Hindustan Oil to start commercial production from Mumbai block by December

Chennai-based Hindustan Oil Exploration Company (HOEC) will start commercial production from its discovered small field (DSF) block in Mumbai by December. The company successfully drilled its first well in the block earlier this month and will become the first to start production of crude oil under the DSF auction rounds.

“Our focus is on monetising the discovered resources. We expect to start production in B-80 (the block) by December. The overall production is expected to double once discovered field production starts,” said P Elango, managing dirtector of the company. Drilling of a second well is expected to be completed by April.

The production from discovered field comes at a time when several blocks under the first and second rounds of DSF are stuck. The field development plan for B-80 consists of drilling two wells to produce oil and gas.

HOEC bagged the block under the DSF Bid Round 2016, when 22 companies were given 31 contract areas. It saw 15 new entrants in the sector.

Earlier, HOEC was reported to have been in talks with Oil and Natural Gas Corporation (ONGC) for sharing the state-run major’s pipeline infrastructure for evacuation of oil and gas from the block. The plan was to transport gas to ONGC’s Hazira plant and oil to its Uran plant.

HOEC holds 50 per cent participating interest in the block, along with Adbhoot Estates. 

The companies had reportedly lined up an investment of $60 million for the block. DSF auctions were done under the Hydrocarbon Exploration & Licensing Policy (HELP) regime that replaced the New Exploration and Licensing Policy. During the second round of DSF, 25 contract areas were awarded.

The company is targeting a doubling of its net production to around 5,000 barrels of oil equivalent per day (boepd) by the second half of 2020, from 3,233 boepd reported at the end of the third quarter of the current financial year. 

The production from its Dirok field in Assam was curtailed last year because of agitations and partial shutdown of major consumers like Brahmaputra Valley Fertilizer Corporation (BVFCL). There was a major explosion at BVFCL’s ammonia-urea plant at Namrup in January that affected the offtake from Dirok.

“Dirok production was affected by the local agitation in Assam, because of which we had to shut down our field. After that, offtake has been lower than what was before the agitation. Besides, restoration work after the BVFCL fire incident was slow,” Elango added. The company’s production has now touched 70 per cent of its capacity in Assam and is likely to touch 100 per cent next month.