Govt aims for 320mmcfd new gas from 34 wells this year

Summary:

• 34 gas wells targeted to produce 320 mmcfd this year
• Daily demand is 3,800 mmcfd; supply gap met with LNG imports
• 14 wells by Bapex; 20 through international tenders
• Workover enhances gas production quickly at a lower cost
• Cost of projects estimated to exceed Tk5,000 crore

To address the growing energy shortage in the country, the government has decided to carry out drilling, workover, exploration, and development of 34 gas wells across various regions this year, with the expectation of adding 320 million cubic feet per day (mmcfd) of natural gas to the national grid.

Currently, the country's daily gas demand stands at 3,800mmcfd, which is steadily increasing. Petrobangla can supply only 2,500-2,800mmcfd, with around 1,000mmcfd met through expensive LNG imports. 

"If the projected production levels according to 3D seismic surveys are achieved, LNG imports could significantly decrease," Petrobangla Chairman Rezanur Rahman told The Business Standard regarding the decision to develop the 34 gas wells. 

The target is to complete the work this year. Successfully executing these projects will ease the pressure of imports, the chairman said, highlighting that continuous decline in domestic gas production is currently being covered by LNG imports.

According to energy division officials, Bapex will be responsible for drilling and workover operations at 14 wells. Besides, 20 more wells will be explored and developed through international open bidding, with foreign companies conducting the work.

Workover refers to the process of re-drilling and upgrading existing wells to restore or enhance their productivity. This includes repairing wells where gas production has diminished or ceased, aiming to increase output through necessary improvements.

The total cost of these projects is expected to exceed Tk5,000 crore, according to the minutes of a meeting chaired by Energy Adviser Muhammad Fouzul Kabir Khan on 22 January.

Most tenders already issued

A five-member subcommittee will be formed to carry out technical analysis and set priorities for drilling and workover operations. 

It will provide detailed recommendations on how each well should be drilled and developed, and it will oversee regular monitoring and inspections to ensure proper implementation of the well drilling activities.

They said  Bapex will handle the workover of 9 wells and exploration of 5, while the remaining 20 wells will undergo exploration and drilling through international tenders with foreign companies. 

"Most tenders have already been issued, with contracts for several wells, including those in the Sylhet gas field, already underway," added the official. 

Energy expert Professor Badrul Imam told TBS that given the current demand and supply situation, the government has made a sound decision. 

He said workover is an effective method to increase gas production and by revitalising wells, workover operations can quickly boost output at a low cost. 

"However, completing workover on 34 wells within a year is a significant task. Bapex has never undertaken such a large-scale program before, so proper preparation, including skilled personnel and necessary equipment, will be crucial," added Imam. 

"But it's not impossible," he noted.

Worries over LNG pricing 

The Petrobangla chairman explained that while LNG costs Tk70-Tk71 per unit (mmcfd), domestic gas is priced at only Tk4, resulting in a blended price of over Tk24.

However, Petrobangla receives an average of Tk22 per unit supplying gas across eight sectors, with industrial and commercial sectors paying between Tk30.50 and Tk31.50, he added.

Rahman warned that if LNG prices rise, the situation will worsen. In June, Petrobangla faced a shortfall of Tk0.98 per unit, which has now increased to Tk6.5 due to the rising dollar exchange rate.

Demand and supply

In FY24, Petrobangla imported 83 LNG cargoes, including 26 from the spot market and 57 under long-term contracts with Qatar and Oman. LNG imports under long-term contracts have been ongoing since 2018, while spot market imports began in 2020.

Given this, experts are urging increased domestic gas production, and the government is taking steps in this direction. Although the government invited international tenders for deep-sea oil and gas exploration, no global companies participated.

The previous Awami League government had planned to drill 100 wells nationwide between 2025 and 2028, including 69 new wells and 31 workovers. These operations were expected to add nearly 1,500mmcfd of gas to the national grid.

Enhancing capacity

At the meeting on 22 January, the energy adviser directed the need for evaluating the purchase of one or more Portable Process Plants to quickly integrate gas from exploration wells into the national grid. He also instructed the assessment of whether existing plants can be relocated if necessary.

For new projects, it was decided at the meeting to streamline feasibility studies by bundling them together, reducing time for third-party evaluations. Also, it was decided that exploration will be prioritised in areas with high gas reserve potential. 

Additionally, Bapex will use its existing rigs, currently five in number, to search for large domestic gas reserves.  The government is also considering acquiring two more rigs for deep drilling, with discussions ongoing about obtaining loans from international organizations.

Petrobangla chairman told TBS that a 20-horsepower rig has been proposed and sent to the ministry for approval, along with another for deep drilling, which will enhance Bapex's capacity to drill more wells. 

According to Petrobangla sources, 16 gas wells have already undergone workover, yielding 184mmcfd of gas. However, only 72mmcfd gas has been added to the national grid, as gas from three wells in Bhola could not be integrated due to a lack of gas pipelines. 

These three wells alone produced 61mmcfd gas. Additionally, gas from the Sylhet and Begumganj wells has not yet been connected to the grid. The process of linking these wells to the national grid is currently underway.