NATURAL GAS

BUSINESS
ASSIGNMENT-1

RISHAV SHRIVASTAVA

FEBRUARY 25, 2019

B.TECH APE-GAS (B-3), R820215092, 500045240
 NATURAL GAS BUSINESS
ASSIGNMENT-1
INDIA’S UNCONVENTIONAL GAS SECTOR
According to the BP Statistical Review 2016, India is the third-largest energy
consumer in the world after China and the United States. Further, India's energy
consumption (growth projected at 4.2% per year by BP Energy Outlook 2035)
is forecast to be the fastest among all major economies.
To meet its energy requirements at affordable prices while using cleaner fuels,
India has decided to reset its energy basket in a significant way, wherein the
role of natural gas would be significant. India made the decision to increase its
use of natural gas from 6.5% at present to 15% to push towards a gas-based
economy. This will accommodate its energy needs while addressing the issue
of rising greenhouse gas emissions by using more of the clean-burning fuel.

• SHALE GAS:
Earlier, the shale gas revolution in the US, together with the precarious
situation of India's domestic energy resources, prompted the government to
explore unconventional energy resources, such as shale gas, coal bed methane,
and gas hydrates in India.
To support India's effort to develop its own shale gas reserves, the US State
Department (DOS) signed a Memorandum of Undertaking (MoU) with India's
Ministry of Petroleum and Natural Gas (MoPNG) on Dec. 6, 2010.
In January 2011, Schlumberger made an initial gas-in-place estimate of 300 to
2,100 trillion cubic feet (tcf) under a shale gas pilot project for Oil and Natural
Gas Corporation Limited (ONGC) in the Damodar Valley basin. In April 2011,
the US Energy Information Administration assessed risked gas-in-place of 290
tcf with technically recoverable resource of 63 tcf, which was upgraded to 584
tcf in 2013 with additional estimates of shale oil at 87 billion barrels in four
basins, namely, the Cambay Onland, Damodar, Krishna Godavari Onland,
and Cauvery Onland.
In January 2012, the United States Geological Survey estimated 6.1 tcf of
technically recoverable shale gas in three basins, namely, Cambay, KG &
Cauvery. Further, while in 2013, ONGC put the shale gas estimates to 187.5 tcf
in five basins, namely, Cambay, KG, Cauvery, Ganga & Assam and Assam -
Arakan, Central Mine Planning and Design Institute estimated 45 tcf of gas in
six basins, namely, Jharia, Bokaro, North Karanpura, South Karanpura,
Raniganj, and Sohagpur.

• GAS HYDRATES:
The Ministry of Petroleum & Natural Gas and the Ministry of Earth Sciences,
Government of India formed the Indian gas-hydrates programme and entrusted
activities to various organizations like Oil and Natural Gas Commission
(ONGC), Oil India Limited (OIL), Gas Authority of India Limited (GAIL),
Directorate General of Hydrocarbons, (DGH), Reliance and national
institutes like National Geophysical Research Institute (NGRI), National
Institute of Oceanography (NIO) and others, to review the existing datasets
for the exploration of gas-hydrates followed by technology development for
producing gas from Gas hydrates.

Using available seafloor temperature and geothermal gradient data, NGRI has
prepared the gas hydrates stability thickness map of India that serves as a
depth window within which features of BSR can be looked into for detecting
gas-hydrates. This map is similar to the maps prepared by NIO and ONGC
independently. Analysis of available seismic data shows BSRs in the Saurashtra
and Kerala-Konkan (K-K) Basins in the western offshore, and the Krishna-
Godavari (K-G) K-G and Mahanadi Basins and the Andaman region in the
eastern offshore.

Gas production from KG-D6 began on 1st April 2009. The current gas
production from the KG-D6 field is about 53 MMSCMD, of which about 45
MMSCMD is being produced from D1 and D3 fields and about 8 MMSCMD from
MA field. The approved Field Development Plan of D1 and D3 envisages gas
production to the tune of 80 MMSCMD from the third year of commercial
production, i.e. with effect from 2012-13.

• COAL BED METHANE:

The estimated potential of CBM in the country is in the range of 1,400–2,600
billion cubic meters (1,260–2,340 Mtoe). The Government has formulated a
CBM policy in 1997 and development of CBM is a concurrent responsibility of
Ministry of Petroleum and Natural Gas and Ministry of Coal.
Total CBM resources in 26 blocks awarded so far are estimated at 1374 BCM.
In the fourth round, the Government of India has awarded 7 CBM blocks in the
States of Assam, Chhattisgarh, Jharkhand, Madhya Pradesh, Orissa, and
Tamil Nadu and signed 33 contracts. Commercial production of CBM in India
has now become a reality with current CBM gas production at about one lakh
cu. mper day.
The Directorate of Hydrocarbon has estimated the country's resource base for
Coal Bed Methane to be between 1400 BCM (1260 mtoe) to 2600 BCM (2540
mtoe). To give impetus to exploration and production, Government has
formulated CBM policy. Based on two rounds of bidding under the CBM policy,
contracts have been signed with PSUs/private companies for the exploration
and production of CBM in 13 blocks. An additional three blocks have been taken
up for development on the basis of nomination.
The estimated investment in these blocks is about 560 crore and estimated
CBM resources are to the tune of 860 BCM (765 mtoe). Commercial
production of CBM from some of these blocks is expected to start in 2-3 years.
Thus, at the very low current rate of production, the proved gas and CBM
together can last for some 50 years.
 CASE-STUDY-1
HVJ GAS PIPELINE

