Gujarat State Petroleum Corporation (GSPC) may witness a “marginal” increase in its KG offshore development cost from the initially estimated $1.7 billion (approximately Rs 8,800 crore at the current exchange value) due to recent amendments in drilling technology to manage the high pressure and temperature of the reservoir.
First gas from KG-OSN-2001/3, the field has been rechristened as “Deen-Dayal,” is expected in 2013. Peak output from the find is estimated to reach 5.7-8.6 million metric standard cubic metre a day (mmscmd).
Though located in shallow water, development of the gas find is considered “challenging” due to twin hurdles of temperature and pressure. The field development plan (FDP) was approved by the Directorate General of Hydrocarbons in November 2009.
According to sources, GSPC has already drilled the “top-hole” section of the four production wells, out of the proposed 15, by using a jack-up rig Deep Sea Driller – I, costing $ 100,000 a day. To drill the final section of the reservoir wall by using a cheaper ($62,000 a day) platform-rig, GSPC has roped in Blade Energy to adopt managed pressure drilling (MPD) technology, which was not part of the original FDP.
“We use mud as a lubricant to drill wells. Considering the difficult nature of the reservoir, there was a possibility that we will end up using more mud to combat pressure, leading to major failure. MDP is expected to ensure the permeability of the reservoir wall to make the drilling successful,” a GSPC source confirmed.
While the new technology will be put to use as early as January 2012, sources say that the other technical alternatives available before the company (like under balance drilling) were proved substantially costly.
“The use of MDP will have a marginal cost impact on our development plan,” the GSPC source said without divulging further details.