cent or at least 1.6 Tcf are  recoverable.
    
Initial gas production could be 5 million standard cubic feet per day, rising up to 50 mmscfd by 2012-13.
    
The inplace reserves are almost equivalent to what RIL had found in the Krishna-Godavari basin deep sea KG-D6. But KG-D6 fields have a higher recovery factor with almost 12 Tcf of gas likely to be produced over life of the field, while in Oilex's case only 1.5 Tcf can be produced as the reservoir is 'tight' with low permeability.
    
McCarthy said Oilex is looking to replicate Cairn India's success in using US technology to produce gas from the onland block by mid-2011.
    
"The Cambay reservoir is classified as tight reservoir. We plan to drill multiple horizontal wells and use hydraulic fracturing to release gas from the right reservoir similar to one being used in the US to extract shale gas," he said.
    
McCarthy, who worked for Cairn Energy from 1995 to 2002, said Cairn India has over the last 12 months implemented very similar technology in Rajahs to ramp up output to 125,000 barrels per day.
    
The Cambay field is a pre-New Exploration Licensing Policy (NELP) block that was originally awarded to Gujarat State Petroleum Corp (GPSC) and Canada's Niko Resources. Oilex stepped in upon exit of Niko.
    
Oilex holds 45 per cent interest in the Cambay Field while GSPC holds the rest 55 per cent. Besides gas, the field also holds 31 million barrels of condensate and the about 200 barrels per day of condensate can be produced along with gas in 2011, he said.
    
Oilex said it estimates the Cambay field holds 248 billion cubic feet of gas with a 90 per cent certainty of being produced.
    
Oilex drilled a number of wells on the field between 2006 and 2008 and found hydrocarbons but they were in tight reservoirs which meant they were not at that time commercial.
    
By applying technology used by companies extracting shale gas in North America, Oilex believes the block now has significant commercial gas reserves.