E&P companies Urge 15% Depletion Allowance for Aging Fields
The exploration companies have called for granting 15% depletion allowance on aging fields rather imposing additional 15% well head value.
Sources told Express tribune that oil and gas exploration companies say that there should be some more consideration to waive off the additional 15% well head value imposed (i.e. extra royalty other than 12.5%) on the aging fields which has passed their 30 years of life.
Additionally, background discussion revealed that there is need to waive off the wind fall levy on gas and condensate also. Aging fields should be given 15% depletion allowance rather imposing additional 15% well head value.
Responding to question, they said that average cost for different artificial lift systems varies from 0.3 MMUSD to 0.9 MMUSD.
“Price incentive with other tax relaxation by regulator would surely confirm the economic viability of brown fields with significant natural decline trend and ultimately expedite the optimization techniques which requires considerable CAPEX and OPEX,” they said.
Sources in Petroleum division said that Oil and Gad Development Company Limited (OGDCL) was taking a lead in incremental oil and gas exploration at its own risk by investing millions of dollars.
The company is working on different fields.
Officials said that OGDCL has a valuable asset in the Zin Gas Field with significant reserves and production potential upto 1 TCF and 100 MMSCFD respectively.
However, the challenges in Baluchistan, particularly security and socio-political issues, could pose hurdles to its development and monetization.
Despite these challenges, OGDCL is determined to proceed with the development and monetization of the Zin Gas Field.
Additionally, engaging in talks with interested buyers demonstrates our commitment to monetizing the field as quickly as possible, likely to capitalize on the current market conditions or to fulfill contractual obligations.
About Kohlu Block, officials said that OGDCL is Operator of this block with 40 % shares, whereas OGDCL has 5 % carry forward shares in Block -28 where recent discovery of Maiwand- X1 is made by MPCL which open a new horizon of hydrocarbon potential in this area.
OGDCL is increasing its exploratory efforts by every passing year. In FY 2024-25 OGDCL is planning to drill 10 exploratory wells which will increase to 12 and 14 in subsequent financial years.
OGDCL is targeting its 20 Major fields for production enhancement primarily in north and south zones. The fields include 14 oil fields (Kunnar, Tando Alam, Pasakhi, Sono, Lashari Center, Thora, Rajian, Kal, Palli, Chak Naurang, Fim Kassar, Missa Keswal, Mela and Toot), 06 gas and gas condensate fields (Chanda, Nashpa, Qadirpur, KPD-TAY, Sinjhoro, and Bettani).
OGDCL foresee that its current production of 34000 BPD Oil would ramp up to 50000 BPD over the next 3-4 Years. To achieve this target OGDCL is planning to convert more than 15 oil wells on suitable artificial lift system like ESP, PCP, JP, SRP or GL.
Moreover, 3-5 infill wells will also be drilled for production maintenance and to drain attic oil. Pressure maintenance and EOR projects have also been initiated and execution will start from FY 24-25.
Whereas raw gas production would observe a growth upto 1.4 BCF in next 5-6 years by developing low BTU (like Zin & Sara West) and high security risk area discoveries like Jandran, Laki Rud & Kalerishum. It will also include production through exploratory efforts during this period.
Currently all E&P companies in Pakistan are facing a challenge of finding larger deposits of oil and gas in the Country and adding enough new reserves to arrest the natural decline of remaining reserves.
OGDCL is therefore continuously making purposive efforts to aim at long term production enhancement by focusing on expediting the conclusion of on-going development projects which on completion will further improve oil & gas production of the company.
The aforementioned technologies which OGDCL has envisaged are already being used by E&P companies worldwide. Some of these were already adopted by OGDCL and now they are being modernized and implemented on fast track for production enhancement and sustenance.
