Energy ( Oil & Gas )

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Oil Gas and Natural Resources

Natural Gas and Oil Exploration

Natural Gas and Oil Exploration : National Petroleum Policy which came into force from July 1993 has already attracted foreign investment in oil and gas exploration and development. Five international oil companies have signed production sharing contracts for exploration and development of hydrocarbon. The five companies are :

1) Occidental Exploration of Bangladesh Ltd.

2) Occidental of Bangladesh

3)Cairn Energy PLC and Holland Sea Search Bangladesh

4)Rexwood Oakland

5) United Merridian International Corporation (UMIC)

OIL GAS AND NATURAL RESOURCES
Introduction

Indigenous energy resources consist of known reserves of natural gas, limited hydro-electric power and traditional fuels coming from fuelwood, crop residuals and animal dung. About 55 per cent of the country's overall energy supply is in the form of traditional fuels with the balance being met by natural gas (24 per cent), imported oil and coal (19 per cent) and hydro-electricity (2 per cent).

The present per-capita consumption of non-renewable energy resources in Bangladesh is about 64 Kilogram of Oil Equivalent (KGOE) which is one of the lowest in the world. Per-capita energy use in KGOE is 123 in Sri Lanka, 236 in India and 267 in Pakistan. Of the total non-renewable energy consumption, about 60 per cent is derived at present from indigenous resources and the rest is met from imported petroleum and coal. Moreover, the entire reserves of exploitable indigenous primary energy resources are located in the east zone, thereby resulting in a gap in energy supply between the east and west zones. Mining of newly found coal in the west zone is expected to start by the turn of the century which will help reduce the gap partially. Of the various natural resources available, natural gas in particular :

a. supplies primary commercial energy for electricity generation to accelerate the pace of agricultural and industrial development and reduces the kitchen drudgery at the level of individual households;  

b. helps in narrowing the deficit in the balance of payments by reducing import bill for oil, coal, etc.;

c. mobilises resources for the national exchequer; and

d. provides raw materials for the production of urea fertiliser and fuel for electricity generation.

The development of the oil and gas sector is vital for further strengthening of the national economy. Expansion of the energy sector since the 1980's is mainly attributed to increased natural gas production. Currently, natural gas accounts for about 70 per cent of the commercial energy consumption compared to about 35 per cent in 1980. The development of Bangladesh's natural gas resources has also contributed to the reduction in deforestation and to an increase in tax revenue for the government through the levies on gas sales. During 1985-1992, gas production increased at an average annual rate of about 10 per cent. It is estimated that minimum growth rate of about 10 per cent per annum in gas production will be required to meet the average GDP growth target of 7 per cent per annum during the Fifth Plan period. However, the existing gas infrastructure has limited capacity and needs to be expanded as per requirement. Additional investment is, therefore, required to enable Bangladesh to utilise its available gas reserves and to increase exploration activities for new gas and oil fields. For further long-term gas supply commitments, particularly for the planned power plants, the government is encouraging private sector participation in the oil and gas exploration activities through the Production Sharing Contract (PSC) with the International Oil Companies.

Potentials of Natural Resources 

Natural Gas:

One of the country's few mineral resources is natural gas, which is the basis for nitrogenous fertilizer production sufficient to meet the country's needs. Estimated national reserves range from 182 billion to 623 billion cubic meters. Deposits lie in more than a dozen different locations, six of which were producing in 1986. The country's gas production is concentrated in the northeastern part of the country . Reserves also have been discovered offshore, but extraction is not yet cost effective.

Total gas production was 2.9 billion cubic meters, with production rising at least 10 percent per year. All production was consumed domestically. About 40 percent of production was used for generating power, nearly 40 percent for producing fertilizer, and the rest divided among industrial, commercial, and household uses. Even by conservative estimates of reserves and consumption trends, the supply was expected to be adequate for Bangladesh's requirements through the year 2030.

