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Role Of ONGC in the India’s Road map for Energy Security : 

Role Of ONGC in the India’s Road map for Energy Security K. Hazarika Director (Onshore), ONGC 1

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2 Contents Energy Scenario Growth of International E&P Industry Birth and Growth of Indian Petroleum Industry Current Scenario, Key Drivers & Thrust Areas for Future ONGC – an Indian MNC Preparedness of ONGC

Energy Scenario : 

Energy Scenario 3

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Powered by Energy Economic Growth Energy is a Key Enabler for Economic Growth 4

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Energy Energy Sources Finite Coal Oil Gas Infinite/ renewable Solar Wind Hydroelectricity Biomass etc. 5

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Reserves Status World Proven Reserves of Crude Oil : 1408.7 Thousand Million Barrels India’s Proven Reserves of Crude Oil: 5.8 Thousand Million Barrels Source: BP Statistical Review of World Energy 2009 6

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Reserves/Production Status World Proven R/P of Crude Oil : 42 yrs India’s Proven R/P of Crude Oil: 20.7yrs Source: BP Statistical Review of World Energy 2009 7

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Primary Energy Consumption Country-wise primary energy consumption MMTOE India: At 433 MMTOE, 5th largest consumer of primary energy One of the largest growing market for energy 3.84% of total Source: BP statistical review 2009 8

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India’s Energy Basket-2009 India Energy Consumption: 433 MTOE Source: BP Statistical Review of World Energy 2009 World Energy Consumption: 11,299 MTOE Primary Energy 9

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Future Projection - 2030 Global Primary Energy expected to grow @ 1.5% (earlier @ 2%) Source: IEO 2009 10

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Future Projection - 2030 India’s Primary Energy expected to grow@ 2.5% (earlier @3.2%) Source: IEO 2009 11

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Oil Consumption India 4th largest consumer of oil : 135 MMT(3.4% of total) India’s Oil consumption increased at CAGR of 4% (1998-2008) against the world CAGR of 1.4 %. World oil consumption (2008) 3,928 MMT Source: BP statistical review 2009 Country-wise oil consumption MMTOE - 2008 12

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Energy outlook For India, sourcing of Energy remains a challenge….. with 16% of Global Population; 0.5% of world’s Petroleum Reserve; 10% of world’s coal reserves; 8-10% GDP growth target; & 4.5% CAGR (’97-07’) in energy demand 13

Growth of International E&P Industry : 

Growth of International E&P Industry 14

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Growth of International E&P Industry Phase - I Phase - II Phase - III Emergence and Growth of Private Sector Oil and Gas Companies Emergence and Growth of National Oil Companies Private Sector Consolidation 1860 – 1935 1935 - 1990 1990 – Till Date 15

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Phase – I [1860 – 1935] Emergence & Growth Private Sector Company Key Drivers Industrial Revolution which created demand for oil. Proliferation of US based companies due to easy land access. European companies able to exploit resources from colonial countries. This led to: Development of Human Resource, Development on technology front; Birth of major oil companies viz. Standard Oil Company, Burmah Oil, Sun Oil, Pennzoil, Royal Dutch Shell, Phillips, etc. 16

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Phase – II [1935 – 1990] Emergence and Growth of NOC Key Drivers Natural resource nationalization and reduction of state’s dependence on International Oil Companies Crude oil becoming a commodity of strategic importance Inability of local private sector to undertake commercially risky and technologically challenging E&P business Leading to: Formation of National Oil Companies (NOCs) – developing energy capabilities International Oil Companies (IOCs) loosing dominance in crude oil production. 17

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Phase – III [1990 – till date] Private Sector Consolidation Key Drivers Govt. decision for faster Exploration Blocks awarded to NOCs & private companies through competitive bidding process Consolidation of private companies for cost reduction Carrying cost of exploration rigs This led to: Major IOCs like BP, Total, Shell, Exxon, Mobil, Chevron etc. acquiring smaller oil companies like FINA, Elf, Gulf, AMOCO, ARCO, Superior, UnoCal etc. Merger of majors Mobil with Chevron and then TEXACO with Chevron. 18

Birth & Growth of Indian Petroleum Industry : 

