Hindustan Oil set to turn a discovered small field success story

At a time when the government is rolling out the red carpet for investors under the third round of discovered small field (DSF-III) auctions, Chennai-based Hindustan Oil Exploration Company (HOEC) has claimed that based on the latest estimates, B80 block — that it won during the first round of DSF — has seen a tenfold rise in oil and gas reserves.
 
The company is expected to start production from the block during the third quarter of the current financial year.
 
With B80 in place, total production by the company is expected to increase from 2,300 barrels of oil equivalent per day (boepd) to 7,000 boepd.
 
This is at a time when the majority of players, who won blocks under the DSF, are struggling to start production.
 
A total of 54 contract areas were awarded in the first two rounds of DSF, out of which the DGH has received field development plans for 29 areas. 

“We are seeing a multifold rise in the reserves based on the latest estimates. The pre-bid expected volume was around 1.8 million metric tonnne (MT) of oil and 0.25 million metric tonne of oil equivalent (MMTOE) gas. This has increased to 18.6 MT and 3.1 MMTOE now,” said P Elango, managing director (MD) of the company. According to the company, with the rise in estimates, the value of reserves also increased from $35 million pre-bid to $365 million now (at a price of $65 a barrel).
 
The company is investing $40 million in the block for two wells, in addition to four wells already drilled by the Oil and Natural Gas Corporation (ONGC). “The reason for such increase is on account of post-development drilling, whereby HOEC revised the B80 three- dimensional geological model by applying all the data from the field, which include all the six wells,” he added. B80 block in the Arabian Sea, off the Mumbai coast, had its first discovery by ONGC in 1987.
 
HOEC won the block in September 2017, when the government came out with small field auctions to attract new investors to the sector. These were small oil and gas discoveries made by public sector undertaking oil companies, ONGC and Oil India (OIL). But these state-run companies could not develop it due to various reasons, including unviability, small size and restrictive fiscal regimes.
 
Though HOEC and Adbhoot Estates had equal stake in B80 initially, the Chennai-based company increased its stake to 60 per cent last year. The company had raised a Rs 150-crore loan during that time for the acquisition and other project development works.
 
The third round for which the government is scouting for investors includes 32 contract areas. These comprise 75 discoveries, spread over 9 sedimentary basins covering an area of about 13,685 square kilometres.
 
These blocks are expected to have a potential of approximately 232 million tonne. The government is set to conduct roadshows at overseas destinations like Perth, Singapore, Houston and London as well as domestic locations like New Delhi, Mumbai and Gandhi Nagar, said sources.