Natural gas is currently the only indigenous non-renewable energy resource of the country which is being produced and consumed in significant quantities. Gas, the main source of commercial energy, plays an active role towards the growth of the economy. Currently, about 90 per cent of power generation is based on natural gas and the whole of the urea fertiliser requirements of the agricultural sector is met by using gas as feed stock. Natural gas output now accounts for about 70 per cent of the country's commercial energy supply. Current gas reserve (proven) has been estimated at about 22.90 TCF of which 13.60 TCF is considered as recoverable. So far 2.72 TCF has already been consumed and as of September 1996, the recoverable reserve was 10.87 TCF. New discovery in Sangu (offshore), Shahbazpur, Shaldanadi and other blocks may augment the gas reserve to several times the present reserve. This will enable generation of more electricity and setting up of new urea plants against the Bangladesh's share of the PSC's already signed. A brief description of the newly discovered gas fields is given below :

Saldanadi Gas Field :

Saldanadi gas field is situated along the India-Bangladesh border under Kashba Thana of Brahmanbaria district. The structure was selected for exploratory/appraisal drilling after evaluation of seismic data collected during 1991/92 field season by BAPEX. Accordingly, drilling was undertaken in 1996 and a prospective gas reserve was discovered at a depth of 2,511 metres. After reviewing the data, a preliminary estimate of gas reserve was given at 0.202 TCF.

Shahbazpur Gas Field : Shahbazpur field is located in the central part of Shahbazpur island of Bhola district. The location was selected for exploratory drilling after evaluation of seismic data collected during 1986/87 field season. Shahbazpur well was spudded in December, 1993 and in 4 months, a depth of 3,631 metres was reached. Due to encountering of over pressure, the well had to be abandoned after flowing gas through coil tubing from interval 3,201-3,210 metres. Subsequently, it was decided to drill a side-track hole. After drilling of side-tracking hole down to 3,342 metres, commercial gas flow was ensured. Analysis of results obtained from vertical and side-track drillings indicated an in-place reserve of 0.5138 TCF.

Shangu Gas Field : Bangladesh Government signed a Production Sharing Contract (PSC) with Cairn Energy and Holland Sea Search for oil and gas exploration in Chittagong and its adjacent coastal areas. The international company conducted a comprehensive seismic survey in the Bay of Bengal in 1995 and identified a prospective area of hydrocarbon reserve located 40 km away from Shangu estuary. The first well was drilled down to the depth of 3,500 metres and four gas zones were reached. Examination of two zones indicated the presence of significant amount of gas and Shangu was declared a gas field. Then the second well was drilled to estimate the gas reserve and a reserve of 0.848 TCF was determined and to exploit the gas reserve, development of the field was planned. To make it commercial, plan was prepared to drill additional production wells, construct platform and install pipelines and processing plants. After successful completion of all these activities, it is expected that the production of natural gas from this field will be possible from April,1998.

Patharia Oil and Gas Exploration Well :

Patharia area is located in the north-eastern part of Bangladesh under Baralekha Thana of Moulvibazar district. After evaluation of seismic data and gravity survey, the location was selected for exploratory drilling. Drilling of one exploratory well with Saudi assistance was planned during the Third Plan period. Patharia well was spudded in 1989. The well was designed to be drilled down to a depth of 5,000 metres. However, due to several changes in casing points and hole deviation, it could reach only down to 3,438 metres. Then the drilling was terminated for deterioration of casing due to frequent reaming, slow drilling rate and risk factor in continuation of drilling.

Oil :  

Exploration activities carried out so far could not discover any significant oil deposit. The only oil deposit so far discovered in the country is in Haripur which produced a total of about 0.65 million barrels of crude oil till 1994. The oil production has since ceased because of reduction of pressure and influx of water in the oil zone. Comprehensive exploration efforts need to be mounted in this field.

