Oilex strikes gas reserves over 1.5 TCF in Gujarat

Australia's Oilex Ltd today said it has made huge natural gas discovery in Gujarat that may hold over 1.5 Trillion cubic feet of recoverable reserves.

Industry estimates put the total resource base or inplace reserves in the Cambay basin discoveries near the town of Khambat, 160-km south of Ahmedabad, at between 20-30 Trillion cubic feet, almost equivalent to inplace reserves of Reliance Industries' eastern offshore KG-D6 fields.

However, KG-D6 fields have a higher recovery factor with almost 12 Tcf of gas likely to be produced over life of the field while in Oilex's case only 1.5 Tcf can be produced as the reservior is 'tight' with low permeability.

Oilex had drilled many wells on the Cambay Field and it today announced "a significant upgrade to its Reserves and Contingent Resources" based on evaluation by North American consultants NuTech Energy Alliance and Morning Star LLC.

In a press statement, Oilex said the Cambay Field may hold 853 billion cubic feet of Reserves Justified for Development plus another 720 bcf of Contingent Resources, totaling the recoverable reserves at 1.5 Tcf.

Oilex holds 45 per cent interest in the Cambay Field while Gujarat State Petroleum Corp (GSPC) holds the rest 55 per cent. The field was awarded to GSPC and Canada's Niko Resources in pre-New Exploration Licensing Policy (NELP) rounds in the 1990s and Oilex steped-in upon exit of Niko.

"This (reserve estimation) follows a nine month program of extensive technical studies on the Cambay Field 'tight' reservoirs using proprietary low permeability reservoir technologies derived from similar 'tight/shale gas' projects in North America," Oilex said.

Besides gas, the field also holds 31 million barrels of condensate.

"The estimates have not been endorsed by the Government of India or the (oil regulator) Directorate General of Hydrocarbons," it said.

Oilex said it will submit data next month for independent reserves certification in early 2011.

 "In its evaluation of the reserves and resources Oilex was advised by two North American companies - NuTech Energy Alliance, a leader in advanced petrophysical, geological and fracture stimulation solutions for 'tight' and shale gas reservoirs, and Morning Star LLC, a worldwide petroleum consulting group with expertise in reserve certification of 'tight' reservoir projects," the statement said.

"The company has renewed its focus on India and has made significant progress in unlocking the potential of the Cambay 'tight' Eocene reservoirs that extend over the 40,000 acre contract area," Oilex Managing Director Bruce McCarthy said.