Nashpa well two: excavating hope

Throughout the course of history, the discovery of oil or indeed its correlated activities have always connoted an aura of ecstasy. The monetary significance is obvious, but digging out – or indeed locating – volumes of black gold is a moment of triumph; an epoch-making breakthrough that promises to ameliorate everything. Be it the groundbreaking revelations in South American oil producing giants Columbia and Brazil, the customary mining disclosures in oil leviathans like Algeria, Libya et al or indeed Daniel-Day Lewis stumbling upon an opulent mine in New Mexico 1898 in ‘There will be blood’ – the rapture is earth-shattering. An oil reserve is seventh heaven under the ground, so to speak. Considering the power predicament in our neck of the woods, the aforementioned ecstasy can be multiplied by any scalar number and it won’t suffice in depicting the sheer vitality that any such unearthing possesses. OGDCL’s (Oil and Gas Development Company Limited) recent oil discovery, from Nashpa well two, is one such moment that augurs optimism and is being touted as a historic undertaking – with scores of reasons buoying up the claim.

Geography and Location
The well that is hogging all the headlines, ‘Nashpa well two’, is located in the Nashpa block which is a part of Khyber Pakhtunkhwa and extends to within Punjab as well. For the geography geeks; Nashpa is located in North-West Frontier region at 33°13’59” north of the equator and 71°19’59” east of the Prime Meridian. For physics geeks; if one were to drop a plumb line from the point where Nashpa is located – on a map pinned on a wall – it would neatly bifurcate Bhakkar and Peshawar, with its displacement ratios being 1:3 between the latter and the former respectively. Also if an imaginary triangle ABC between Rawalpindi, Nashpa and Peshawar is drawn on the map, it would border on a right-angle triangle with the length AB (distance between Naspha and Rawalpindi) being twice that of BC (distance between Nashpa and Peshawar).

Power Shortage
The oil discovery comes under the hangover of the worst power crisis in the history of Pakistan. The amplitude of hue and cry that engulfs the shortage has reached an all-time high, with both the industrial sector and the masses being criminally victimised. With such an abundance of reserves, the shortage is not only lamentable but also flummoxing. The oil escavation that was preceded by a noteworthy gas discovery, would inevitably solve the power puzzle, by reducing our dependence on the ever escalating imports and by eventually making us self-sufficient with regards to power production.

Opulence of Nashpa Block
The block spreads over areas of Khyber Pakhtunkhwa and Punjab. Mela and the aforementioned Nashpa have been the two prominent zones that have been located for oil – in 2006 and 2008 respectively. The principal protagonist in the excavation task has been OGDCL, with strong backup courtesy GHPL (Government Holding Private Limited). According to PPL’s (Pakistan Petroleum Limited) data there is a 26.05 per cent PPL working interest and the recoverable reserves amount to 51 Bcf gas and 16.63 million barrels (MMbbl) oil. Mela oil field contains 14 MMscf gas and 4,458 bbl oil, while Nashpa oil field has 20 MMscf gas; 5,310 bbl oil. However the recent revelation has further bolstered the prospects of the lucrative area.

Nashpa well one
The first installment of the Nashpa expedition took place in June 2009. Nashpa well one was dug down to the depth of 4384 meters, which resulted in a successful exploration. The reserves in Nashpa, when coupled with 2006’s discovery of Mela reserve, ensured that the region was acknowledged as a rich reservoir of oil. The often flaunted ‘discovery of the decade’ Tal Block is also an affluent region, which is within proximity of Nashpa Block. Encompassing and being engulfed by oil rich zones, Nashpa block became the hub of attention for OGDC, PPL and GHPL and hence expedition were planned for the future citing the prospect of further inroads into oil and gas reserves.

OGDC and the share crisis
OGDC is the grand daddy of exploratory activities in Pakistan. It operated on a fifty per cent interest with Pakistan Petroleum and Government Holding Private. However, this hasn’t been a fruitful year for the company, as far as its shares are concerned. There has been a slump off late within the realm of KSE100 Index that has threatened to plunge OGDC into paramount losses – a cumulative decline of 9.2 per cent has been witnessed this year. However, Nashpa well two promises to be the saviour of the biggest player in the energy exploration realm. It is being prognosticated that owing to new oil and gas discoveries, OGDC can enhance its profitability and is expecting up to 20 per cent addition to its oil and gas production this year.

