ONGC may unearth 22 tcf gas at KG basin

The latest find in the gas-rich KG-basin by Oil and Natural Gas Corporation (ONGC) shows that the region is living up to its reputation of "an enhanced Bombay High in the making."

While initial reports suggest that ONGC may be sitting on a whopping 22 trillion cubic feet (tcf) of gas "" compared with 11 tcf of Reliance Industries and 20 tcf of GSPC "" ONGC officials said that it was too early to put a number to the find.

"Modular dynamic testing indicates good quality gas. The preliminary indications are exciting. But we still have a some way to go," a senior ONGC official said.

The indication of gas spells good times for the country's gas-starved power sector. Gas-based power plants across the country have been working at low capacities - 50-60 per cent plant load factor "" due to the shortage of gas.

The shortage of gas will, however, take some time to be plugged. While initial tests confirm a 30-metre gas-bearing zone at a depth of 5,300 metres in the Bay of Bengal, company officials say that drilling in another 1,000 metres is on. "We should be able to confirm the exact volume of reserves in January. And then it will take at least 4-5 years to get these reserves to users," the ONGC official said.

Huge amounts of gas have been found in the K-G basin in the last few years. While Gujarat State Petroleum (GSPC) announced gas reserves of 20 tcf in June 2005, the country's largest find, Reliance Industries has estimated reserves of 11 tcf. With ONGC's find the reserves in the area can well go up to above 50 tcf, making it one of the largest offshore gas reserves in the world.

The LNG twist

The huge gas expectations of gas will "put regulatory mechanism and consumer sentiments to test," said an industry analyst.

An important consequence of the large gas reserves, once they becomes available, are falling gas prices. This will lead to lowering of dependence on imported liquefied natural gas (LNG), putting the LNG projects in trouble.

The coal-based ultra mega power projects may also consider transferring to gas if the available domestic volumes increase. However, additional infrastructure for evacuation will need to be out up for evacuation of the gas.

"It is difficult to put a definite date to such production. Moreover, a deep-sea water well makes things more difficult," an analyst said. In 2002, Reliance had announced that it would start producing gas from the K-G basin by 2007. That date has now been deferred to 2009.