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Production of tight gas likely to begin in July-August

Pakistan is expected to start producing 30 Million Cubic Feet per day (MMCFD) of tight gas in July-August this year from Sajawal Gas field located in District Dadu, it is learnt. According to Petroleum Ministry officials this will be the first ever tight gas production in the country, wherein total tight gas reservoirs stood at 40 Trillion Cubic Feet (TCF).

As per official estimates, Pakistan has huge reservoirs of shale and tight gas. The US Energy Information Administration has estimated the shale gas reserves in Pakistan at 51 Trillion Cubic Feet (TCF), low BTU gas reserves 2 TCF and that of tight gas at around 40 TCF which makes them larger than the existing natural gas reserves. The first ever tight gas Sales and Purchase Agreement was signed on November 13, 2012 in Islamabad for first production from a tight gas reservoir in Pakistan from Kirthar Block in Dadu, Sindh. The Kirthar Block is jointly owned by Polish Oil and Gas Company (PGNiG) (70 percent) and Pakistan Petroleum Limited PPL (30 percent).

If exploration and extraction is on schedule, SSGC will receive 30MMCFD gas into its system through two Kirthar Block wells. For the implementation of this project, SSGC has been awarded a contract of Rs 235 million for the construction of 52-km pipeline from Kirthar Block''s Rehman Gas Field which will be integrated into SSGC''s system at Naing Valve Assembly through the Bhit Gas pipeline.

The government in 2012 approved a new exploration policy, with improved incentives, as compared to the 2009 policy. Even offering higher prices for shale and tight gas to the exploration companies, it is estimated that Pakistan would pay a maximum of $6.50/MMBtu for gas compared with $11/MMBtu for imported gas from Iran and $13/MMBtu from Turkmenistan and $18/MMBTU of Liquefied Natural Gas (LNG). As per 2012 exploration policy "Exploration and Production (E&P) companies are being offered 40-50 percent higher prices for the extracted gas compared with the $4.26/mmbtu price announced in Exploration and Production Policy 2009. Companies which succeed in recovering gas from tight fields within two years would get 50 percent hike over the 2009 price and, if it takes more time, they will get only 40 percent hike on the 2009 price. As an added incentive, the leases for the fields will now be for 40 years, instead of 30 in the 2009 policy".

Apart from this, PPL in collaboration with ENI is set to start for the first time drilling of exploratory well in Sindh''s deep sea in 2014. In this regard, around seven exploratory wells, eight appraisal wells, and 19 development wells have been planned for discovering shale and tight gas in Sindh in the next five years.

Tight gas reserves have also been identified in the existing development and production leases granted to various E&P companies operating in Pakistan. Main tight gas regions identified are Kirthar Foldbelt located in Dadu, Sindh, Sulaiman Foldbelt (located in Balochistan), Potohar region in Punjab and offshore areas near Karachi. Pakistan is particularly heavily dependent on natural gas for its energy needs. At present actual demand for gas is around 8 Billion Cubic Feet (BCFD) per day, while constraint demand is also hovering around 6 BCFD against total supply of 4.3 BCFD.

To encourage investment in developing domestic shale gas, Pakistan has approved a new exploration policy with improved incentives as compared with its 2009 policy. Pakistan Petroleum is now inviting fresh bids to auction licences to explore and develop several blocks in Dera Ismail Khan (KPK), Badin (Sindh), Naushero Firoz (Sindh) and Jungshahi (Sindh).

Copyright Business Recorder, 2013


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