Petrobangla plans drilling 100 wells for oil, gas by 2028

To address soaring gas demand and a desire to reduce dependence on expensive LNG imports amid dollar shortage, state-owned Petrobangla has laid out an ambitious plan to significantly boost domestic gas production, which includes drilling 100 new and old wells between 2025 and 2028.

Petrobangla is currently implementing another project for drilling 48 exploratory, development, and work-over wells to boost gas production by an additional 618mmcfd. Of these wells, the drilling of 23 will be handled by the state-owned Bangladesh Petroleum Exploration and Production Company Ltd (Bapex), while work on the remaining 25 will be outsourced.

According to Petrobangla, the country's gas demand is around 4,000 million cubic feet per day (mmcfd), but the average supply is only 2,700mmcfd, including 644mmcfd from imported liquefied natural gas (LNG), resulting in a shortfall of approximately 1,300mmcfd.

Petrobangla foresees gas demand rising to 6,655mmcfd by 2029-30 with a projected supply of 4,352mmcfd, underscoring an urgent need for action. To bridge this gap, the government is prioritising domestic gas production, investing in onshore and offshore projects as detailed in a Petrobangla document. 

Gas production will continue to decline for two to three years before a rebound.

Nasrul Hamid,State Minister for Power, Energy and Mineral Resources

Offshore exploration has also gained traction, with an international company already operating in two offshore blocks to uncover new reserves. Efforts are underway to enhance the offshore model Production Sharing Contract (PSC) to attract further investments in offshore oil and gas exploration.

In a seminar on the country's gas demand, supply and scope of exploration at the Petrobangla office in the city yesterday, Petrobangla Chairman Zanendra Nath Sarkar said of the 100 wells, Bapex will undertake the drilling of 52 new wells and perform workovers on 16 existing ones. 

In addition, Bangladesh Gas Fields Company Ltd will drill nine new wells and perform workovers on 12 old ones, while Sylhet Gas Fields Limited will dig eight new wells and conduct workovers on three old ones, he said.

"Over 300 potential sites have been identified for this purpose, from which we will finalise 100 wells after thorough verification. Within the next 15 days, we will initiate a feasibility study and promptly assemble a committee comprising our present and former engineers and university teachers," the Petrobangla chairman said.

Mentioning that the ongoing project for drilling 48 wells is progressing swiftly and will be completed by 2025, he said the country has already begun reaping the benefits of this gas exploration project. 

"After the successful drilling of 10 wells, daily gas extraction capacity has surged by 130mmcfd although we anticipated a production boost of 100mmcfd," Zanendra Nath Sarkar said.

"Gas extraction in Bangladesh typically occurs through well drilling ranging from 2,600 metres to 4,000 metres deep. However, certain wells, such as Fenchuganj-2, have been drilled as deep as 4,900 metres. Initiatives have been taken to conduct deeper drilling in two other wells, including one in Mobarakpur of Pabna. We expect positive outcomes from this deep drilling endeavours," Petrobangla chairman added. 

Nurul Alam, the secretary of the Energy and Mineral Resources Division, said, "We are set to initiate our offshore bidding gas exploration programme in the first week of March. Your [stakeholders] valuable insights are crucial in this endeavour. We are prepared to promptly invite tenders for offshore oil and gas exploration."

Attending the seminar as the chief guest, State Minister for Power, Energy and Mineral Resources Nasrul Hamid said the domestic gas production is on the decline amid depleting gas reserves. The decline is likely to continue for two to three years before a rebound.

"If we could supply around 2,000mmcfd of gas to meet the demand of power plants, the electricity subsidy would have decreased by approximately 70%. Currently, 17% of the total gas supply is allocated to captive power plants owned by industries, while 43% is directed towards grid power plants," Nasrul Hamid said.

He said, "Through the drilling of 48 wells, we anticipate acquiring 500mmcfd within the next two years. With gas demand projected to reach 6,000mmcfd by 2027, it is imperative to drill new wells as well as import.

"It is commendable that Petrobangla aims to drill 100 wells by 2028, but it is crucial to have a detailed action plan for each month and year. Progress will be closely monitored, and those unable to meet expectations will face exclusion."