Coal :

Discovery of coal dates back to late fifties, when an exploratory oil well was drilled through coal beds in Bogra. Subsequent explorations resulted in the discovery of the Jamalgonj coal deposit at a depth of about 1,000 metres from the ground level and having an estimated reserve of more than 1,000 million tons of coal. Feasibility studies have indicated that the development of this deposit is not yet feasible under the prevailing international market price. However, with the increase in gas price, these deposits may become competitive. After evaluation of a detailed geological and geophysical survey, Geological Survey of Bangladesh (GSB) identified 13 locations in the region of greater Rangpur and Dinajpur districts as the prospective basins for coal exploration. Exploratory wells were drilled in 5 basins out of which high quality bituminous coal deposits were found in 3 basins. In addition, BHP, a foreign company, also discovered a coal reserve in one basin. In 1984/85, Geological Survey of Bangladesh located another coal deposit at Khalashpir (Pirgonj) of Rangpur district at a shallower depth (150 metres), with an estimated reserve of 450 million tons of coal. This deposit requires to be appraised in respect of its potential.

Besides, minable coal deposit was also discovered in Barapukuria area of Parbatipur, Dinajpur at a reasonably shallow depth (240 metres) with an estimated reserve of about 300 million tons. Based on this, a project for construction of an underground mine has been undertaken at an estimated investment of Tk. 8,873.60 million to produce an annual output of 1 million tons commencing from 2000/01. Recently, another coal deposit has been discovered by Geological Survey of Bangladesh in Dighirpara area of Dinajpur district covering an area of about 15 sq. km. As only one well has been drilled, the actual deposit of coal could not yet be determined.

The GSB has planned to conduct comprehensive exploration activities by the year 2000 in the following seven basins :

a. Badargonj-II (Rangpur)
b. Basudevpur (Rangpur)
c. Barapukuria-I (Dinajpur)
d. Barapukuria-II (Dinajpur)
e. Daudpur (Dinajpur)
f. Dongapara (Dinajpur)
g. Shamnagar (Dinajpur).

Peat :

Deposits of peat occur at shallow depths in different low lying areas of Bangladesh. According to the Geological Survey of Bangladesh, the reserve of dry peat is about 170 million tons. The major deposits are in greater districts of Faridpur (150 million tons), Khulna (8 million tons) and Sylhet (13 million tons). Peat requires drying before making briquettes for use as fuel. A pilot project for extraction of peat and making briquettes was implemented by Petrobangla, but the results were not encouraging and extraction was assessed as economically not viable. However, in future, this resource may be viable as and when prices of other fuels rise.

Hardrock and Limestone :

Hardrock was discovered by GSB in Madhyapara area of Dinajpur District in 1964 at a depth of 285 metres from surface. An agreement was signed with North Korea in 1993 for the opening of an underground hardrock mine with a target production of 1.6 million tons per annum. The hardrock mine is expected to come into operation by the year 2000/01. Madhyapara hardrock will be used for river training , heavy construction work, railway ballast, highway, etc. The granite slabs excavated from this mine can also be used as polished tiles and pavings. Presently these are imported.

Considerable import substitution and increased revenue earning may, therefore, be expected from this rock. Limestone has been found at Joypurhat and some other places of Sylhet district. The production of sub-surface limestone of Joypurhat is yet to materialise.

Petroleum  

Bangladesh holds unknown quantities of commercially exploitable reserves of petroleum, both on land and offshore. In December 1986, oil was discovered in the Haripur gas field, south of the city of Sylhet, in northeastern Bangladesh. Lucky Well Number Seven promptly went into production at the rate of several hundred barrels per day, the first commercial oil production in Bangladesh. The crude was shipped by rail to the Eastern Refinery in Chittagong, where it was combined with other lighter imported crude oil for refining. The Eastern Refinery had been operating at just 66 percent of capacity and processing 34,000 barrels of crude per day. The domestic addition did not in itself have much of an impact on energy use in Bangladesh, but it was a beginning that fed hopes for further development. In the late 1990s, the Bangladesh Oil, Gas, and Minerals Corporation was carrying on further test drilling in western Bangladesh as well as in the vicinity of the successful Haripur strike. The government formed a high-level committee under the minister of energy and mineral resources to formulate recommendations for stimulating oil exploration and extraction in Bangladesh. In 1997 the U.S.A. signed protocol to provide assistance for oil exploration, a broadening of its traditional cooperation in the field of power generation, transmission, and distribution.