The website carries here, for reference purposes, the latest snapshot of India's oil and gas data prepared by the PPAC. The following details are carried in the document which can serve as a ready reckoner:
8Import/Export of Crude Oil and Petroleum Products
8Production of Petroleum Products
8Major Petroleum Products Pipelines in India
8Consumption of Petroleum Products, Petroleum Products Demand and GDP, Diesel Consumption by sectors
8Number of LPG Distributors of the PSUs
8Element wise explanation of Price Build up of Domestic LPG
8Selling Price of Diesel for Bulk Consumers in Metros
8Weightage of Petroleum Products in Wholesale price index (WPI) Impact of Increase in Retail Selling 8Price of Major Petroleum Products on Inflation
8Demand Projections of Petroleum Products for 13th Five Year Plan
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In what is expected to come a massive blow to Mahanagar Gas Ltd MGL), the PNGRB has quashed a complaint lodged by the CGD entity for declaring the transportation tariff charged by ONGC for supply of gas through the Uran-Trombay gas pipeline.
8MGL had argued that ONGC did not have to locus standi to charge a transportation tariff as it was a dedicated pipeline and had been in existence for a long time.
8ONGC had billed GAIL a total of Rs 174 crore in pending tariff payments.
8GAIL in turn raised a demand for Rs 74 crore on MGL because a large portion of the gas ferried in this pipeline went to MGL.
8The regulator has held that ONGC was the authorized entity operating the pipeline and it is entitled to charge a tariff rate for transportation of gas. And a tariff rate is applicable from the date of authorization of the pipeline.
8MGL will have the right to appeal and it is quitely likely that it will do do.
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Pertinently, neither OIL nor ONGC nor any other public sector company is barred from bidding for these marginal fields.
8In that sense, the marginal fields that are owned by these companies may go back again to them if they decide to bid aggressively for them.
8No one knows these fields better than the companies themselves.
8Therefore, the companies would know which fields to bid for and which not to.
8There is an argument that the public sector do did not work on these fields because the price was not remunerative. That is clearly not the case for crude fields but a case could be made out for gas fields, wherein the price elicited was not the market price.
8Now that the price has been freed, it is likely that the NOCs would like to bid aggresively for these fields now.
8The point however to note is that freeing the price of gas does not necessarily mean that the gas can fetch a high price. The ceiling will be definitely be the landed price of spot gas in the market.
8Additionally, these fields, being isolated, will face an evacuation problem.
8There are a few limitation that are going to hamstring some companies from bidding very aggressively. For one, the revenue share has to be ascertained beforehand, and that is difficult without actually doing real E&P work on the field. Based on available data handed over from a databank, it may not be possible for a bidder to figure out what the optimal government take should be.
8Revenue limitation on account of low crude and gas prices will mean there will be a reasonable amount of risk still involved in these fields.
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Kamarajar Port Ltd (KPL) has chalked out a plan to develop two more marine liquid terminals (MLT) as per phase III of its master plan at Kamarajar port.
8The combined capacity is pegged at 10 MTPA.
8Out of the two, one would be developed through the PPP mode and the other on a captive basis.
8One terminal will be built by IOCL on a captive basis and the refiner will be commencing its construction by April 2016, completing it by the end of September 2018.
8Whereas the construction work for the second terminal will begin by April 2017 and is scheduled to completed by end of September 2019.
8KPL has already awarded the construction, operation and maintenance of the marine liquid terminal (MLT) to Ennore Tank Terminals Pvt. Ltd on a 30 years build, operate and transfer (BOT) license.
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ONGC's CY-ONN-2002/2 field in Puducherry is expected to being producing gas from 2016-
8Output in the initial two years is going to be low, at 14,000 and 39,000 cubic meters a day (CMD in 2016-17 and 20167-18.
8But then output goes up to 0.25 mmscmd in 2018-19 and then reaches 0.8 mmscmd in 2020-21.
8This is indeed a significant enough output.
8Production begins to come down thereafter, albeit slowly.
8Output comes down to around 0.64 mmscmd in 2027-28
8Gas production projection given for 2032-33 is 0.178 mmscmd.
