Govt body opposes Bangora gas well drill proposal

FT ONLINE

A government expert body has opposed KrisEnergy proposal to dig Bangora-7 (B7) gas well, saying it is "unjustified and harmful" for the national interest.

The B7 well is adjacent to Srikail-4 well, where Bangladesh Petroleum Exploration and Production Company (BAPEX) is currently producing gas.

If KrisEnergy starts producing gas from B7 well, it may suck gas from the BAPEX well meaning that the country has to pay KrisEnergy Tk 250 for each mcf gas instead of Tk 100 that it is paying BAPEX for the same, a senior official of energy ministry said preferring anonymity.

KrisEnergy, a Singapore-based international energy firm, recently submitted a proposal to the government to dig B7 well.

Originally, Tullow Bangladesh Ltd (TBL) was given the permission to dig the B-7 well in 2014 and BAPEX was given the contract by TBL for the drilling. But due to a court injunction, the contract was cancelled.

After taking over Tullow operations in Bangladesh, Kris submitted the proposal for B7.

But the location of the proposed B7 well is not the same as that of the previous B7 well, officials said.

A BAPEX working group has opined the new B-7 well is just 195 meter away from the Srikail-4 well and if KrisEbergy starts digging B-7 well it will cause "serious harm" to the Srikail-4 well.

Petrobangla is extracting seven to eight mmcfd gas from this well daily and BAPEX has proposed conducting dual completion in this well to raise the gas production to 20 mmcfd.

"As drilling in B-7 well may cause serious threat to the Srikaile well 4, we feel that this proposal should not be approved," a senior official of the BAPEX said preferring anonymity.

There remains another serious issue. If KrisEnergy starts extracting gas from B-7 it may suck gas from Srikail 4 well due to the close proximity.

"This means the gas we are getting at a rate of Tk 100 per mcf will have to be purchased from KrisEnergy at a rate of Tk 250," the official said.

BAPEX suggests that instead of digging the B-7 well, KrisEnergy should dig B-5 well to extract gas from the field.

"In Tullow's proposal, they have shown that the primary targets are D and E sand. D sand is already depleting and the formation pressure is 1590 psi. Even if the well is drilled the pressure of the D sand will be less than this one. If any well is drilled below D sand, it can cause the loss of the field," BAPEX expert committee said in its report.

Commenting on the issue, energy expert Professor Badrul Imam said a vested quarter has long been active to harm the national interest in the energy sector.

"We should not allow such drilling, which will cause harm to our own interest. If drilling B7 affects Srikail 4 well, then it should not be allowed at all," he said.

KrisEnergy is now conducting operation in block 9, which covers 1,770 sq km over the eastern margin of the onshore Bengal Basin, approximately 50 km east of Dhaka. It contains the Bangora gas producing field and the Lalmai gas discovery. Bangora production is between 105 mmcfd and 110 mmcfd.

Kris bought the stakes of Tullow on the Bangladesh block at $ 42.35 million.

The sales and purchase agreement between KrisEnergy and Tullow Oil International Ltd was signed on April 8, 2013 and the transaction was given retrospective effect from January 1, 2013.

On December 17, 2013, Tullow Oil, the Irish company, officially handed over its stakes to Kris after getting approval from Petrobangla in November.

KrisEnergy signed a sales and purchase agreement to acquire a 30 per cent working interest in and operatorship of Block 9 in April 2013.