In search of black gold: A deep water exploratory rig drills for oil off Bombay High

It is not very comfortable aboard a nine-seater Dauphin helicopter off the coast of Mumbai in the midst of the monsoon rains. Turbulence is the first thought that assails you, even as you contemplate the foaming expanse of the Arabian Sea below.

The other thought is the power of competition. Barely six years after India's New Exploration Licensing Policy (NELP) threw open the country's potential oil fields (called so, even if they lie underwater) to global oil explorers, the action looks set to be-come riveting.

Oil and Natural Gas Corporation (ONGC) is India's most ambitious driller, and a chopper is the only way to reach its offshore Vasai basin field. Located some 80 kilometres west of Mumbai, it is amongst India's biggest oil and gas finds of recent times. What does Vasai mean to the $7-billion (Rs 32,200 crore) oil major? In a word, plenty. It has drilled 48 wells in this basin, and is already hard at work pumping out the gas, as apparent from atop the Alpha Bassein Process Complex- the destination of our short flight. It is pumping out some 16.6 million metric standard cubic metres per day (MMSCMD) of sour gas and oil condensate, to be de-moisturised on the spot, before being piped all the way to Hazira in Gujarat, for de-sulphurisation.

IT'S A BRAVE, NEW WORLD...

Subir Raha Chairman & MD ONGC Oil and Natural Gas Corporation topped crude production of 26 million tonnes (about half- a-million barrels per day) in 2002-03. It has made six recent discoveries: Vasai West (oil and gas), Krishna-Godavari Offshore Basin (oil and gas), Rajasthan's Chinnewala Tibba (gas) and Assam's Laipling-Gaon (gas). Preliminary studies show that Vasai West has 240 million barrels of oil and oil-equivalent gas and Laipling-Gaon, some 100 million barrels. Mukesh Ambani Chairman & MD RELIANCE INDUSTRIES Reliance's first major exploration breakthrough was the discovery of gas reserves in the Krishna-Godavari Basin off India's east coast, in 2002. This year, RIL struck oil in an offshore block in Yemen, in which the company has 30 per cent equity. The company also has rights to 32 exploration blocks in India, covering 2,88,000 sq km, and is committed to spending about Rs 1,380 crore ($300 million) on exploration over the next two years. BRITISH GAS INDIA For British Gas (BG), India is one of six core areas of significance. In February 2002, BG bought a 30-per cent interest in Panna-Mukta-Tapti oil and gas fields, where ONGC has a 40-per cent stake and the rest is with RIL. BG is looking to invest $500 million (Rs 2,300 crore) in India over the next three years, and the recent visit of the company's board to India has underlined the importance being ascribed to the country. GSPCL Gujarat State Petroleum Corporation (GSPCL) is playing a prime role in gas production at the Hazira fields, in which it holds a two-thirds stake. In association with Canada's Niko Resources, it is producing about 3 million metric standard cubic metres of gas every day. GSPCL, which built India's first land-based drilling platform in 1998, is extending its operations globally through strategic alliances with overseas petroleum companies. Oil fever: Reserves worth 200 million barrels estimated CAIRNS ENERGY UK-based Cairns Energy drilled a series of wells in 2001 in the Krishna-Godavari block, adjacent to Reliance's gas-strike block. Having drilled six wells in the KG-DWN-98/2 block, Cairns has made five discoveries. The company estimates the block's reserves to be at least 200 million barrels of oil-equivalent. Two of the wells were gas discoveries and two were oil gas finds. One well was a small, sub-commercial oil and gas discovery.

Thrill Of The Drill

Take a closer look, and you might think that India's quest for oil security has assumed frantic proportions. Another high-activity zone is ONGC's D1 field, situated 80 km south-west of Bombay High. ONGC plans to push some 27 hired rigs into the game just for exploration in depths up to 400 metres. Does it have the nerve to go deeper? Oh yes. It is busy refurbishing its Vijay Sagar rig for exploration in the 400-900 metre range, and is scouting for two rigs to drill all the way to 27,000 metres-a level that could make some of the world's hardiest oil execs gulp.

It is, quite simply, "the biggest-ever deep water campaign globally'', in the words of Subir Raha, ONGC's chairman and managing director. Searching for deep water oil at any given point costs an average $350,000 (Rs 1.61 crore) per day-including $200,000 (Rs 92 lakh) for a hired drilling rig-but ONGC is keen on a multi-point operation. Starting mid-September, a set of rigs is going to sink its drillers deep into the sea, in a high-voltage, nine-month operation that's going to leave Raha with a neat bill of $486 million (Rs 2,236 crore).