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The PNGRB had issued an order today where it reiterated the encashment of 25% of the Performance Bond Guarantee (PBG) for GAIL's inability to complete financial closure on a pipeline project despite the fact that 42 months had gone by.
8This is a lot of money by any yardstick; The penalty was Rs five crore on a PBG of Rs 20 crore.
8As usual GAIL behaved like the spoilt child and refused to abide by the directions of the PNGRB and ran to the Delhi High Court for a stay order.
8The court however refused to play ball and gave GAIL one week to convince the PNGRB why the fine should not be imposed.
8Eventually, the GAIL brass headed by a director and two executive directors turned up to plead before the Board for a repreive.
8Smelling sweet revenge, the Board decided to stick to its decision.
8What is more GAIL was told to ensure that the PBG be reinstated to the Rs 20 crore before forward.
8Comment: The PNGRB's orders must also be more clear. Though the fine has been imposed, the project itself finds no mention. Then again, it talks of a September 30 order that imposed the fine in the first place but the order itself has not been uploaded. Someone in PNGRB is goofing up and he must be hauled up and told to do his job.
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The United Arab Emirates (UAE) and India, one of the world’s fastest-growing economies and a large petroleum importer, are looking to expand their total trade by a considerable 60 per cent over the next five years.
8According to UAE official, it is looking to invest around $75 billion in India and establish an infrastructure investment fund to support India.
8UAE has also put forward its intentions to help India fill its strategic petroleum reserves, which India has already started in Visakhapatnam, with a capacity of 9.75 million barrels.
8India is also planning to commission two more sites later this year, taking the total capacity to 38.85 million barrels.
8In order to scale up its petroleum reserves, in second stage India will be aiming to add another 91.63 million barrel to its strategic petroleum reserves.
8In the last financial year, India imported 320,000 barrel per day of crude oil which is 8.5 per cent of India’s total imports.
8The relation between India and UAE is likely to get stronger in the years ahead.
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ONGC is planning to drill another 72 development wells in its Rajamundary asset located in Andhra Pradesh.
8The initial cost of project is pegged at Rs. 792 crore.
8Out of these 72 wells, 48 wells are proposed in the East Godavari district, 12 in the West Godavari district and another 12 wells in the Krishna district.
8The wells will enhance oil and gas production from existing reservoirs by raising the recovery factor.
8The locations are planned to be taken up for drilling are in the Godavari onland and West Godavari PML blocks.
8The drilling activity will take up 2 to 3 months for each well.
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Cairn India is looking for a pipeline repair contractor for its crude pipeline that runs from its block at Barmer, Rajasthan tothe coastal terminal facility in Gujarat.
8The pipeline network is made up a main 24” underground and continuously heated insulated crude pipeline running through a length of 670 km along with 24” and 10” spur-lines, an an 8” Gas (fuel) pipeline.
8The transportation facility of pipeline is approx. 1,75,000 barrels of crude oil per day
8The brief scope of work under the repair contract of pipeline is as follows:
8Attend any emergency or planned repairs on the pipelines through weld repair sleeve and leak repair clamp
8Supply of specialized hot tapping and stopple equipment on hire or callout basis, complete with all accessories suitable for 24”, 10” & 8” pipeline.
8Supply of specialized manpower on call out basis for carrying out repair Jobs and that includes hot tap specialist, welders, fitters, NDT inspectors etc.
8Supply of general equipment on call out basis for carrying out repair Jobs- tools/ tackles, welding machines etc.
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India has seen a net $380 billion FDI inflow from April, 2000 to June, 2015.
8About 17% of this money is in equity inflows, which is hot money really.
Sectors such as construction, computer software and hardware, telecommunication, automobiles make up 9%, 7%, 7%, and 5% respectively of the total FDI kitty..
8Other sectors like drugs and pharmaceuticals has seen an investment flow that makes up 5% of the total FDI into country whereas chemicals, power, trading witnessed 4% FDI inflow each.