1. HISTORY:
HVJ an abbreviation for Hazira-Vijaipur-Jagdishpur (also known as HBJ where
B stands for Bijeypur, another name of Vijaipur) is India's first cross
country gas pipeline. The project was started in 1986 after the incorporation
of GAIL (India) Limited to supply gas to the fertilizer plants located in the state
of Uttar Pradesh. The first phase of the project consisting of non-branched
1,750 km grid was commissioned in 1997. Later on the system was expanded
with additional branches to supply gas for industrial and domestic use in the
states of Rajasthan, Haryana and NCT, which increased the total grid length to
3,474 km.
In year 1998, newly established Indraprastha Gas Limited took control of the
Delhi branch of the pipeline to set up a citywide gas grid.

The Hazira-Vijaipur-Jagdishpur gas pipeline network is the first cross-country

gas pipeline project. The 1,700 km long HVJ pipeline system was commissioned
in 1987-88. GAIL successfully commissioned 610 km Dahej-Vijaipur pipeline
project, increasing the length of HVJ pipeline to 3300 km. GAIL is developing a
520 km Dahej-Uran pipeline. The other pipeline projects of GAIL include 139
km Thulendi-Phulpur pipeline, 114 km Dadri-Panipat pipeline and 192 km
Vijaipur-Kota pipeline project.

2. CAPACITY:

This pipeline has been constructed by Gas Authority of India Limited (GAIL) to
transport gas. It is 1,750 km long and connects Hazira in Maharashtra to
Bijapur in M.P. and Jagdishpur in U.P. It carries 18 million cubic metres of gas
everyday to three power houses at Kawas (Gujarat), Anta (Rajasthan) and
Auraiya (U.P.) and to six fertilizer plants at Bijapur, Sawai Madhopur,
Jagdishpur, Shahjahanpur, Aonla and Babrala.

Each of the fertilizer plants has a capacity of producing 1,350 tonnes of

ammonia per day. The construction of this pipeline is a unique engineering
feat and has been completed at an estimated cost of over Rs. 1,700 crore. The
pipeline passes through 343.7 km long rocky area, 56.3 km long forest area,
besides crossing 29 railway crossings and 75 big and small rivers.

This is the world’s largest underground pipeline and has brought about a big
transformation in the economy of Gujarat, Madhya Pradesh, Rajasthan and
Uttar Pradesh. It has been extended upto Delhi so that enough gas is made
available to meet the growing demand of the capital city.

3. CUSTOMERS:

▪ Gas Rehabilitation and Expansion Project (GREP):

In 1998-99, the capacity of HVJ Pipeline was expanded to 33.4 MMSCMD under
the Gas Rehabilitation and Expansion Project (GREP) by construction of a loop
line of 505 km. from Vijaipur to Dadri and increasing compression capacity of
existing compressor stations and adding 2 more compressor stations at
Vaghodia and Khera.

▪ Pipelines in K.G Basin & Cauvery Basin:

GAIL is operating a Pipeline network of 830 km in K.G. Basin in the state of

Andhra Pradesh. This includes main grid pipelines like Tatipaka-Kakinada to
Nagarjuna Fertilizers crossing the country’s largest river crossings of Gautami
& Godavari rivers and Tatipaka-Narsapur-Kovvur pipeline. Other pipelines
include 204 km. pipeline to LANCO power project, Kakinada - BSES Pipeline to
supply gas to REL power plant, etc.
▪ Pipelines in North-East Region:

GAIL is also operating 69 km. regional pipelines in Assam and Tripura. The
pipelines existing in Assam supply gas to GAIL LPG plant and ASEB. In Tripura
the pipelines are connecting ONGC gas fields at Agartala dome, Rokhia and
Konaban. GAIL is also supplying natural gas to Tripura Natural Gas Company
Limited.

▪ Pipeline in Rajasthan:

GAIL laid the first pipeline in the country in desert area from Gamnewala up to
Ramgarh to supply gas to RSEB’s power plant. 66 km Dandewala - Gamnewala
– Ramgarh pipeline has been laid which supplies gas to RSEB.

