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Pakistan has right time to boost oil and gas exploration activities

Published on 6th June, Edition 23, 2016

 

Country has massive deposits of shale gas and oil

Oil and gas companies involved in the exploration and production have somewhat lessened their activities in Pakistan. Nevertheless the existing companies have no desire of liquidating their business. Throughout the world the exploration and production companies are facing the same state of affairs as there is the reduction in the petroleum products prices and Pakistan is no different from others.

At present no international exploration and production company was considering to giving up their operations in Pakistan as the country’s Petroleum Policy 2012 offers best prices and incentives to the exploration and production companies. Consequent upon current decline in international oil and gas prices, exploration and production companies internationally were decreasing their costs by utilizing different means.

Pakistan should take this opportunity and provide a chance to attract these companies to undertake new exploration and production activities in the country. Although Petroleum Policy 2012 extends attractive incentives to exploration and production companies operating in upstream and downstream sector, but it still need a review. Pakistan has a bright chance to take advantage of the international recession in oil and gas prices as services costs and other exploration related costs have dropped drastically.

This is the time the local and international stakeholders and policy makers, including the Government of Pakistan, discuss and examine the key oil and gas sector issues in Pakistan and their possible solutions. The competent authority must provide policy guidance and recommendations to increase activity and investment in the sector, with focus on oil and gas exploration and energy efficiency.

Hefty shale gas reserves

Pakistan’s shale gas and oil reserves are more than the combined reserves of Central Asian States put together. The gas supply is at 3.95 billion cubic feet in the on-going year against demand for 6.45 bcfd. Oil production is estimated to drop by 2.61 bcfd by 2028 if the potential of gas is not explored.

Pakistan had one of the largest shale gas and oil reserves, and recent comprehensive studies had indicated the potential to be larger than originally envisaged. Several oil and gas exploration companies operating across the country have made as many as 73 discoveries as a result of 271 drills carried out in the last three years.

During the above-mentioned period, 46 new exploration licences, which covered an area of 94,608.85 square kilometer had been awarded to accelerate the exploration activities in the country.

Various measures being implemented to minimize the gas shortfall included the import of Liquefied Natural Gas (LNG), projects, which were importing gas through the pipelines from Iran and Turkmenistan, in addition to the promotion of the LPG air mix.

 

US offers assistance

United States has offered Pakistan assistance in undertaking and financing another study to assess the hidden and vast shale oil and gas reserves in the country, officials quoted as saying recently.

The first study was conducted by the US Agency for International Development (USAID), but it did not cover some areas of Balochistan, Sindh and Khyber-Pakhtunkhwa.

Pakistan has accepted the offer for the second study for which the US will bear the entire cost. Pakistan and the US have held a couple of meetings on forging cooperation in the energy sector over the past few years.

In the first assessment, USAID estimates showed that Pakistan had massive deposits of 10,159 trillion cubic feet of shale gas and 2.3 trillion barrels of shale oil. The figures that were several times higher than those released by the US Energy Information Administration (EIA).

The USAID further revealed that risked technically recoverable resources were 95 trillion cubic feet of shale gas and 14 billion barrels of shale oil.

According to EIA assessment in April 2011, Pakistan had 206 trillion cubic feet of shale gas in the lower Indus Basin, of which 51 trillion cubic feet were recoverable.

EIA also saw the presence of 9.1 billion barrels of shale oil that were technically recoverable out of estimated deposits of 227 billion barrels. In the first study, the USAID collected data of 1,611 wells and undertook shale formation of 1,312 wells through drilling. It used 70 percent of data to prepare the study and sent samples to the New Tech Laboratory in Houston for assessment.

Latest shale gas will cost $10 per million British thermal units, which will come down with the increase in recovery of untapped reserves.

The government will frame a policy for shale deposits after the cost of drilling is determined and the second study is conducted.

More discoveries

OMV has invested $2.5 billion in oil and gas exploration since commencing operations in 1991 in Pakistan and the company is investing $45 million this year. From 1991 to date, the company has expanded operations from Sindh to Balochistan and Punjab. OMV (Pakistan) has established itself as the largest international gas producer in Pakistan with a volume of more than 110,000 barrels of oil equivalent per day from Kadanwari-Miano and Sawan fields.

OMV has remained quite aggressive in development work as capacity of the Kadanwari processing plant has been enhanced to 232 million cubic feet per day (mmcfd) while capacity of the Sawan plant has gone up to 400mmcfd.

There is a high potential for shale and conventional gas production in Pakistan and the government was offering the most attractive wellhead oil and gas prices and asked international and local companies to take advantage of the situation.

Pakistan Petroleum Limited (PPL) announced that they have discovered another oil and natural gas reserve in Sanghar, Sindh.

Orient Petroleum has discovered oil and gas in its Ali-1 well in the Mirpur Khas block in Sindh province. The well is reported to have flowed 22 million cubic feet of gas and 350 barrels of oil. The 333.5 square kilometer block was awarded in December 1999 and the work programme required a $2 million, which included 2D and 3D seismic and an exploratory well. In January this year, the company, along with its joint venture partners, BowEnergy Resource, Zaver Petroleum, and Government Holdings, made a gas discovery in the Usman-1 well. The well flowed 48 mmcfd of gas and was the fourth major discovery in its Mirpur Khas and Khipro exploration blocks in Sindh. The recent discovery Ali-1 is the fifth discovery.

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