8The flow of FDI in India from across the world has helped access funds at cheaper cost and acquire best in class technology, besides boosting employment generation.
8For reference purposes, the website carries here a detailed note on FDI in India and its implications.
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Looks like the RIL led consortium has decided to drop plans for any further exploration related activity in the D-6 block.
8The company had earlier accumulated stocks of equipment in the fond hope of furthering its E&P work, both to sidetrack existing D-6 wells and production work to get its discoveries going.
8But clearly all these plans have been shelved.
8It does not make sense to get into production mode for its discoveries because at the current price of gas, it does not make economic sense.
8Assuming that the price of equipment and services have fallen, breakeven costs will still be higher than the current price or the likely price in the next one year or more.
8According to RIL sources, the current break even price for discoveries is around $7/mmbtu.
8This price is way too high compared to the current gas price.
8A premium on the price was expected for deepwater discoveries from the government but that too has also been kept in cold storage.
8Then again it is not known whether the premium will be available for RIL's discoveries or not as the cut off point for being eligible for the premium excludes these discoveries as of now.
8On top of all this, there is likely to be a demand for around Rs 8000 to Rs 9000 crore for gas that has been taken from the adjacent ONGC block.
8All of this makes the D-6 block a losing proposition for its owners.
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As the demand for Residual Fuel OIl declines in global market, a lot is expected to change in the way refineries.
8Refineries will have to upgrade and convert residual material to lighter, cleaner products. And that is going to cost money.
8Health and environmental concerns related to the high sulfur content in RFO have led to new policies and regulations that have significantly lowered expectations for future RFO use.
8RFO contains a large amount of contaminants, including sulfur, nitrogen, and heavy metals. Because of its high viscosity, RFO is either blended with lighter streams or heated to ensure that it can be pumped.
8Throughout the world, RFO is used in many sectors, including marine transportation, power generation, commercial furnaces and boilers, and various industrial processes.
8RFO plays an important role in the global liquids fuel market, as its price is normally below that of other liquid fuels.
8Large reductions in RFO demand will likely come from decreased use of RFO for power generation and space heating.
8In the power sector, the cost of pollution control, maintenance, and RFO heating often offset the lower cost of RFO when compared to natural gas and other more expensive fuels.
8Consequently, power sector demand for RFO, especially in industrialized countries, is expected to decrease.
8However, RFO will serve as a transitional fuel in the power sector of developing countries such as India that may be more sensitive to price and less sensitive to environmental and health implications.
8Some marine transportation operators are considering the use of LNG as an alternate fuel for ships operating along routes where LNG is available.
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Gujarat State Petroleum Corporation Ltd. (GSPC) has planned to conduct a public hearing on the proposed modification of its Early Production Station ( EPS ) in Tarapur, Gujarat on 30th Oct, 2015.
8The project is being undertaken to increase the overall production of the field by connecting additional wells to the existing Tarapur EPS.
8Hence, the facility is required to be modified for managing the additional production from the new wells.
8Currently only three wells are connected to the station, after modification additional 12 wells will be connected.
8After the proposed modification a total of 4 separators will be installed, each will be handling 1500 bopd of oil and 2000 meter per cube per hour of gas in the station.
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While its Cambay and Ravva fields turned in a stellar performance in Q-2, 2015-16, the overall average gross production for H1 FY2016 stood at 207,538 boepd, which is just a 1% year-on-year rise.
8So that wasn't really much of an increase but Cairn claims that it is in line with estimates
8The half yearly performance was much lower on a YoY basis in Rajasthan and Cambay.
8In Rajasthan, H-1 YoY output went down 2% (though Q2 output showed a 3% jump to 168,126 boepd, primarily driven by better inline reservoir performance in the Mangala field in Rahasthan), while Cambay went down by 6%.
8The total gross output in H-1 went up solely on account of a sharp 23% jump in production posed by the Ravva field.
8So is the Rajasthan block going to show a static or declining performance going ahead.
8Not so, says Cairn. This is on account of the fact that the polymer flooding exercise in its Rajasthan fields have only just began.
