PETROLEUM EXPLORATION & PRODUCTION

17-02-2024

Oil and Natural Gas Corporation (ONGC) has started first crude oil production from its Cluster-2 deep-sea project in the Krishna-Godavari (KG) basin in the Bay of Bengal.
Petroleum Basin in India
1. A petroleum basin contains various rocks and sediments, crucially including source rocks where oil and gas originate.
2. India has 26 sedimentary basins covering 3.4 million km².
3. Distribution:

- 49% on land
- 12% in shallow water (up to 400 meters depth)
- 39% in deepwater areas (up to Exclusive Economic Zone or EEZ).

1. The Krishna-Godavari (KG) basin is a passive margin basin (transition between oceanic and continental lithosphere) in India that covers over 50,000 km²in the Krishna and Godavari River basins in Andhra Pradesh.
2. Indian Sedimentary Basins: Basins categorized into three based on hydrocarbon resource maturity:

- Category-I: Commercially established & producing basins (Total 7 basins).
- Category-II: Prospectivity (tool that helps allocate exploration resources efficiently) identified (5 basins: Kutch, Mahanadi-North East Coast, Andaman-Nicobar, Vindhyan, Saurashtra).
- Category-III: Prospective (14 basins: Himalayan Foreland, Ganga, Kerala-Konkan-Lakshadweep, Bengal, Karewa, Spiti-Zanskar, Satpura-South Rewa Damodar, Narmada, Deccan Syneclise, Bhima-Kaladgi, Cuddapah, Pranhita-Godavari, Bastar, Chhattisgarh).

- Offshore drilling in marine environments like the Arabian Sea or Bay of Bengal.
- Onshore drilling on land across various sedimentary basins in the country.

1. Oil and Gas Production: ONGC is India’s largest oil and gas producer which contributes 72% of the country’s hydrocarbon production.
Steps for Enhancing Petroleum E&P
1. The formation of the Directorate General of Hydrocarbons (DGH) aims to manage oil and natural gas resources efficiently.
2. Streamlined approval processes via digitization and standardization on the e-platform.
3. The National Data Repository (NDR), launched in 2017, facilitates Exploration & production (E&P) activities by serving as a government data bank.

- NDR is a government-sponsored data bank that stores, maintains, and reproduces data about E&P. It is part of the Directorate General of Hydrocarbons in the Ministry of Petroleum and Natural Gas.

1. The NDR is being upgraded to a cloud-based facility with virtual data rooms for investors' 24x7 access.
2. The India Hydrocarbon Vision 2025 outlines development targets for the sector. d
3. 100% FDI through automatic route for exploration activities, infrastructure related to petroleum products and natural gas marketing, etc.
4. National Seismic Programme (NSP) aims to undertake a fresh appraisal in all sedimentary basins across India.
Significance of Indigenous Petroleum E&P
1. Reduction in Import Bill: India's crude oil import, accounting for 85%, can be curtailed by increasing indigenous petroleum production.
2. Strategic Importance: Mitigates vulnerability to global geopolitical uncertainties, supply disruptions, and price fluctuations.
3. Revenue Generation: Indigenous petroleum production contributes to government revenue through taxes, royalties, and profit-sharing agreements.
4. Employment Generation: Creates jobs in exploration, production, refining, and distribution.
Challenges and Solutions:

Challenges	Solutions
E&P units require substantial capital investment for expensive equipment and skilled labour.	Seek joint ventures with global companies. Provide stable tax regimes and incentives.
Advanced drilling technologies are necessary to extract petroleum from complex geological formations.	Collaborate with academia for research and technology access.
E&P activities pose risks of spills, leaks, and accidents, as seen in events like the recent Ennore oil spill in Tamil Nadu.	Utilize advanced spill control technologies. Conduct comprehensive training on spill prevention and response protocols.
Drilling, pipelines, and infrastructure can lead to habitat loss and harm wildlife.	Implement sustainable E&P practices. Partner with biodiversity boards for environmental studies and response planning.
Local communities may be displaced, leading to social and cultural challenges.	Conduct impact assessments for community mitigation.

About Hydrocarbon Exploration and Licensing Policy (HELP)
1. HELP, introduced in 2016, replaced the New Exploration Licensing Policy (NELP).
2. Provides a single license for Exploration and Production (E&P) covering various hydrocarbons like conventional oil and gas, CBM, shale oil, gas hydrates, etc.
3. Shifted from a Profit-Sharing Model to a Revenue Sharing Contract model.

- A revenue sharing contract (RSC) is an agreement between a contractor and the government in the hydrocarbon industry.

1. Open Acreage Licensing Policy (OALP) allows investors to choose blocks by evaluating National Data Repository (NDR) information.

- OALP is a policy reform introduced in 2016. The policy allows companies to explore hydrocarbons like oil and gas, coal bed methane, and gas hydrate in areas that the government does not notify.