▪ Pipelines in Gujarat:

Gujarat has huge resources of natural gas. GAIL has laid pipelines in North
Gujarat and South Gujarat regions to supply gas to consumers which include
power plants, fertilizer plants and other industrial units. In North Gujarat, GAIL
supplies gas to AEC, Ahmedabad, REL and other consumers through 145 km
pipeline network. In South Gujarat, GAIL operates 257 km pipeline network in
Baroda region and 252 km in Bharuch region. Major customers include NTPC
Jhanore, GNFC Bharuch, GEB Dhuvaran, GEB Utran, etc. Re-gasified LNG is also
being supplied to consumers in the region through these pipelines.

▪ Pipelines in Maharashtra:

Around 125 km pipeline network from Ex-Uran terminal in Maharashtra is

being operated by GAIL to supply gas from Uran gas fields to consumers in
Mumbai region. Major consumers include RCF Thal, RCF Trombay, MGL, IPCL,
Ispat Industries, etc.
 CASE-STUDY-2
RUSSIAN CLASSIFICATION OF RESERVES

The estimation of reserves of natural gas, gas condensate and crude oil can be
broken down into two components: (i) geological reserves, or the quantities of
natural gas, gas condensate and crude oil contained in the subsoil and (ii)
extractable reserves, or the portion of geological reserves whose extraction
from the subsoil as of the date the reserves are calculated is economically
efficient given market conditions and rational use of modern extraction
equipment and technologies and taking into account compliance with the
requirements of subsoil and environmental protection.
The Russian reserves system is based solely on the analysis of geological
attributes. Explored reserves are represented by categories A, B, and C1;
preliminary estimated reserves are represented by category C2; potential
resources are represented by category C3; and forecasted resources are
represented by categories D1 and D2. Natural gas reserves in categories A, B
and C1 are considered to be fully extractable. For reserves of oil and gas
condensate, a predicated coefficient of extraction is calculated based on
geological and technical factors.

• Category A- Reserves are calculated on the part of a deposit drilled in

accordance with an approved development project for the oil or natural gas
field. They represent reserves that have been analysed in sufficient detail to
define comprehensively the type, shape and size of the deposit; the level of
hydrocarbon saturation.

• Category B- Represents the reserves of a deposit (or portion thereof), the

oil or natural gas content of which has been determined on the basis of
commercial flows of oil or natural gas obtained in wells at various
hypsometric depths.
• Category C1- Represents the reserves of a deposit (or of a portion thereof)
whose oil or natural gas content has been determined on the basis of
commercial flows of oil or natural gas obtained in wells (with some of the
wells having been probed by a formation tester) and positive results of
geological and geophysical exploration of non-probed wells.

• Category C2- Reserves are preliminary estimated reserves of a deposit

calculated on the basis of geological and geophysical research of
unexplored sections of deposits adjoining sections of a field containing
reserves of higher categories and of untested deposits of explored fields.

• Category C3- Resources are prospective reserves prepared for the drilling
of (i) traps within the oil-and-gas bearing area, delineated by geological and
geophysical exploration methods tested for such area and (ii) the formation
of explored fields which have not yet been exposed by drilling.

• Category D1- Resources are calculated based on the results the region’s
geological, geophysical and geochemical research and by analogy with
explored fields within the region being evaluated.

• Category D2- Resources are calculated using assumed parameters on the

basis of general geological concepts and by analogy with other, better
studied regions with explored oil and natural gas fields.

▪ CASE FACTS:
• Russia is the world's largest producer of crude oil and the second-largest
producer of dry natural gas.
• Russia was the world's largest producer of crude oil including lease
condensate and the third-largest producer of petroleum and other liquids
(after Saudi Arabia and the United States) in 2014, with average liquids
production of 10.9 million barrels per day (barrels per day).
• Russia was the second-largest producer of dry natural gas in 2013 (second
to the United States), producing 22.1 trillion cubic feet (Trillion cubic
feet).
• Russia consumed 31.52 quadrillion British thermal units (Btu) of
energy in 2012, the majority of which was in the form of natural gas (51
percent). Petroleum and coal accounted for 22 percent and 18 percent,
respectively.

▪ On what grounds are the reserves classified?

The Russian reserves system is based solely on the analysis of geological
attributes. Explored reserves are represented by categories A, B, and C1;
preliminary estimated reserves are represented by category C2; potential
resources are represented by category C3; and forecasted resources are
represented by categories D1 and D2. Natural gas reserves in categories A, B
and C1 are considered to be fully extractable. For reserves of oil and gas
condensate, a predicated coefficient of extraction is calculated based on
geological and technical factors.

▪ Which is the best category of reserves?

In my opinion, category C1 is the best category because it represents the
reserves of a deposit (or of a portion thereof) whose oil or natural gas content
has been determined on the basis of commercial flows of oil or natural gas
obtained in wells (with some of the wells having been probed by a formation
tester) and positive results of geological and geophysical exploration of non-
probed wells.