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India, the world fourth largest oil consumer, has to forge a stronger energy relationship with Russia, the world’s single largest exporter of energy for more than a decade.
8Western sanctions have played an important role in recalibrating Russia's global energy outlook.
It is looking increasingly east as both sanctions and a dramatic fall in crude and gas prices have hit Russia economically
8It is now clear that Russia would end up in a recession during 2015. The economy will contract and the forecast is that the recession will continue until 2016
8While China has been able to cash in on Russia's vulnerability by striking a lucrative gas deal, India is still to make adequate efforts in this direction.
8This is despite the fact that India has strong ties with Russia.
8Both the Indian government and companies such as OVL will have to work hard to reap the energy dividend from Russia.
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The state of the global E&P market can be witnessed from the lackluster performance of the latest Brazilian auction for E&P blocks. Most of blocks went unsold.
8Brazalian national oil company Petrobras sat out the oil licensing round and most multinationals stayed out too.
8The onland blocks were taken over by local startups and mid-sized companies which are likely to use political clout to wriggle out of work programme commitments should the going get difficult.
8The auction took place amid a slump in crude prices and a management crisis as Petrobras, the country’s dominant producer, as it grapples with cash constraints and allegations of under-the-table payments.
8The poor response is despite the fact that Brazil is one of the world's most hydrocarbon rich countries but will the situation be different in India should an auction happen today?
8The answer is both a "yes" and a "no".
8Private companies are likely to stay away as the new model will make it tougher for them to decide on a revenue sharing plan when prices are down and the geology is uncertain.
8Foreign companies are likely to stay out completely as they cut investment budgets in keeping with low prices and lower returns.
8There are unlikely to be any private sector bids for Indian offshore blocks at this point in time, particularly when operators are unable to tap even discovered reserves given the lopsided gas pricing policy.
8But the public sector may be called upon by the government to bid for some uneconomical blocks so as to ensure that the auction is a success.
8However even at current low prices, there is likely to be significant competition for the small and marginal fields that are to be auctioned out. Private players are likely to make a beeline as the reserves in these fields have been mostly discovered, and the cost of recovery should be lower than current global prices. More E&P work will in probably raise the reserve estimates and bring in more money to the operator.
8But whether these fields will leave enough money in the hands of the operators under a new pricing paradigm after sharing revenue with the government remains a moot point.
ONGC and OIL are also likely to participate enthusiastically in the bidding round as the cost economics have turned positive. This is because market price is to be given for the gas that will be produced, and this may crowd out private players.
8There are the examples of investors in the the Ravva and Panna-Mukta-Tapti fields that private players will try and emulate. The owners of these fields have gone on to become unicorns, pocketing billions of dollars from the oil and gas business by first learning the business and then investing well.
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Cairn and its partner Oil and Natural Gas Corp (ONGC) have written to the government seeking relief on levy of cess citing the production sharing contract (PSC) for Rajasthan field which is silent on such a levy and does no specify any rate.
8Cairn had also initiated an arbitration against the levy but had to drop it as part of the conditions laid down by the government for approving takeover by Vedanta Group.
8The company has pointed out that a cess is applicable only on pre-NELP blocks. And even there the rate is fixed at Rs 900 per tonne on 26 blocks awarded prior to 1999. Only in case of Rajasthan is the cess levied at Rs 4,500 per tonne.
8While the cess had in the past been linked to prevailing crude oil prices when it has hiked, the same principle should be applied when rates have fallen to make a balance.
8On a rough estimation Cairn has completed 300 million barrels production in six years and has contributed over Rs 60,000 crore to the exchequer.
8The current cess leived has become a burden for producers after international oil prices halves around at 50 per barrel.
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Water based mud will be used during the drilling operation and drill cuttings generated along with waste mud, will be washed, and separated for reuse after improving their properties.
8Moreover, maximum amount of produced associated and non associated gas will be sold to local buyers and rest will be used internally in the indirect bath heater to heat the oil and for maintaining the mobility of crude oil for transportation.
8It is expected that waste oil, approx l000 liters per well, will be generated which will be handed over to authorized recyclers.
