Unconventional oil, gas reserves

Cos working on policy

Friday, December 18, 2009
By Saad Hasan

KARACHI: Pakistan Petroleum Exploration and Production Companies Association (PPEPCA) is working on the concept of a new policy to boost search for unconventional oil and gas reserves in the country, says Janos Feher, the Chairman of the industry’s apex body.

The framework being prepared would include suggestions which make easier for exploration and production (E&P) companies to undertake expensive process of recovering gas reserves from low permeable rocks, he said.

“Tight gas shall be part of it,” he said in an emailed reply to questions sent by The News. “It is the industry’s belief that from tight gas reservoirs a sizeable quantity of gas can be produced.”

Exploration and production of oil and gas is covered under the petroleum policies prepared by the government in consultation with the industry from time to time. None of the policies have so far addressed the matter of unconventional hydrocarbon reserves.

With increase in consumption, Pakistan’s gas reserves are depleting fast. Just enough gas, which is the most used fuel in the country, is left to meet the requirements over the next 20 years.

There has not been any major discovery of gas reserves in the last decade even when rising consumption has outpaced production of four billion cubic feet per day. Reserve replacement ratio, which is an indicator of how much used reserves have been replaced by new finds, has dropped to the low level of 49pc.

Search for unconventional hydrocarbon reserves has come in the limelight with increase in oil prices. Higher prices have made it economical for E&P companies to employ modern techniques and equipment to drill vertically and reach low permeable rocks.

Janos Feher, who is also Managing Director of MOL Pakistan, said the initiative to find tight gas required policy decision in the form of either better price per million British thermal unit (mmbtu) or other incentives. “The cost of producing gas from low permeability reservoir is substantially higher than normal reservoir.”

Industry officials say there is a lot of potential for finding tight gas in Pakistan. Wamiq Bokhari, CEO of News Horizon Exploration and Production, believes there are 30 to 50 trillion cubic feet of such reserves in the country.

“They are far more than what we have found in Sui. But getting that out is not economical,” he told this scribe a few days ago. “Drilling for tight gas reserves requires adoption of technology at a higher cost. There has to be some incentive like higher gas price.”

But it is hard to say if E&P companies will venture into such a business considering the worsening security situation in Balochistan and the NWFP. Most of the prospective areas in Sindh and Punjab are already occupied. In the latest round of bidding held earlier in the year to auction new exploration blocks, there was no participation from any new foreign company.

However, Feher said that was in part because newcomers were not given enough time to review the Petroleum Policy 2009 and the international roadshow held to market the blocks was carried out in the holiday season in Europe and North America.

Moreover, he said decrease in crude oil prices has made it easier for local E&P companies to hire service providers and manpower.