Nasrul Hamid told experts, engineers, and technologists attending the seminar that their focus should be on drilling gas wells without concerns about funding. The government will manage the funding.

"Over the past two years, the government has allocated an extra $11 billion to address energy demands, including LNG imports. However, due to inadequate action by relevant organisations, gas extraction could not be escalated," the state minister added.

Experts at the seminar emphasised the significance of prioritising gas extraction in Chattogram's mountainous region, Bhola, and the offshore areas.

Anwar Hossain Bhuiyan, a professor Geology at Dhaka University, said there is a possibility of 10 trillion cubic feet (tcf) of gas reserves in the Chittagong Hill Tracts. However, he noted that extracting gas from Bhola entails lower risks compared to Chattogram.

Former Bapex managing director Mortuza Ahmad Faruque underscored the need for greater focus on the Chittagong Hill Tracts. 

"Despite plans to drill 106 wells in 2014, this endeavour was hindered by governmental constraints. While Bangladesh may not match the fuel extraction levels of the Middle East, the potential for oil and gas discovery in these regions [Chittagong Hill Tracts] of the country remains significantly high," Mortuza Ahmad said. 

Experts also said due to existing laws and regulations, it is impractical to expedite the drilling of numerous wells within a short timeframe. Therefore, they recommended that the government establish a special fund to secure the necessary funds for drilling expenses.

Moinul Ahsan, a former director of Petrobangla, said both drilling gas wells and extracting coal from domestic mines offer solutions to our current energy crisis. He also criticised the decision not to extract coal from the Fulbaria mine.

Previous surveys on oil, gas reserves

Between 1986 and 2001, nine globally recognised companies were engaged in exploring oil and gas resources in Bangladesh. These organisations conducted exploration activities across the country and in specific regions.

In 2001, the United States Geological Survey (USGS) and Petrobangla conducted a survey while the Hydrocarbon Unit and the Norwegian Petroleum Directorate conducted another survey.

The report produced by USGS and Petrobangla suggested a minimum estimate of 8.4 trillion cubic feet (tcf), an average of 32.1tcf, and a maximum of 65.7tcf of gas reserves.

In contrast, the estimates provided by the Hydrocarbon Unit and the Norwegian Petroleum Directorate indicated a minimum of 19tcf, an average of 42tcf, and a maximum of 64tcf of gas reserves.

Total gas fields

According to Petrobangla, Bangladesh has discovered a total of 29 gas fields. As of 13 February 2024, approximately 2,041.7mmcfd of gas is being extracted daily through 111 wells across 20 gas fields. At its peak, up to 2,800mmcfd of gas had been extracted simultaneously. However, due to depleting reserves, production has decreased in several wells.

Five gas fields (Rupganj, Kamta, Feni, Chatak, and Sangu) have been deemed abandoned, while three gas fields (Qutubdia, Bhola, and Jokiganj) are inactive due to the absence of a gas transmission system.

Global LNG prices fell but dollar crisis a big challenge

While global LNG prices have experienced a decline, the prevailing dollar crisis remains a significant challenge for Bangladesh. 

Last fiscal year, the combined import cost of oil, gas, and coal ranged from $13 billion to $15 billion, with projections suggesting a requirement of $18 billion for the current year, according to the Energy Division.

A report from the World Economic Forum identified energy scarcity as the primary risk among the five risks to Bangladesh's economy. 

Presently, LNG prices in the global market are at their lowest levels. For instance, the price per Metric Million British Thermal Unit (MMBtu) in the Japan Korea Marker (JKM) market stood at $9 on 13 February, in contrast to $18 during the same period last year and $32 in 2022.

In August 2022, spot market LNG prices surged to a record high of over $60 per MMBtu, prompting the government to halt LNG imports from the spot market. 

However, with the recent decline in prices, the government has initiated efforts to ramp up LNG imports from the spot market this year despite the dollar crisis. Also, Petrobangla faces limitations in importing LNG due to inadequate management to convert LNG and supply it to the grid.

Petrobangla officials say that it will cost about Tk10,000 crore to bring 22 cargoes of LNG from the spot market till next October. Each cargo contains 3.36 MMBtu of LNG.

According to the Energy Division, Tk38,660 crore was spent on LNG imports in the fiscal 2021-22.