Mari seeks early production from Bannu field | The Express Tribune


ISLAMABAD:

Mari Petroleum Company Limited (MPCL) is asking the government for permission to start early oil and gas production from the Bannu West field in North Waziristan.

Officials say the Bannu West field contains the largest hydrocarbon reserves in the country. “Mari Petroleum had explored one well and final estimates would be received following the discovery of oil and gas in the remaining wells,” officials said.

Sui Northern Gas Pipelines Limited (SNGPL) is to get an allocation of 40mmcfd of gas from this field due to early production to meet gas-starved Punjab demand.

Sources have told The Express Tribune that MPCL is likely to start gas production early from the Bannu West field to add 40 million cubic feet per day to the national grid.

Punjab has been the biggest consumer of gas despite having the lowest production compared to other provinces. Currently, it also consumes imported gas in different sectors and even domestic consumers use it.

An Export License (EL) of Bannu West Block was granted on April 27, 2005 to MPCL in accordance with Petroleum Policy 2001 and Pakistan Petroleum Policy (Exploration and Production) 2001. MPCL has so far acquired 105 km 2D linear and 832 kilometers of 3D seismic data. Based on the processing and interpretation of these data, MPCL drilled an exploration well named Bannu West-1 and made a gas discovery in the Lockhart and Hangu formations, which opened up the new potential of exploration in the plateau of Kohat.

The oil division had received an application from MPCL for the “early production” clearance to evaluate the said discovery in the Bannu West-1 exploration well drilled in the Bannu West block.

Rule 20(1) of the Pakistan Petroleum (Exploration and Production) Rules, 2001 (Schedule 111) states that “Subject to the provisions of these rules, the license entitles the holder to the exclusive right to undertake, in the area of licence, all activities related to reconnaissance and exploration, including oil drilling”.

According to the rules, the “licensee shall not be permitted to extract oil from discoveries other than through testing and early production, as the government may permit upon written request submitted by the licensee. ‘a licence, provided however that in no event such testing or early production shall result in loss of government revenue’.

Early production from the well is a technical requirement and common industry practice is to evaluate the oil/gas discovery to establish the extent of the reservoir and to evaluate the performance of the reservoir to declare the commerciality of said discovery.

Petroleum division officials said the company’s request for “early production” from the Bannu West-1 discovery is rational and consistent with applicable petroleum policy and rules.

In addition, the case regarding the request for “early production” was considered and found admissible, therefore, the oil division had proposed to the cabinet to allow MPCL to make “early production” for 24 months – the beginning of the Production will be subject to the condition that MPCL will submit the Statement of Commerciality (DOC) and Field Development Plan (FDP) on the Bannu West-1 discovery prior to the expiration of the permitted “early production” period.

The exploration under production test arrangement would be accounted for in the payment of the production bonus. The company must also have fulfilled all other legal obligations such as rentals, training and social protection in accordance with the applicable rules.

Published in L’Express Tribune, September 11e2022.

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