Energy Bangla - Bangladesh Gas sector: Sun Rising

In the wake of serious gas crisis in Bangladesh which among other problems has created impediments to arrange fuel for power generation and Urea fertilizer production, two significant developments have created new expectations. Petrobangla at long last accepted the third party assessor report submitted by Chevron on Bibiyana gas reserve. It is a significantly large field having a reserve of 4Tcf + which effectively doubles the earlier Ultimate Recoverable Gas Reserve. The other development is that the government has set up mind to revise cabinet's economic committee decision to award nine offshore gas blocks instead of three blocks awarded to two multinational companies. The two decisions can have significant impacts in the energy scenario of Bangladesh.

Bibiyana Episode:

We all knew from the day Bibiyana reserve assessment was submitted to PB in year 1999 that Bibiyana is significant world class gas field. At that time I had opportunity to work on behalf of Petrobangla to assist Unocal in Jalalabad Gad field development. Accompanied by senior Unocal executives several times flew to Bibiyana during drilling of Bibiyana well 2. Few senior level technical personnel of Unocal and later Chevron interacted with undersigned at different stages regarding Bibiyana Gas field development. But PB professionals having very shallow knowledge of reservoir engineering were illogically contesting reservoir assessment report and analysis of Chevron. At one stage some inexperienced professionals even insisted that production from Bibiyana should be restricted 450MMCFD. If you check PB daily Production and Marketing report it will appear that even in early 2009 Bibiyana production capacity used to be shown as 450MMCFD when it used to produce @550MMCFd. It was first changed to 500 and subsequently to 600MMCFD without any explanation.

We all knew that Unocal/Chevron proposed to build a pipeline from Bibiyana to export gas to India. As we were designing Rashidpoor –Ashuganj at that time we had several interactions with concerned professionals of Chevron-Unocal professionals. Later ADB wanted to finance a pipeline having 500MCFD without compression and 1000MMCFD with compression .Initially it also proposed to export 300MMCFD to India dedicating 200MMCFD for Western Region. When Bangladesh regretted to accept Gas export ADB declined to fund the Rashidpoor-Ashuganj Loop Line Project .Bangladesh had to build it with its own money.

When we were constructing R-A loop line one day the then Energy Secretary while visiting Gas systems in Brahamanbaria region we had very useful meeting after dinner at Habiganj Gas Field gust house. The decision to develop Moulavibazar and Bibiyana to meet expanding Gas demand was taken. The following day we visited Moulavi Bazar and Bibiyana Gas fields and ball started rolling.

Simultaneous to Bibiyana development the supplementary actions for gas transmission capacity expansion were planned in the form of setting up gas pipeline compressor stations at Muchai, Ashuganj and Elenga. Chevron Developed Moulavi Bazar and Bibiyana in time. Compressor stations were supposed to be operational by early 2008. But till February 2010 construction of any compressor station has not started yet. Chevron is allowed to produce @650MMCFD in a capacity saturated transmission system which is also partially filled with gas condensate in absence of routine on-stream pigging. Consequently gas system low pressure has created panic.

We have seen a parliamentary committee recently discussed these issues and possibly on wrong advice stated that Chevron supplied unspecified gas into Transmission grid. Chevron plant at Bibiyana has higher capacity. There are no reasons that it would supply unspecified gas .GTCL during system calibration would definitely have spotted this if that happened.

Petrobangla acceptance of higher reserve has created opportunity to further develop Bibiyana to produce @1200MCFD. It would be far more appropriate if Chevron –GTCL together can build a separate cross Country High Pressure pipeline from Bibiyana to Monohardi with a spur to Ashuganj. Significant works on ROW and Route were done we know for export pipeline. These will feed required Gas in under implementation Transmission pipelines all the way up to Khulna and Mongla. If PB Gas fields are also simultaneously developed and Magnama and Haitya exploration yield positive development by 2016 another 1500MMCFD gas will be available for use. If domestic Coal is used is extensively used for power generation Bangladesh may have gas security for Urea production and other use. But it is too early to be complacent .Significant works are essential to attain that situation at every segment of Gas value chain.

Revision of Offshore PSC Award:

We know Bangladesh has already fallen way behind India and Myanmar in offshore exploration. Taking our advantage they have made significant strides. We all know Bangladesh was first to start offshore exploration in 1974. But after Bangabandhu subsequent governments failed to carry forward good works. 4 Party alliance governments at the last stage started the initiative which Care Taker Government significantly advanced. Two IOCs Conoco Philips of USA and Tullow of Ireland were selected for PSC for 8+1=9 offshore blocks. But for silly reasons during approval Conoco Phillips was offered two blocks instead of 8 and Tullow one .Under the under consideration revision Irish company Tullow Bangladesh Limited will get block No-6 instead of block No-5 awarded to it while the US company ConocoPhillips South Asia New Venture Limited will get blocks No-10, 11, 12, 15, 16, 17, 20, 21 instead of blocks No-10 and 11.

The Conoco Philips bid for these blocks and were selected as evaluated bidders. But PB committee also recommended to make award accordingly .During negotiation for award of PSC the IOC claimed to award these in accordance to their bid. Perhaps Government was concerned for strong objections of India and Myanmar as they claimed significant portion of the blocks. Conocco Philips observes that while dispute resolution is in progress there is ho harm in carrying our preliminary surveys. In case of Tullow the situation is different .70% of the block 5 has been claimed by India so they requested to award block 6 instead. Well these could be always settled through negotiation.

Wonder why Conoco Philips situation drifted to this stage. Any Company has to spend significant time money and resources to submit winning bids. If they are asked to sign truncated works they have every reason to fell deprived. We are proving novice after years of brainstorming.

If PSCs could be signed in December IOCs could carry out some work before sea gets rough. Now IOCs have to wait till November at least .Another dry season for working in offshore is lost.

It will take at least 7 years to reap any benefit out of off shore exploration. Hopefully by that time maritime boundary disputes will be resolved either amicably or through arbitration.

Among many frustrating news the two significant developments in Bangladesh gas sector will create some hopes among mid stream and down stream investors. Our coal , our gas will be much better and more feasible options than Imported Coal and LNG.