ONGC audit raises questions about exploration record
May, 07th 2008
ONGC, the countrys largest oil producer, may have to answer some tough questions about its exploration operations. At a time when private oil majors like RIL are striking new oil and gas finds in every new well, ONGC appears to have missed oil and gas leads in as many as 20 wells drilled between 2002 and 2005.
These are findings of global petroleum consulting firm DeGolyer & McNaughton (D&M), which audited 350 wells as part of a third-party audit. D&M has identified approximately 20 wells, where the hydrocarbon potential may have been missed. This should result in future exploration leads, the interim report said.
The consultant recently submitted an interim report for the first phase comprising 350 wells. ONGC had appointed the exploration expert for a third-party audit of 579 exploratory wells drilled since 2002 to assess and improve performance.
ONGC, however, said this should not be interpreted as a missing of hydrocarbon potential. Explaining the D&Ms recommendations, ONGC said wells scoring low on three parameters - pre-drill, drilling and post-drill - might result in generating future exploration leads, if further work in the respective operations is undertaken.
D&Ms audit ranked the 350 wells at an average of 3.08, on a scale of 0 to 5.0, which is way above the cut-off rank of 2.5 to be considered as a successful exploratory well. This is a clear indication from a reputed third party that ONGCs exploration expertise compares favourably with almost all other major exploration companies, an ONGC official said. While concluding the audit, D&M has, however, observed that ONGC has matched and often exceeded the expected level of diligence and technical content.
D&M, which audits thousand of wells each year, has for the first time created a well-ranking system. According to the six-point ranking scale: 0 means data not available, 1 denotes unsatisfactory data and 2 means meeting some of the requirements. Point 3 means meeting most of the requirements, 4 is assigned for meeting requirements (a high level of competence) and 5 is an ideal situation of exceeding expectations.
The consultant has said with the completion of the audit of 579 wells, D&M will provide ONGC a comprehensive list of areas requiring additional attention to improve exploratory process. ONGC, which has been pulled up for not making enough efforts in its exploration activities, launched the third-party audit in line with its commitment to improved corporate governance.