Birth & Growth of Indian Petroleum Industry 19

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20 Growth of E&P Industry Phase - I Phase - II Phase - III Birth and Pre-Independence era Emergence and Growth of National Oil Companies Opening up of Hydrocarbon Sector 1889 – 1947 1947 - 1990 1990 – Till Date

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21 Commercial discovery of crude oil made in 1889. Thereafter systematic drilling began in 1891. A small refinery built in Margherita in 1893 – shifted to Digboi in 1901. Industry showed modest growth over the next 50 years. On the eve of independence, two domestic oil producers were operating in the Country Assam Oil Company in the Northeast Attock Oil Company in the Northwest (Present-day Pakistan). Phase – I [1889-1947] Birth and Pre-Independence era

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22 Creation of Oil and Natural Gas Commission Oil & Natural Gas Directorate upgraded to Oil and Natural Gas Commission in 1956. Commission converted into a statutory body by Act of Parliament in 1959 for planning, promoting, organising and implementation of programme for development of Petroleum resources in India. Hydrocarbon India Ltd. (HIL), precursor to ONGC Videsh Ltd., formed in 1965. Oil and Natural Gas Commission becomes Oil and Natural Gas Corporation on 1st Feb.’1994. In 1997 ONGC is declared as one of the “Navratna” PSU. ONGC becomes a “Maharatna” PSU in 2010. Emergence & Growth of National Oil Companies

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23 Oil and Natural Gas Directorate (the predecessor to ONGC) in 1955. Oil India Private Limited formed in 1959. In 1961, it became a joint venture company between the Indian Government and Burmah Oil Company Limited, UK. In 1981 it became a fully Govt. owned entity Creation of State owned refineries Indian Refineries Limited in 1958 Indian Oil Company Limited in 1959 Both merged to form Indian Oil Corporation in 1964 In 70s Petroleum Sector was largely nationalized as Govt. took over the operations of IBP, Esso, Caltex and Burma-Shell. Phase – II [1947 – 1990] Emergence & Growth of National Oil Companies 23

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24 The Nineties (90’s) saw the opening up of Petroleum Sector New Exploration Licensing Policy formulated by Govt. in 1997-98: To provide level playing field to Public and Private players, with the aim of giving impetus to exploration in India. Overwhelming response received for private and public players – both Indian and foreign. 100% FDI allowed in refinery sector in July, 2000. FDI limit increased from 26% to 49% in new refinery projects by PSUs in Jan.’08 Phase – III [1990 – till date] Opening of Hydrocarbon Sector

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25 Source: Planning Commission & TERI Data Book Growth of E&P Industry

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26 Source: Planning Commission & TERI Data Book Growth of E&P Industry

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27 Source: Planning Commission & TERI Data Book Growth of E&P Industry

India’s Current Scenario, Key Drivers & Thrust Areas for Future : 

India’s Current Scenario, Key Drivers & Thrust Areas for Future 28

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29 Current Scenario Exploration Post NELP exploration has picked-up VII rounds of bidding completed 256 blocks have been allocated Likely to attract an investment of US$ 10 billion 68 oil and gas discoveries made leading to reserve accretion of over 600 MMToE. NELP VIII recently completed. 36, out of the 70 blocks on offer, awarded.

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30 Current Scenario Oil & Gas Production Indigenous crude oil production in 2008-09 was: 33.506 MMT Indigenous gas production in 2008-09 was: 32.849 BCP Gas production started from KG Basin by RIL in Apr’09 Crude oil production started from Rajasthan by Cairn India in Aug.’09 Domestic production of oil & gas shall, therefore, enhance considerably from 2009-10 onwards. Refining Surplus installed capacity from 2001-02 onwards. Currently installed capacity is about 150 MMT and expected to increase by another 92 MMT during the XI Plan. Refinery throughput in 2008-09 was 160.772 MMT.

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31 Key Drivers Key drivers for Energy Growth Maintaining GDP Growth Imbalance in Supply and Demand Equation Growing Primary Energy Requirement

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32 Maintaining GDP Growth Average Economic Growth of 3.5% & 2% population growth during the first 45 years of independence – Witnessed doubling of GDP in these 45 years. During the next 9 years economy grew at 7% and population at 1.5% GDP double in 9 years. Country is on a steep growth curve and targeted growth is over 7% in the coming years. India is poised to become 3rd largest economy by the middle of this century.

