ONGC Drills 503 Wells in FY18 - Highest in 27 Years

Oil and Natural Gas Corporation Ltd. (ONGC) has drilled 503 wells in 2017-18, the highest number in 27 years. Among the 503 wells, 119 exploratory and 384 development wells were drilled. In order to assess the prospectivity of existing acreages in a time-bound manner and add to the company’s reserve base, more focus was laid on exploratory drilling.

During FY18, ONGC’s planned capex outlay on drilling activities was Rs. 16,038-crore with a target to drill 496 wells, including 110 exploratory and 386 development wells. However, the company drilled 503 wells at a cost of approximately Rs. 14,200-crore, which is 11.5% lower than the budget outlay. “The initiatives taken by the company to optimize cost and enhance operational efficiencies has yielded additional savings in the fiscal year ended March 31, 2018,” ONGC said in a press release.

This is the second consecutive year that ONGC has drilled over 500 wells. In FY17, the company drilled 501 wells at a cost of Rs. 15,440-crore. This year’s achievement comes at a time when the company is looking to step up domestic output in line with the clarion call given by Prime Minister to reduce India’s oil & gas dependence by 10% by 2022.

Speaking about the achievement, Mr. Shashi Shanker, Chairman and Managing Director, ONGC said, “We have taken measures to improve our operational efficiency by better well designs, inducting new technologies, improving cyclespeed, standardization of well testing procedures and minimizing idling period of rigs.”

What’s more remarkable is that among the 119 exploratory wells drilled eight were in the deep-water fields, against the initial target of six, and 45 in shallow-water fields, against the target of 38.

Company within Company

In order to have a more focused approach in drilling operations, a new concept ‘Company within Company’ was rolled out in Mumbai High (MH) Asset to bring about operational efficiency in offshore drilling operations. “The plan has already paid rich dividends as MH Asset achieved highest-ever cycle and commercial speeds,” Mr. Shanker said.

This year, ONGC has set a capex outlay of Rs. 17,615-crore on drilling activities, with a significant upside in the number of deep-water development wells planned. The company has set an ambitious target to drill 535 wells, of which 24 are deep-water development wells as part of Cluster-2 development of KG-DWN-98/2 project, off the East-Coast of India. The company is also set to drill 30 wells as part of its CBM development project.

Rise in gas production

Meanwhile, ONGC has reportedly registered 6.3% increase in natural gas production in 2017-18 and is on track to double the output by 2022. It produced 23.484-bcm (billion cubic metres) of gas in 2017-18 as against 22.088-bcm in 2016-17. This is the highest gas output by ONGC in five years and the growth rate is higher than the global average of 3-4% year-on-year.

ONGC has stepped up on bringing newer fields into production after Prime Minister Narendra Modi set a stiff target of reducing oil import dependence by 10% by 2022.

The overall gas production, which includes production from the joint ventures, registered a growth of 5.8% at 24.610-bcm, as against 23.270-bcm in the previous year. The company is targeting gas production of 24.41-bcm during the current financial year and incur an investment of around Rs. 7,000-crore.

While the main incremental growth on stand-alone basis came from western offshore, the onshore fields have also contributed substantially despite natural decline coupled with several other constraints.