8For drilling rig operation and lighting purposes, power requirement of 662.5 KVA will be required for each well, which will be met through two DG sets.
8Electricity supply will be sourced from the GEB.
8At each EPS, 8-10 Liters/hr of diesel will be consumed in D.G set (82.5KVA) in case of power failure.
8Water requirement of 40 KLD per well site will be made available through nearest surface water source or through road tankers.
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ONGC which plans to drill 22 wells in Ramanthapuram district of Tamil Nadu will now no longer have to worry about the CRZ clearances.
8During the initial proposed locations, some of the wells were falling under ESZ and CRZ zones.
8However, after the revised geophysical and geological studies, relocations were made and no location was found to be falling within the CRZ and hence the company's CRZ application was withdrawn.
8However ONGC still awaits clearance from the wild life department.
8But as ONGC was asked to submit the EIA report within a period of two year starting from 2013 which is due to expire on 05.11.15 but due to delays, ONGC will now have to take up the case with the EAC Meeting of October 2015 for extension of the TOR for one more year.
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One option that is still under consideration is to take gas to Mangalore through a 286 km, 24-inch spur line that goes from Bidadi on the Dabhol-Bangalore pipeline along the ROU of HPCL's LPG pipeline all the way to Mangalore.
8Two other options were also investigated -- a 330 km line from Goa along the NH 17 highway or the coast or a 312 km spur line from Hivvinahadagalli -- but eventually the spur line from Bidadi on the Dabhol-Bangalore pipeline was found to be the most viable option.
8The point to note is that the capacity utilization of the Dabhol-Mangalore pipeline (DBPL) is currently only at 10% and it may take up to seven years to reach the 60% utilization rate against the design capacity of 16 mscmd.
8What is more, the envisaged power project at Bidadi is under litigation and may not eventually come through and that case the gas pressure at Bidadi should be sufficient to supply around 3 to 5 mmscmd of gas to Mangalore through a 24-inch spur line without installing an auxiliary compressor till the pipeline reaches the 75% utilization rate.
8The spur line to Mangalore is to go along the ROU of the proposed Mangalore-Hasan-Solur LPG pipeline that has been authorized by PNGRB for HPCL to build.
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GAIL has claimed a total capex of Rs. 233.54 crore for its its Narimanam and Kuthalam (NKM) sub-network from 2008-09 till the end of its economic life in 2024-25, whereas capex for Ramnad sub-sector (RMD)network was also claimed to be Rs. 29.31 crore of the years starting from 2008-09 to 2026-27.
The PNGRB however finds that the figures do not match up to what the verified data shows
8The operating expenses submitted by GAIL for the NKM sub-network is Rs. 299.23 crores from 2008-09 to 2024-25, and for the RMD sub-network, it is Rs. 324.98 crores,from 2008-09 to 2026-27..
8However, the total opex figures for Cauvery Basin Network from 2008-09 to 2013-14, as certified by the CA do not match with the figures given out by GAIL
8In addition to opex, GAIL has also considered 0.3% of the throughput as unaccounted gas loss, as a cost to be recovered through the transportation tariff, amounting to Rs. 41.37 crore from 2008-09 to 2024-25 for NKM network and Rs. 59.62 crore from 2008-09 to 2024-25 for the RMD network.
8PNGRB is not happy about factoring in the unaccounted gas loss into the tariff structure.
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It is time for all Indian companies to enter the renewable power sector in some form or other because the cost economics are looking more and more attractive.
8Renewable generation costs are forecast to continue decreasing.
8From 2010-15, indicative generation costs for new plants fell by an estimated 30% on average while that for new utility-scale solar PV declined by two-thirds.
8Over 2015-20, the IEA forecasts are that new onshore wind costs will decline by a further 10%.
8New utility-scale solar PV cost will decline by 25%.
8Importantly, high levels of incentives are no longer necessary for solar PV and onshore wind, but their economic attractiveness still strongly depends on the regulatory framework and market design.
8Meanwhile, some technologies (offshore wind, solar thermal electricity and some bioenergy) require continued policy support to bring them down the learning curve.
