In FY16, exploration cost write-off was Rs 5,700 crore, lower from Rs 10,870 crore in FY15
Oil & Natural Gas Corp (ONGC) is trying hard, and succeeding, in lowering exploration cost write-offs, one of the largest concerns for all oil firms. Write-off has nearly halved in a year and is expected to shrink further.
Explorers spend millions of dollars gathering seismic data and drilling wells to discover areas that can commercially produce oil and gas. They have to write off expenses when the wells drilled in the process turn out to be dry, or with reserves that can't be exploited commercially.
In FY16, ONGC's exploration cost write-off was `5,700 crore, sharply lower from `10,870 crore in FY15, Rs 7,843 crore in FY14, and Rs 10,088 crore in FY13. “My worry was how we can carry on with this kind of write-off,” said Ajay Kumar Dwivedi, who has recently completed a year as Director (Exploration) at ONGC, highlighting that the exploration write-off in some past years came close to the company's entire exploration budget.
But with a conscious effort led by top leadership and involving all relevant departments, the write-off has now started falling substantially. “This year, I am sure it will further come down. The number of wells drilled will increase and write-off will come down. I'm pretty sure because the entire board has joined hands in making this happen,” he said. There is “more focus on analysis, more focus on data, more focus on challenging each other,” on the interpretation of data that has helped the company face fewer dry wells this time, he said. The company has made endeavours at integrating in a more cohesive way past data of certain basins, where it has been active for years and decades with the current knowledge, leading to more mature understanding and better preparedness for drilling.
The sharing not just of seismic data but also of operational knowledge gained during drilling has also helped reduce exploration costs. Dwivedi says it all began with an effort at “defining a new work culture wherein knowledge gets supremacy, the individuality gets diluted, and silos are broken,” allowing employees and departments to challenge each other's understanding.
ONGC has an exploratory budget of about Rs 9,000 crore for the current fiscal year.
A successful exploration is hugely important for the state firm facing a declining output year after year and under immense government pressure to bring new fields to production.
A global oil price collapse is further expected to aid ONGC's exploration drive as rigs and other oilfield services are more easily and cheaply available these days.
Oil & Natural Gas Corp (ONGC) is trying hard, and succeeding, in lowering exploration cost write-offs, one of the largest concerns for all oil firms. Write-off has nearly halved in a year and is expected to shrink further.
Explorers spend millions of dollars gathering seismic data and drilling wells to discover areas that can commercially produce oil and gas. They have to write off expenses when the wells drilled in the process turn out to be dry, or with reserves that can't be exploited commercially.
In FY16, ONGC's exploration cost write-off was `5,700 crore, sharply lower from `10,870 crore in FY15, Rs 7,843 crore in FY14, and Rs 10,088 crore in FY13. “My worry was how we can carry on with this kind of write-off,” said Ajay Kumar Dwivedi, who has recently completed a year as Director (Exploration) at ONGC, highlighting that the exploration write-off in some past years came close to the company's entire exploration budget.
But with a conscious effort led by top leadership and involving all relevant departments, the write-off has now started falling substantially. “This year, I am sure it will further come down. The number of wells drilled will increase and write-off will come down. I'm pretty sure because the entire board has joined hands in making this happen,” he said. There is “more focus on analysis, more focus on data, more focus on challenging each other,” on the interpretation of data that has helped the company face fewer dry wells this time, he said. The company has made endeavours at integrating in a more cohesive way past data of certain basins, where it has been active for years and decades with the current knowledge, leading to more mature understanding and better preparedness for drilling.
The sharing not just of seismic data but also of operational knowledge gained during drilling has also helped reduce exploration costs. Dwivedi says it all began with an effort at “defining a new work culture wherein knowledge gets supremacy, the individuality gets diluted, and silos are broken,” allowing employees and departments to challenge each other's understanding.
ONGC has an exploratory budget of about Rs 9,000 crore for the current fiscal year.
A successful exploration is hugely important for the state firm facing a declining output year after year and under immense government pressure to bring new fields to production.
A global oil price collapse is further expected to aid ONGC's exploration drive as rigs and other oilfield services are more easily and cheaply available these days.
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