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33 Growing Primary Energy Requirement 830 MMToe 433.3 MMToe Source: BP Statistical Review 2009 & IEA Outlook 2008

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34 Imbalance in Supply and Demand Equation Source: MOP&NG and TERI Energy Data Yearbook

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35 Key Thrust Area Exploration – out of 3.14 sq. Kms. 22% - moderate to well explored. 20% - poorly explored 44% - exploration just initiated 14% - still remaining unexplored. (Source: ICRA) Infrastructure and Development of New Finds Major finds made under NELP mostly in deep water and frontier Development of technology and Infrastructure for development of these finds will require massive capital infusion.

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36 Key Thrust Area Redevelopment of Brown Fields Most of the major producing fields are aged & mature. Require induction of technology for improved production and Recovery Factor. Require revamping of surface facilities – more investment with lesser returns from mature fields. Refining Sector Further capacity enhancement required to meet growing product demand. Technology up-gradation of existing refineries to meet future fuel norms.

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37 Key Thrust Area Pipeline Network Increase in pipeline coverage for gas and product transportation required. Infrastructural requirement for development of projected gas market. Development of City Gas Projects Development of Alternate Source of Energy Development of alternate sources of energy like CBM, UCG and Gas Hydrate in primitive stage. Capital investment required on the technology and development front.

ONGC – an Indian MNC : 

ONGC – an Indian MNC 38

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40 * 38th project is Sudan’s 741 km long completed Pipeline ONGC- E&P Global Footprints 40 OVL Production (O+OEG) : 8.776 MMToe

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41 ONGC: Domestic Operations 41

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ONGC Group produces ~ 1.2 million barrels per day of oil Plus Oil- equivalent Gas, from a balance reserve of > 11 billion barrels O+OEG: refines about 12.5 MMTPA ( >270, 000 bopd): extracts about 3 MMTPA of Value Added Products Sells Crude Oil, Gas Value Added Products (LPG, Naphtha, Ethane-Propane, SKO, HSD, ATF etc.) with a turnover of USD 23.83 billion (2008-09) 42

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E&P Infrastructure State-of-the-art exploration facilities 28 Seismic Crews 79 Drilling rigs 78 Work over rigs 108 Well Stimulation Units Globally comparable Production & Transportation facilities 240 Onshore installations 194 offshore installations 22,000 + Kms. of Pipelines 30 Offshore Supply Vessels 43

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Journey - Oil Production Onshore Offshore ONGC Since Inception 44

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Gas Production Trend Since Inception ONGC Offshore Onshore 45

Exploration and Production Cycle : 

Exploration and Production Cycle 46

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Phases of Field development 47

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Most of the easy oil has been found. As we move to harsher environmental conditions i.e. deeper into the sea/ocean and undeveloped areas in search of more oil & gas we are faced with a myriad of technical challenges from drilling to abandonment. New Finds and Production 48

New Finds and Production : 

New Finds and Production Finding new oil In harsh environment – Deep Sea (Offshore) Finding cost very high Developing deep sea fields–cost higher & time consuming Big new field in Onshore For putting the find to producing Asset on fast track Enhance production from the existing matured & Ageing fields through Increasing Recovery Factor of existing fields Monetization of idle Assets Optimization of flowing wells Revamping of Ageing Installations Achieving Zero Flaring of Gas 49

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International Scenario More than 40,000 oil and gas fields discovered (Onshore & Offshore) 94% of the oil is coming from 1500 fields only. Mature fields contribute 70% of total world crude oil production. Average Oil Recovery Factor: US reservoirs – 32% (DOE, USA May 2002) Norwegian Continental Shelf – 44% (Norwegian Petroleum Directorate) Oman recovery factor varies from 5% to 70% with an average of about 30%. (Observation of PDO) Iran recovery factor increased from 28% to 35%. (Wood Mackenzie, Jan.’04) A reasonable estimate of RF around the world is 37% (OFR) 50

So… The major thrust has to be on management of Existing matured and Ageing fields… : 

So… The major thrust has to be on management of Existing matured and Ageing fields… 51

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International Scenario Matured and aging fields The stage at which production levels begin to decline. Smaller quantities of reserves to produce with time. Frequent Servicing such as de-bottlenecking, work- over maintenance programmes. Field trials of innovative technologies are difficult to justify economically. Combating the spiral of creates a pressing need to monitor fields. Share of production from these older fields can only increase by arresting the production decline is one of the strategic arena for Global competition. 52