It's big money. And it's all part of the country's 2002-2007 Tenth Plan, which has earmarked a mammoth Rs 46,000 crore for exploratory activities.

Of the private sector explorers, most attention is focused on Reliance Industries Ltd (RIL), which has already stunned onlookers with its quick gas strike in the Krishna Godavari Basin, off India's east coast. The strike, which occurred within three years of having won the block (along with Canada's Niko Resources), has given RIL gas reserves of 14 trillion cubic feet, some 10 trillion of which is recoverable and could translate into 38.9 mmscmd of gas supply for 20 years.

Of course, RIL has other domestic search operations as well-notably in the Panna-Mukta-Tapti and the Mahanadi and Kutch offshore basins. Having taken nine new exploration blocks in 2002-03, RIL now has rights to 32 exploration blocks in India. "RIL is leveraging its success in India to actively pursue prospects in attractive and politically stable regions in the world," says Mukesh Ambani, CMD, RIL.

The original purpose of the NELP, though, was to provide the stimulus of global competition. Canada's Niko Resources, the UK's Cairns Energy and British Gas (BG) are the main investors, so far. BG has invested $500 million (Rs 2,300 crore) in the country, and plans to invest another $500 million (Rs 2,300 crore) over the next three years. Says Pravin Tandon, Director, BG India, "Given the growing market-gas demand is expected to grow from the current level of 5,300 MMSCMD to around 13,700 MMSCMD in 2025-and the government's enhanced focus on the hydrocarbons sector, BG perceives significant opportunities along various elements of the gas chain, both upstream and downstream.''

"We are leveraging our success in India to actively pursue prospects in attractive and politically stable regions in the world" Mukesh Ambani, Chairman and Managing Director, reliance industries limited

"We will never join the ranks of OPEC, simply because we only have 1 per cent of global hyrocarbon reserves and 15 per cent of the world's population" Subir Raha, Chairman and Managing Director, Oil and Natural Gas Corporation

Real Rush

Exploration can be a heady experience, with all the throbbing suspense of a treasure hunt. But if you want to know what really excites Raha these days, it's the prospect of actually extracting the stuff. And fast. For that, you would have to look a few kilometres west of the Vasai basin, at a field called Vasai West. It has barely been 18 months since 240 million barrels of oil and oil-equivalent gas reserves were found here, but Raha wants the energy to start flowing by mid-2004. That the state-owned ONGC could move at such lightning pace was unthinkable just a couple of years ago.

Pumping gas even from depths of 40-50 metres below sea level takes some determination, not to mention investment. It involves the setting up of a booster compressor platform, living quarters and processing units. And it's all fraught with danger. In fact, no visitor can miss the precautionary measures, which extend from rig design to operating procedures. "The safety and security of the personnel is the prime consideration in constructing any platform, since living on the platform means practically sitting on a bomb,'' explains D.K. Mukherjee, administrative controller of the Bassein Complex, reassuringly.

No sweat. What matters, at the end, is the extent to which domestic production can reduce India's dependence on crude oil and gas imports. And at a reasonable cost. So, what's the score?

Unbelievably good, actually, judging by ONGC's figures. The D1 field is expected to produce 19 million tonnes of oil and oil-equivalent, at an estimated cost of nearly Rs 310 crore. Vasai West is expected to deliver 97 million tonnes of oil and oil equivalent, at a capital cost of about Rs 985 crore. Smaller fields are expected to give almost 1.5 million tonnes, on an investment of something just over Rs 430 crore. Then, there's ONGC Videsh Limited, too. "We expect overseas acquisitions to add 10 million tonnes to our kitty by 2007,'' says Raha.

National Exuberance

None of it, though, will get India into the league of, say, the Organization of Petroleum Exporting Countries. As Raha says, "I don't think we will ever join the ranks of OPEC, simply because we only have 1 per cent of global hydrocarbon reserves and 15 per cent of the world's population." India consumes some 100 million tonnes of crude oil every year, over two-thirds of which is imported. As India's crude needs swell to a projected 150 million tonnes in a decade, conventional logic dictates that the best it can do is keep this ratio stable. Run, that is, just to stand still.

Some analysts, such as Avinash Chandra, Director, Directorate General of Hydrocarbons, are optimistic that India could actually make a go of its renewed import substitution endeavour. This could be done if India triples its current annual oil production of 32 million tonnes a year over the next 10 years. That's reason enough for all the deep sea drilling to keep so many energy analysts on the edge of their seats. There's no saying what lies down there, and it does not cost much to maximise expectations while the drills are still drilling.

with inputs from Roshni Jayakar