India seeks bids in eighth NELP licensing round

April 27, 2009
India has invited operators to bid for 70 exploration blocks covering 163,535 sq km under its eighth New Exploration Licensing Policy (NELP 8) round.

India has invited operators to bid for 70 exploration blocks covering 163,535 sq km under its eighth New Exploration Licensing Policy (NELP 8) round.

India has 24 deepwater blocks, 28 shallow–water blocks, and 18 onshore blocks on offer. Of the 24 deepwater blocks, 18 are off western Andaman, an area that is available for the first time. Deepwater blocks also are available in the Mumbai and Kerala–Konkan basins off the west coast.

For the oil and gas blocks, operators will have a 7–year exploration period and are to complete their minimum work program within 4 years.

Onshore acreage blocks are in the northeastern states of Assam (2 blocks) and Manipur (2), the eastern state of West Bengal (2), the central state of Madhya Pradesh (3), the western state of Gujarat (8), and the northern state of Haryana (1).

For coalbed methane acreage (CBM IV), the government has offered 10 blocks covering 5,000 sq km. These are in Assam (1 block), partly in Chhattisgarh and partly in Madhya Pradesh (1), Jharkhand (1), Madhya Pradesh (2), Maharashtra (2), Orissa (2), and Tamil Nadu (1).

Bidding for both CBM IV and NELP 8 will end on Aug. 10, with production–sharing contracts to be signed within 4 months.

However operators are worried over the lack of clarity on tax issues as the finance ministry has stopped a 7–year tax holiday for gas production from blocks awarded under NELP. According to reports from India, officials from the petroleum ministry are in discussions with the finance ministry to work out a solution as oil and gas should have a level playing field.

Oil Secretary RS Pandey said it was better to proceed with the licensing round amid the global economic slowdown to generate activity. He added, however, that if there were little interest, India may hold onto the blocks. If there is sufficient interest, another 30–40 blocks would be offered in the next phase, he said.

“This is the best time to get exploration assets,” said VK Sibal, India’s upstream regulator. “It will be available more easily. So, I think medium–to–aggressive bidding [will be] there.”

India, however, has only offered one block in the Krishna Godavari basin off India’s east coast, where Reliance Industries discovered large gas reserves 61/2 years ago. Production started last week from the Dhirubhai 1 and 3 discoveries in the Bay of Bengal.

At peak production, it will produce over 550,000 boe/d. The gas is delivered to the onshore facility at Gadimoga, a small village in the East Godavari district of Andhra Pradesh. It flows to the East West Pipeline of Reliance Gas Transportation Infrastructure Ltd.

Since NELP was introduced in 1999, India has made 68 oil and gas discoveries in 19 exploration blocks.

Benin

TGS–NOPEC Geophysical Co. began shooting 3,500 line–km of spec 2D seismic survey in the Gulf of Guinea off Benin.

The program is designed to help further define the extent of the petroleum system in Benin’s ultradeep water. It extends the 10,000 km of 2D seismic shot in recent months off Ghana.

Hungary

The Balotaszallas–E1 well on Hungary’s Tompa Block encountered a 560–m overpressured section of interbedded siltstones, shale, and sandstones with some conglomerates, said Toreador Resources Corp., Dallas.

Electric logs, mud logs, and gas readings of greater than 100,000 ppm encountered across the interval confirm the presence of natural gas. TD is 3,620 m.

The well is to be treated in May after a frac program is designed. Delta Hydrocarbons BV is carrying well costs for Toreador, which has a 25% working interest.

Italy

The deepest Miocene horizon in the Bezzecca–1 appraisal well on the Cascina San Pietro permit east of Milan flowed at the rate of 2.2 MMcfd of gas on a 1/4–in. choke at 1,760 psi pressure during initial cleanup, said Po Valley Energy Ltd., Perth.

The company said the results at 1,925–45 m are above its expectations. Tests of the interval continued in mid–April with short tests to follow in Miocene and Pliocene intervals as shallow as 1,860 m.

Bezzecca is the company’s fourth former Eni gas field redevelopment. Po Valley expects to start production in the third quarter of 2009 at Castello and Sillaro fields and is moving toward the granting of a production concession at Sant’ Alberto in the San Vincenzo license.

Libya

The international arm of Algeria’s state Sonatrach gauged an oil and gas discovery in the Libyan portion of the Ghadames basin.

Sonatrach International Petroleum Exploration & Production (Sipex) said the A1–65/02 well flowed 1,344 b/d of oil and 1.88 MMcfd of gas from the Ordovician Memouniat formation. TD is 9,033 ft.