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International Scenario National Oil Companies (NOC) are the dominant players in the global oil and gas industry. 80% of the reserves are held by NOC. NOCs’ fields are typically onshore with current recoveries way below those of International Oil companies (IOCs’). NOC ~ 20% IOC > 60% The key to IOCs’ success is the Application of Technology. 53

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International Scenario Importance of Mature fields Most of the easy oil has been discovered, existing fields still remain the main source of production 30-35% of OIIP is recovered at the end of production period in usual practice . Increasing recovery factor by 1% gives 2 to 3 additional years worth of oil (about 10 Bbbl) to the world If this can be increased by 10% it will yield additional 200 – 300 Bbbl of oil translating into about 20 years of consumption. Residual reserves have thus become a focus area of development 54

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Decline in Pressure and Reserves High water-cut and sand/ scale problems Reserves become scattered and a single field begins behaving like multiple marginal fields Mostly scattered fields with old infrastructure Typical Challenges of a Mature field 55

Preparedness of ONGC : 

Preparedness of ONGC 56

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57 Sojourn in the Deep Sea – Drilling & Development Deep Sea drilling taken up in KG Basin and Kerala-Konkan Avg. estimated cost of drilling per well ~ Rs. 600 Crores Two Deep Sea Drilling rigs already deployed One more Deep Sea Drilling Rig to join in our Deep sea drilling campaign by end of 2010.

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58 Redevelopment of Fields through integrated schemes: Offshore fields viz. Mumbai High North & South; Onshore fields of Ankleshwar, Ahmedabad and Mehsana; Review of IOR/EOR schemes of Assam and Gujarat fields Review of implemented schemes; and Implementation of newer technology for EOR

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59 Development Drilling Stress on aggressive infill drilling. Drilling of hi-tech and side track wells: Impetus given to hi-tech drilling in Onshore Assets. 97 hi-tech wells drilled during the last 4 years. Non-flowing wells and in some cases abandoned wells liquidated by S/T More than 25 wells liquidated by S/T during last 3 years.

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60 Additional Field Development Fast track additional development of fields viz. Padra, Akhuljuni & Kathana fields of Cambay Sub-asset. Oil production has gone up from 300 TPD to over 500 TPD in 2 years’ time. Development of new finds: All new finds having oil potential were immediately put on production. 48 of 70 new finds have been put on production. Cumulative oil and gas gain (2002-09) has been 0.738 MMT and 265 MMSCM respectively. Development plan for new finds executed viz. Laiplinggaon of Assam and Gopavaram of Rajahmundry.

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Bio-remediation of 49641 Tonnes of soil soaked with oil carried out by application of Oilzapper technology – at Mehsana Asset in Gujarat Proposed for extension to other fields also. Environmental Initiatives Before After 61

ONGC is thus committed & prepared to deliver through its perseverance, technological excellence and perceived initiatives toIndia’s Energy Security : 

ONGC is thus committed & prepared to deliver through its perseverance, technological excellence and perceived initiatives toIndia’s Energy Security 62

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Thank You 63

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Higher level hi-tech wells 7” Liner-900 Setting Whipstock Removal of Whipstock Single layer Horizontal well Packer Prod. Casing Suggestions Bare foot completion planned for Kalol wells Multilateral / branched lateral wells can be drilled with same inputs 2nd level ML wells can be planned for simultaneous production from different two layers 7” retrievable whipstock is required (cost : Rs. 22 lakhs) Multi Lateral Well Branched Multi Lateral Well Dual Layer Multi Lateral Well 600 850 1080 1310 1595 Kalol Tara- pur Baba- guru Post Kand Kand K-II K-III K-IV K-V K-VI+VII K-IX+X L-XI K-XII

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13-3/8” 9-5/8” 5-1/2” Ultra Short Radius Well is made horizontal in 8m TVD Casing is section milled Cement plug is placed for S/T Curved section is drilled with an assembly The assembly is changed to drill maximum 200m drain hole Short Radius Well is made horizontal in 20m TVD Permanent whipstock is set at desired point window is cut and drain hole is drilled with short radius drain hole drilling tool 5-1/2” 9-5/8” USRDH SRDH High Tech Drilling Schematic of USRDH & SRDH Well Back