ISLAMABAD: The oil and gas production in the country has significantly declined over the past two years mainly because of the inability of the state-run Oil and Gas Development Company Limited (OGDCL) to meet its drilling targets, resulting in increased outflow of foreign exchange for imported fuels, informed sources told Dawn on Sunday.
The OGDCL controls about 45 per cent of the country’s oil reserves and 35 per cent of natural gas reserves. And its share in the country’s oil production is 61 per cent and its gas output accounts for 25 per cent of the national gas production.
The oil production of the OGDCL has declined from about 54,000 barrels per day (BPD) to about 37,500 BPD in almost 18 months while gas production has come down from about 1,200 million cubic feet per day (MMCFD) to less than 1,000 MMCFD, official documents suggest.
This decline in production has partially resulted in increased fuel imports.
According to minutes of the OGDCL’s development review meeting held a few days ago, the company is unlikely to meet its drilling targets set for the current financial year. As of Dec 22, the OGDCL was able to spud only six wells against a target of 42 wells, set for the year ending June 30, 2010.
The company has so far marked only 23 sites for drilling of wells which means that at least 19 points are yet to be identified. It is almost impossible for the OGDCL to spud the 19 wells in the time available.
Last year, too, the company had set a target of drilling 52 wells but had managed to drill only 32 wells, informed sources said. This had resulted in a decline in oil production from about 54,000 BPD to about 45,000 BPD.
OGDCL’s spokesman Basharat Mirza attributed the company’s inability to meet its drilling and production targets to bad security situation and litigation with some private companies. He told Dawn that three major wells – in Tando Allahyar, Kunar Pasakhi and Sanjhoro – could not be developed to production stage because of stay orders issued by the courts while Uchh and Dakhani fields were also in litigation.
He said a number of other wells also could not be drilled or developed because of bad law and order situation. Many of these oil- and gas-bearing areas licensed to OGDCL are considered ‘highly prospective’, where oil and gas production could significantly change the country’s energy outlook. Several senior company officials, however, said the decline in the company’s output was mainly due to the transfer of highly technical professionals to irrelevant positions and training institutes than to the security problems.
They said most of the executive positions vacated by these professionals were given to political inductees who lacked professional expertise to improve exploration and production portfolio.
The OGDCL has been able to complete only 1,029kms of 2D survey during the first six months of the current year against a target of about 4,313kms and claims that more than 3,000kms were in the militancy-hit area.
Likewise, the company has been able to complete 3D activities in an area of about 190 square kilometres against a target of 970 sq. km.
Sources said the slow progress in exploration and development work in the areas leased to the company could also be attributed to heavy reliance on a single private sector company from which the OGDCL hired rigs for exploration at high charges.
They said the company was maintaining control over 16 wells, of which only eight rigs are operated by the OGDCL itself, with the other seven rigs having been rented from a contractor.
Last year, the company could not meet its target of increasing oil production from 41,500 to 46,000 BPD by June 2009. This year, the company did not set production targets and instead focussed on exploration and drilling targets that could not be met. This was mainly because of more than anticipated work on drilling as experienced professionals remained sidelined.
As a result, not only the rigs owned by the OGDCL but also its contractor took more time than stipulated to drill the wells.
For example, a contractor spent 492 days on a well where it was required to complete the work in 360 days and spent 150 days on another where the work was to be completed in 125 days. The OGDCL, too, spent more than 540 days on a well which was targeted to be completed in 375 days.
This is happening at a time when the government estimates indicate “a serious gas shortage in a few years leading to critical energy shortfalls unless the supply is significantly augmented by approximately two billion cubic feet per day (BCFD)”. The country’s current gas production is around 4.2 BCFD and “the unmet constrained demand is estimated to be in excess of 1 BCFD”.
The government also concedes that the most preferable option is to accelerate exploration for gas discoveries to meet energy needs rather than gas imports through pipelines and liquefied natural gas.
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