It is the first discovery on the block, 140 miles southwest of Tripoli. The Libyan government awarded the block in 2005. Sipex operates the license with 25% interest, and NOC has the right to 75% of the production.

Oman

RAK Petroleum PCL of the emirate of Ras Al Khaimah plans to drill the Zad–2 well on Block 47 in Oman later in 2009 after having acquired subsidiaries of Indago Petroleum Ltd., London, that hold rights in Oman.

RAK Petroleum raised its interest to 100% in blocks 31 and 47 with acquisition of Indago Ventures 31 Ltd. and Indago Ventures 47 Ltd. If successful, RAK Petroleum said, the Zad prospect will become an important gas–condensate field 10 km from an existing pipeline. The exploration well will test the fractured Cambrian Amin sandstone reservoir, an analog to Kauther field.

Harvest Natural Resources Inc., Houston, signed an exploration and production sharing agreement with the government covering the Al Ghubar–Qarn Alam block in Oman.

Oman Oil Co. will have an option to back in for up to 20% interest if gas is discovered.

The ministry of oil carved the newly created 955,600–acre block, designated for exploration and production of gas–condensate, out of the Block 6 concession operated by Petroleum Development Oman. PDO will continue to produce oil from several fields.

Ghubar–Qarn Alam is in the Ghaba salt basin near Barik, Saih Rawl, and Saih Nihayda gas–condensate fields, which support Oman’s exports of LNG. Harvest will target the same reservoir, Cambro–Ordovician Andam sandstone.

The company will spend $4.8 million in 2009 for geological–geophysical studies, to reprocess seismic, and prepare to drill. It will drill at least two wells in the first 3 years.

Turkey

Sherritt International Oil & Gas Ltd., Toronto, plans to spud the Durusu–1 exploration well in the western Black Sea off Turkey by the end of May 2009.

The well, in 80 m of water 20 km off the Turkish coast, is programmed to evaluate the Tertiary Danisman and Osmancik formations that produce gas onshore to the west. GSP Romania’s Saturn jack up is to drill the well to 2,500 m subsea. The drillsite is in the Thrace basin on a block of seven licenses north and northwest of Istanbul that hug the coast to the border with Bulgaria.

Sherritt holds 42% working interest, HEMA Energy has 33%, and Toreador has 25% and is carried for the first $10.7 million of Durusu–1 well costs.

Nova Scotia

The Nova Scotia government finalized a 10–year oil and gas production lease covering the Windsor and Horton groups on the 474,625 gross acre Windsor Block onshore north of Halifax.

With $32 million spent so far on seismic, drilling, completions, and other work, Triangle agreed to drill seven wells by Apr. 15, 2014, and surrender areas not drilled or adequately evaluated. Royalty rate is 10%.

Tenure on some or all of the lands is eligible for renewal after the first 10 years if commercial production is established and–or drilling and evaluation criteria are satisfied.

The company mainly seeks gas in Mississippian–Devonian Horton Group shales, but the block also has conventional oil and gas potential.

Triangle, which operates through its subsidiary Elmworth Energy Corp., is seeking one or more partners to continue operations (see map, OGJ, Dec. 22, 2008, p. 35).

Arizona

The state gave conditional approval for formation of the 171,000–acre St. Johns Gas Unit for the production of carbon dioxide and helium in Apache County, Ariz.

The unit agreement calls for orderly development over a 5–year period and includes a minimum work program of five wells in the next 12 months. Enhanced Oil Resources Inc., Houston, is operator of the voluntary unit with an estimated 84% working interest.

The approval of the unit agreement is subject to final sanction by the federal government and review and approval by the state land commissioner of any substantive changes recommended by the federal government.

EOR Inc. predecessor Ridgeway Oil Corp. discovered St. Johns field in 1994 in the southeastern Holbrook basin.

Pennsylvania

Seneca Resources Corp., Buffalo, NY, said preliminary results are positive from its first three operated vertical wells in Devonian Marcellus shale in Pennsylvania.

The company drilled and cored a vertical well on Tract 595 in Tioga County and plans to spud a well this week on Tract 100 in Lycoming County.

It will decline to lease two other tracts that total 8,408 acres on which it was high bidder at a state sale in September 2008 because pipeline routes acceptable to the state are more than twice the length anticipated at the time of bidding.

Seneca expects to follow the current 10–well program with more than 100 horizontal wells on tracts 595 and 100 in the next few years. The company holds acreage in seven counties in the play.