Mari Petroleum Company Limited (MPCL) is seeking permission from the government to start early production of oil and gas from Bannu West field in North Waziristan.
According to officials, the Bannu West field is estimated to contain the largest hydrocarbon reserves in the country. “Mari Petroleum had explored one well and final estimates would be received after discovery of oil and gas from the remaining wells,” officials said.
Sui Northern Gas Pipelines Limited (SNGPL) is going to secure an allocation of 40 mmcfd of gas from this field due to early production to meet the demand of gas-starved Punjab.
Sources told The Express Tribune that MPCL is likely to start early production of gas from Bannu West field to add 40 mmcfd to the national grid.
Punjab has been the largest consumer of gas despite the fact that it has the lowest production as compared to other provinces. Currently, it is also consuming imported gas in different sectors and even domestic consumers have been utilising it.
An exportation licence (EL) of Bannu West Block was granted on April 27, 2005 to MPCL in accordance with Petroleum Policy 2001 and under the Pakistan Petroleum (Exploration and Production) Policy 2001. MPCL has so far acquired 105 line kilometres of 2D and 832 kilometres of 3D seismic data. Based on the processing and interpretation of this data, MPCL drilled an exploration well namely Bannu West-1 and made a gas discovery in Lockhart and Hangu formations, which has opened up the new exploration potential in the Kohat Plateau.
The Petroleum Division had received a request from MPCL for permission of “early production” to appraise the said discovery in Bannu West-1 exploration well drilled in Bannu West Block.
Rule 20(1) of Pakistan Petroleum (Exploration and Production) Rules, 2001 (Annex-111) states that “subject to the provisions of these rules, the licence gives the holder the exclusive right to undertake, within the licence area, all activities related to reconnaissance and exploration, including drilling for petroleum”.
According to the rules, the “holder of the licence shall not be entitled to extract any petroleum from discoveries other than through testing and early production as the government may allow upon written request submitted by the holder of a licence provided, however, that in no event, such test or early production shall cause loss of revenues for the government”.
Early production of the well is a technical requirement and the common industrial practice is to appraise oil/ gas discovery to establish the extent of the reservoir and to evaluate reservoir performance to declare commerciality over the said discovery.
Petroleum Division officials said that the request of the company for “early production” from the Bannu West-1 discovery is rational and in line with the applicable petroleum policy and rules.
Furthermore, the case regarding the request of “early production” has been examined and found in order, therefore, the Petroleum Division had proposed the cabinet to allow MPCL to do “early production” for 24 months – start of production will be subject to the conditions that MPCL will submit the Declaration of Commerciality (DOC) and Field Development Plan (FDP) over the Bannu West-1 discovery before the expiry of allowed “early production” period.
The exploration under test production arrangement would be accounted for in the payment of production bonus. The company should also have fulfilled all other statutory obligations like rentals, training and social welfare as per applicable rules.
Published in The Express Tribune, September 11th, 2022.
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