Payment predicament
According to resources, local oil refineries and gas distributors’ failure to pay for supplies is hindering the investment plan of OGDC. A gargantuan amount of Rs93 billion ($1.07 billion) is due as back payments. While, the lack of payment had not significantly derailed the company’s progress, what was unambiguous was that such a trend would have eventually taken its toll on the company. There was a call of bond issuance or bank loans as a possible way out of the quagmire. However that was being shelved for up to a year with the hope that the situation would improve with the passage of time. This lack of payment on the distributors’ part delayed the payment to fuel suppliers, who in turn are indebted to oil refiners. The total amount – called circular debt – is said to amount up to Rs300 billion, and it was crystal clear that a breakthrough was the need of the hour on a multitude of fronts.

The earth-shattering excavation
With an estimated output of 3370 barrels per day, the oil reservoir in Nashpa well two is a major boost for not only OGDC, but for the nation as a whole. The aforementioned figure of 3370 barrels equates nearly one-fifth of the company’s current crude output. Nashpa well two was drilled down to a depth of 4340 meters, intending to delve into potential reserves at Datta, Shinawari, Samanasuk, Lumshiwal, Hangu and Lockhart formations. The task proved successful both in the domains of gas and oil. “Datta Sandstone” has been the first to bear fruit with massive volumes of hydrocarbon located – the aforementioned potential of ‘3370 barrels per day or crude oil and 11 MMFCD through 32/64 choke at well head flowing pressure 3800 psi.

Zin block factor
OGDC has launched a multi-pronged attack on oil excavation and one of the targeted zones has been Zin block as well. In fact, if one were to discern the underground insinuations and couple it with the dire straits that the power and energy sectors find themselves in, Zin block could be a major factor in nationwide enhancement. OGDC has backed the zone as one of its most lucrative target areas and numerous development projects are already underway, with many more to follow. Results are expected soon according to the company voices.

KSE’S gain
OGDC is a unanimously acknowledged powerhouse in the Karachi Stock Exchange, and hence, any promising exploration activity has a bearing on the stock exchange. OGDC along with PPL are the biggest gainers owing to the recent discoveries, and the latest market numbers are vindicating the claim. After the oil discovery’s news broke, both the stocks attracted a strong purchase trend and close to the weekend they single-handedly pushed the 100-Index up by a massive 61 points. According to Topline Securities OGDC and PPL have a 56 per cent, and 25 per cent stake respectively in Nashpa fields. Add this to the potential of Zin block and OGDC and PPL might rule the roost in the near future.

Oil exploration incentive
According to reports, government of Pakistan has earmarked a substantial amount of Rs1135 million for exploratory activities in the country. The sum has been allocated over the past eight years, and is a statement of intent from our hierarchy. The aforementioned amount has been given to OGDCL’s Research and Development division. This particular division has been going great guns recently and with the money allocation – for conducting geological surveys and mapping projects in a multitude of potent blocks – the output can be magnified further.
The word is that Pakistan Basin Study project has also been conducted, for which the company hired services of other companies. The task was carried through with technological virtuosity, with the latest available techniques and machinery being utilised.

Nashpa well three and prospects
The Nashpa success story might just prove itself to be a blockbuster trilogy. After ‘Nashpa well one’ proved to be an oil fertile zone and ‘Nashpa well two’ followed suit in terms of potential and profitability, ‘Nashpa well three’ is another prospect that is whetting the appetite of the oil extractors, consumers and all other stakeholders. OGDC and its allies are on the look out for further possibilities, not only in the Nashpa zone but in Zin block as well. There are four, five other projects in the pipeline that promise to further enhance the flow from fields and it bodes well for the future.

Epilogue
‘Nashpa well two’ is a major breakthrough towards digging the nation out of the power quagmire, and it is a massive boost for OGDC and its allies – the discovery has a lot hinging upon it. With expectations pertaining to a precipitous increase in output on an all-time high, the Nashpa block has evolved from being a ray of hope to now a luminous bundle of light.

The writer is Sub-editor,
Profit and can be reached at [email protected]