‘Exploiting gas from workover wells can reduce dependency on spot LNG’

Bangladesh has become increasingly dependent on imported LNG (liquified natural gas) due to gas supply shortfalls from the local sources. The high price of LNG, especially in the spot market (a market where commodities, currencies, and securities, are traded for immediate delivery) has put a lot of stress on the overall economy of the country. Recent news reports reveal that state-run Sylhet gas field Company Limited (SGFCL) and Bangladesh Petroleum Exploration and Production Company (Bapex) have successfully produced gas from old abandoned wells through workover (performing a variety of remedial operations on natural gas wells to try to increase production) operations. 

Professor Badrul Imam, former geology professor at the Dhaka University and representative of the civic voice for strengthening Bapex, observes that state-run oil gas companies need minimum investments to add gas to the national grid immediately by exploiting the workover wells that can reduce the country's dependency on the expensive spot market. 

Bangladesh fails to supply adequate gas to the national grid from its own sources. What is your observation regarding this? 

This is a major weakness of the energy sector in our country. In spite of having a lot of prospective gas fields, Bangladesh is one of the least explored countries in the world. Bapex has the capability of drilling three to four exploration wells a year but it does not drill even one every year. Exploration by other companies, including foreign ones, has also been few and far between. 

Representational image. Photo: Gas Transmission Company Limited

The exploration in the vast offshore area of the Bay of Bengal remains stalled. If a serious exploration drive had been undertaken, Bangladesh would not have had a gas crisis in the first place. 

The government is addressing the declining gas supply from local sources by importing LNG. What is your view on the current gas supply trend and its implications?

With the local gas supply declining and its demand increasing, it is, perhaps, inevitable that we import LNG to keep the industries running. Too much dependence on imported LNG means too high an energy import bill for the government to pay and this will hurt the economy in the long run. 

In the absence of enough exploration for its own gas, the volume of LNG import is likely to increase from the present 20% of the total gas supply to 30-50% or even higher in the future. LNG price in the international market is high at the moment and it is likely to shoot up further as the European countries look for alternative gas sources due to oil-gas sanctions against Russia due to the Russia-Ukraine war.

At present Bangladesh buys most of its LNG through long term contracts with Qatar and Oman whereby the unit price remains fixed at about $11 per unit. The rest of the volume is procured from the spot market and this is a volatile and unstable place. The unit price of LNG is $35 per unit at present but it moves up and down with the pulse of global politics and strategic scenarios. 

Bangladesh pays much more for the smaller share of LNG volume procured from the spot market than it pays for the larger share procured from long contracts.  

How much dependent Bangladesh is on spot LNG and how can the dependence be reduced or avoided entirely?

Bangladesh procures LNG from the spot market to supplement the volume procured under long term contracts. Presently about 100 to 150 million cubic feet per day (mmcfd) is being procured from the spot market. This is not a large volume and can be supplied from local sources if previously depleted or abandoned wells are worked over under a major work programme. 

Workover wells are routine procedures in gas field management and their success depends on the efficiency of the reinterpretation of older data about the wells. In 2011, international oil gas service company Schlumberger investigated the abandoned wells of Bangladesh and suggested that 40 wells could be revived. There has been no subsequent follow-up.  

At present, the importance of workover wells is enhanced because of the dependence on highly-priced spot LNG. A dedicated work programme is required so as to bring all the probable candidates of abandoned wells to be worked over. For a long term solution, there is no alternative to new exploration wells and new discoveries. 

Due to an apparent lack of dynamic work policy, state-run Bapex cannot go for large scale exploration and make best use of the gas reserves under its coverage.  Like some other members of civil society, you have campaigned for strengthening Bapex. Could you tell us more about your views? 

Bapex has the technical capability. New talents have been joining Bapex on a regular basis and they have the potential to gather a lot of expertise within a short span of time. 

Moreover, Bapex is financially strong. The government has formed the Gas Development Fund (GDF). Every year, the GDF grows further, although the government spends the money on other purposes like gas import. The main objective behind the formation of GDF was to boost gas exploration. 

The problem lies in the style of managing Bapex. The state-run company is controlled by a ministry and the bureaucratic practice of the ministry often slows it down. For example, when Bapex places a proposal on an exploration well drilling following a thorough technical assessment. Often it takes one year to get approval as the file travels from Petrobangla to the ministry to all high ups without much reason. 

The time-consuming process is unnecessary I think. The whole process may be condensed into a few workshop-like events where all administrative, financial and logistic queries could be discussed and sorted out by the stakeholders. Bapex must not be put under the overlordship of the ministry officials.  

Given the inadequacy of capacity of Bapex, a suggestion has been placed to allow International Oil Companies (IOCs) to explore the onshore gas blocks. Do you agree with this suggestion?   

I would not say that this suggestion is wrong in the present context. Once we suggested the government not to grant IOCs onshore blocks for exploration. We would say that Bapex is a public entity and the government should equip it as an efficient company. We would recommend that Bapex should be assigned with onshore works so that it could have total control of the national resources onshore. This is ideal and remains so till date. 

We do not pretend to believe that Bapex has the same level of technical capabilities of Shell, Chevron or other renowned IOCs. 

We still believe Bapex should be technically uplifted, logistically groomed up and financially strengthened to a very high standard so as to completely take over our exploration especially onshore. But time is not on our side. 

Simply put, we just need the gas now. Bapex may very well work alone or in joint ventures with IOCs onshore. Such a partnership between Bapex and IOCs to jointly explore the Chittagong Hill Tract has been in talks for some time now.