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BPCL has put together a ambitious plan to supply massive quantities of high pour point and high viscosity intermediates such as Low and High Sulphur Vaccum Residues (HSVR), Low Sulphur Heavy Stock (LSHS) and Vaccum Gas Oil (VGO) from its Mumbai refinery to the newly revamped and expanded Kochi refinery.
8The Mumbai refinery will transfer as much as 400 TMT of HSVR per annum to Kochi
8HSVR in fact is a blend of vacuum residues with 10 % to 15 % heavy kerosene which will be stored separately for transfer to Kochi
8The HSVR will be processed in the DCU in Kochi for more value added products.
8Then again, the total plant fuel requirement in Kochi subsequent to its expansion and revamp is estimated at 422 TMT of which around 120 TMT will be internally generated, leaving a gap of 322 TMT of low sulphur plant fuel to be imported by the refinery. This gap can be plugged by Mumbai refinery by supplying 170 to 200 TMT of LSHS to the Kochi refinery, with only the balance 122 TMT of low sulphur fuel oil left to be imported by Kochi.
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Everyone is now playing it safe with their pipelines after 22 people died a blast in GAIL network in the KG Basin.
8Even safer product pipelines are not up for scrutiny and testing.
8BPCL for example is planning the pressure testing of its product and PLT lines in West Bengal
8The testing will be carried out on the HSD pipeline from PLT Exchange Pit to HSD A/G Tanks inlet valves TK15, TK16, TK17 with product as per standard procedure at 10.5 Kg/ sq.cm.
The testing procedure will consist of following process:
8HSD and SKO pipelines can be tested with water or product. MS pipelines must be tested with water only. Pipeline quantity has to be sucked in BPCL tanks and it should be filled with water.
Pressure testing shall be carried out on segment wise pipelines.
8During 1st 15 minutes, 25% of max. test pressure 10.5 Kgf /cm2 i.e., 2.6 Kgf/cm2 pressure shall be applied to the pipeline testing. After 30 minutes from starting, pressure will be raised to 50% of max. test pressure during 3rd 15 minutes, i.e, up to 5.25 Kgf/ cm2 and it will be monitored during 4th 15 minutes.
8If everything is found normal, after 1 hour from starting, the pressure should be raised to 75% of max. test pressure during 5th 15 minutes, i.e, up to 7.69 Kgf/ cm2 and it will be monitored during 6th 15 minutes.
8In case no leakage is developed, after 1.5 hours from starting, the pressure will be raised to 100% of max. test pressure during 7th 15 minutes, i.e, up to 10.5 Kgf/ cm2. The pressure and temperature should be monitored for 2 hours from the time full pressure is applied.
8If any leakage is suspected and pressure falls ordoes not sustain, no further pressure shall be applied on the pipeline. Already developed pressure shall be released from test end and and the Maintenance Engineer shall be informed.
8In case of successful testing, pressure has to be released gradually over a period of 30 minutes.
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For reference purposes, the website carries here a background paper on the EU-India Trade and Investment Partnership Summit 2015 that was held on September 30, 2015 in Brussels.
8The paper is one of the finest expositions in recent times of the challenges and opportunities available in India and is a must read for any ardent business analyst or entrepreneurs.
8The paper provides ideas about what the future holds in store for India and the likely areas -- particularly those in which India holds a comparative advantage -- where the country can push ahead.
8For those looking at business opportunities, the paper provides critical inputs on what the EU can offer and India can use in the light of the Made in India pragramme.
8It highlights the many challenges ahead and makes a candid comparison with China and India's ranking as a palce to do business in/
8A reading of the paper is a must for those with a larger vision of how India will forge ahead in the future and the areas where opportunity lurks.
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A recent survey has shown that some 50 percent of crews working on offshore support vessels are willing to compromise safety rather than say “no” to clients while nearly 80 percent believe commercial pressures could influence the safety of their working practices.
8The findings come from a newly published report
8The case study analysis established that many factors contributing to the accidents find root in a company's safety management.
