Bangladesh News

The country’s first off-shore gas field Sangu, also the costliest of all fields, is faced with a premature rapid depletion with its daily production already almost halved, competent sources said.

The gas field’s British operator Cairn is however frantically trying to increase its production by drilling the 10th well at the site and repairing two of the existing nine wells. The new well is expected to be completed by March 30.

Drilling of this extra well located four kilometres off the existing Sangu field platform will add $20 million to the recoverable cost of Sangu for Cairn. Sangu platform is located 35 km off the coast in the Bay of Bengal.

Cairn already claims to have invested a staggering $ 555.95 million in the field till 2005. Now, $20 million plus other expenses will add to this.

The field has one completely dry well. With four troubled wells and four operational ones, it now produces 91 million cubic feet gas per day (mmcfd). A few years back, this field was producing 160 mmcfd.

By repairing two troubled wells, Cairn hopes to raise production up to 125 mmcfd by the end of this month. But Petrobangla believes that it might go up to 110 mmcfd at best.

Cairn believes that drilling of the 10th well might increase the field’s production back to 160 mmcfd as this would tap a new location. “But we will be able to say it for sure in April when we will have all data in hand,” said a source.

Sources in Petrobangla and Cairn say it is natural that a gas field’s production would gradually decrease over the years but the present state is somewhat surprising.

“This field is producing gas for the last eight years. It is normal that production rate would now reduce. But we did not expect the rate to fall so dramatically,” said a Petrobangla expert.

An energy ministry high official said many of the problems of Sangu field could have been avoided if Petrobangla had allowed Cairn to conduct a three-dimensional (3-D) seismic survey. Cairn’s proposal to do one such survey was refused a few years back.

“Petrobangla should have been more accommodative about Cairn’s proposal. It has allowed Unocal (now Chevron) to conduct 3-D survey at Bibiyana, and Tullow in Block-9. If 3-D survey was conducted at Sangu, there could have been better drilling plans and reduced risks for both Cairn and Bangladesh,” the official noted.

A Petrobangla official was critical about its role. “Petrobangla did not take many operational decisions on Sangu based on the original appraisal report on the field,” he said.

“When the field started production in 1998, Petrobangla allowed Cairn to maximise production because at that time the country was reeling under gas shortage. If Petrobangla was careful, it would not have allowed 160 mmcfd production rate and would have settled for a conservative rate that would have given the field a longer life,” the official said.

High rate of gas production, compared with the gas field’s capacity, can damage internal structure of the gas field, leading to a premature death of the field. This has happened to Bakhrabad gas field, which was initially estimated to have 1.4 trillion cubic feet (TCF) of gas. Ill planned production has led this field to drastically lose its production after extraction of only 0.4 TCF gas. “However that might not exactly be the case with Sangu. But it is a similar case,” he added.

Meanwhile, Cairn has mobilised two sea vessels in the Bay of Bengal for fresh exploration at a cost of $40 million. It will conduct drilling at South Sangu by mid-February, and in Hatia, 25 km off Sangu, in April.

“These are exploration wells. If nothing is found there, Bangladesh will not bear its cost,” said a source.

The country now needs around 1,500 mmcfd gas. A large portion of it comes from Jalalabad, Moulavibazar and Sangu under separate production sharing contracts (PSCs) with foreign oil companies.