Oil and Gas Development Company Limited (OGDCL) has discovered a hydrocarbon-rich field in Sindh having estimated reserves of 3.292 billion cubic feet (bcf) of gas.
Commercial production from the new discovery is poised to start in June this year. However, the company is seeking a one-year extension in the testing phase for the Umair SE-1 Guddu discovery.
OGDCL was granted an exploration licence for the Guddu block in May 1999 in accordance with the Petroleum Exploration and Production Policy 1997 and under the Pakistan Petroleum (Exploration and Production) Rules 1986.
OGDCL, which is the block’s operator, has so far acquired 545 square kilometres of 3D and 243 line km of 2D seismic data.
Based on the results of seismic data, the company has made a new gas discovery in Guddu from the Habib Rahi Limestone and Pirkoh Limestone by drilling a well namely Umair SE-1. According to the initial test results, total gas reserves are estimated at 3.29 bcf.
Petroleum Division has received an OGDCL’s request, seeking permission for an extended well test to assess the discovery in the Umair SE-1 exploration well drilled in the Guddu block.
Rule 20(1) of the Pakistan Petroleum (Exploration and Production) Rules 1986 states “subject to the provisions of these rules, the licence gives the holder the exclusive right to undertake, within the licence area, all activities related to reconnaissance and exploration, including drilling for petroleum”.
According to rules, “the holder of the licence shall not be entitled to extract any petroleum from discoveries other than such test and early production as the government may allow upon written request submitted by the holder of a licence, provided, however, that in no event such test or early production shall cause loss of revenues for the government”.
Extended well test/ test production is a technical requirement and common industrial practice to examine the oil and gas discovery to establish the extent of the reservoir and evaluate the reservoir’s performance to declare commerciality.
According to the Petroleum Division, OGDCL has made a rational request for extended testing and it is in line with the applicable petroleum policy and rules. The division examined the application and found it “in order”.
It proposed to the Economic Coordination Committee (ECC) a one-year extension for the Guddu discovery since the start of production.
The tentative date for the beginning of production is June 23, 2023 subject to conditions that OGDCL will submit the Declaration of Commerciality and the Field Development Plan for the Umair SE-1 discovery before the expiry of the allowed extended well test period.
The production made under the testing arrangement would be accounted for in the case of production bonus payment. “The company shall fulfill all other statutory obligations like rentals, training and social welfare as per applicable rules,” the division said.
In order to expedite the approval process with the objective of enhancing oil and gas production, the Petroleum Division said that it may be authorised to approve the request for extended testing and further extensions, if technically justified.
Published in The Express Tribune, January 22nd, 2023.
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