8In particular, incomplete or non-existent hazard identification procedures, lack of safety procedures or failure to ensure they are implemented, lack of communication about safety hazards and insufficiently trained crews were mentioned as factors contributing to the accidents.
8After establishing the link between poor safety culture and accident causation, the research study focused on identifying to what extent a well-embedded organizational safety culture can contribute to safety leadership within the workboat industry.
8Again, three case studies were conducted, this time of companies with above-average safety records, and the framework developed based on the literature review was used to assess each company’s safety culture.
8All three companies communicate safety as their top operating priority and, despite not being legally obliged, two out of the three companies had established a certified safety management system.
8Communication of safety procedures and other safety-related information was found to be an important aspect and innovative ways were developed to achieve effective communication. All three companies established reporting mechanisms to encourage employee feedback and urged their crews to stop an operation they deem unsafe. Based on the research study findings, recommendations were made for companies in the workboat and OSV sectors wishing to improve their safety processes.
8It is time that Indian companies pick up such studies and look at their recommendations for implementation in their own ships.
8Operators such as ONGC can also pick cues from such studies.
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Our neighboring country China seems to have prepared a conducive environment to scale up its shale gas output.
8Decreasing well costs and increasing experience in developing shale gas wells have been supplemented with continued government investment in China.
8Difficulties faced in increasing CBM output have led China to look at fast tracking development of shale gas resources, taking a similar path toward shale development as it did with CBM.
8China's technically recoverable shale gas resources are estimated at a massive 1,115 Tcf. What part of these resources become economically recoverable will depend on the market price of natural gas, including both pipeline gas and liquefied natural gas, in relation to the capital and operating costs and productivity of shale gas production within China.
8In the past four years there have been more than 700 shale gas wells drilled in China, and production levels have reached 0.38 Bcf/d.
8As Chinese companies gain experience producing from shale, the cost of shale gas drilling has declined. By mid-2015, the cost of drilling a horizontal well in shale formations in the Sichuan Basin was between $11.3 million and $12.9 million per well, a 23% reduction compared with the level in 2013.
8China has invested heavily in joint ventures in U.S. shale plays, making up as much as 20% of total foreign investment in U.S. shale plays. These investments have provided China with valuable expertise that can be applied to its own domestic production, helping lower well development costs.
8In 2012, to encourage the exploration of shale gas, the Chinese government established a four-year, $1.80/mmbtu subsidiy program for any Chinese company reaching commercial production of shale gas. In mid-2015, these subsidies were extended to 2020, but at a lower rate.
8Initial shale gas development has been focused on the Longmaxi formation in the Sichuan Basin, which is estimated to hold technically recoverable volumes of 287 Tcf.
8Two large Chinese companies, Sinopec and PetroChina, are on schedule to reach an output of 0.6 Bcf/d of shale gas production by the end of 2015.
8Although still a small fraction of China's overall production, estimated at 13.0 Bcf/d in 2014, increasing shale gas output could eventually help meet growing demand for natural gas in China and limit the growth of the country's natural gas imports.
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In what can only be dubbed as an insensitive and highly unconscionable act, the GAIL brass has challenged the imposition of a meager Rs 20 lakh fine for gross negligence that resulted in the explosion in the company's KG Basin gas pipeline network that killed 22 people in their sleep.
8The plea that was taken by GAIL is that its appeal before the PNGRB before the fine was levied was not fully head by the Board.
8The GAIL counsel also argued that the regulator failed to take into account the huge volume of investment made by the company after the blast took place.
8The counsel for GAIL provided elaborate arguments to the effect that the PNGRB should not have imposed a fine as the order is a result of a quasi-criminal proceedings in which a penalty was not to be imposed unless the petitioner either acted deliberately in defiance of law or was guilty of dishonest conduct or acted in conscious disregard of its obligation.
8The gas major said that it was unfair on the part of the PNGRB to impose a Rs 20 lakh fine and then top it up with a per day levy of Rs one lakh if the fine was not paid up on time.
8Natural justice was not done as required under Article 14 of the Constitution as the hearing the other side was not properly done before a judgement is passed, the company had argued.
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