ONGC to spend 24% more on drilling this year vs FY18

Oil and Natural Gas Corporation Ltd, India’s largest hydrocarbon producer, said it plans to spend Rs 17,615 cr on drilling activity in the current financial year.

This is a 24% increase over the Rs 14,200 cr spent in the year ended March.

The company also set a record in financial year 2017-18 by drilling the highest number of wells.

Against the planned drilling of 496 wells in FY18, said the company, it actually drilled 503 wells, its highest ever.

Next year, ONGC said, it plans to drill 535 wells.

Out of the 503 drilled last year, 110 were for exploration and 386 were for development (production). “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,” it said.

Out of the 119 exploratory wells drilled last year, 8 were in the deep-water fields — two more than targeted — and 45 were in shallow waters, 7 more than targeted.

Moreover, said CMD Shashi Shanker, these well were drilled well below initial cost estimates. The target budget for last year was Rs 16,038, while the actual expenditure was only Rs 14,200.

Drilling costs are influenced by the rental rates of rigs, which fluctuate with crude oil prices and demand.

Among the highlights of this year’s drilling schedule are the 24 deep-water wells that will be dug as part of the cluster-2 development of KG-DWN-98/2 project in Bay of Bengal, next to Reliance Industries’ KG D6 block.

The company will also drill 30 wells as part of its methane extraction projects from coal beds.

The company also said that it was able to improve its profitability levels by introducing a ‘company within a company’ concept for its Mumbai High offshore operations.

“The plan has already paid rich dividends as MH Asset achieved highest-ever cycle and commercial speeds,” Shanker said.

Besides, he added, ONGC took measures to improve efficiency via better well designs, inducting new technologies, improving cycle-speed, standardization of well testing procedures and minimizing idling period of rigs, he added.