Gas System Management Turns Critical

The natural gas-dominated energy sector of Bangladesh is heading towards irreversible uncertainty. The proven gas reserve of discovered gas fields is depleting fast. There has been far less than bare minimum gas exploration since 2020. The BAPEX-only onshore exploration strategy did not work well. The capacity-constrained BAPEX has so far managed to discover few marginal gas fields. Most of these, however, have either watered out or nearing the end of production life. The wellhead pressure of most wells, even the major gas fields like Bibiyana and Titas, are fast depleting. If several wellhead compressors are not set up, many wells would have retired in two to three years. Water drive wells may suddenly start depleting at higher rates.

In such a situation, the gas fields are now producing 2357.30 MMCFD against a capacity of 2760 MMCFD, according to Petrobangla’s Day Production Report on 17-18 March 2021. The RPGCL supplied 851MMCFD equivalent RLNG to the national gas grid on the days. The present reality evidences that within the next 3-4 years, there is no possibility to increase gas supply from own fields. Rather the production may drastically deplete. There is no possibility for any additional LNG import before 2025. Perhaps Petrobangla and EMRD has no contingency plan. A huge amount of investment has been made over the past 12 years in gas transmission infrastructure of GTCL without ensuring increase in gas production. Some parts of the infrastructure have already turned to become white elephant.

Experts observe that some investments have been made due to top-down gas system management. The compressor station at Elenga in Tangail is hibernating; the compressor stations at Ashuganj never got its desired feed gas at intake. Some pipelines like AB1, AB2, Bibiyana- Dhanua, Bonpara–Ishwardi-Khustia–Jessore–Khulna are running well below their respective designed capacities. Few are not being used even. Experts consider that IMED or BERC should conduct study on the GTCL infrastructure to examine the extent of its utilization.

Summarized Daily Production Report

A.     Petrobangla Operated Companies

BGFCL, SGFL, BAPEX

Delay in setting up wellhead compressors in BGFCL fields may complicate secondary recovery. Production from Bakhrabad and Meghna fields may not last more than 3 years.

B. IOCs Operated Gas Fields

C: RPGCL supply of RLNG

Total Gas Field to GTCL Operated Gas Grid: 3209.10 MMCFD (March 17-18, 2021)

According to the present state of production scenario, the gas supply could be continued only with major discovery of new fields or import of additional LNG. As told earlier, this may not happen in the next 3-5 years. So, the gas supply security is in jeopardy.

Why such situation arises? Following the discovery of Bibiyana field in late 1990s by UNOCAL, they started pressing the government for allowing them to export gas to India through pipeline. The then government did not allow it. The civil society agitated against it. A section of civil society considering a market signal even suggested to approve it. However, in a state of dilemma and debate, a new government took over office and under popular pressure could not let UNOCAL  export gas. In the meantime, UNOCAL reassigned PSC to Chevron. However, considering the decision as disincentive, IOCs lost interest in investing in Bangladesh. Neither did Petrobangla make sincere efforts in expediting exploration in onshore and offshore. The government signed dubious contract with a controversial company NIKO. Two back to back blow outs happened at Chattak and Tengratilla. The contract entered arbitration. The government adopted BAPEX-alone policy for onshore exploration. Unfortunately, BAPEX neither grew technical expertise nor had own fund to carry on exploration at expected rate. Neither its management had any executive authority for operating as an exploration company in matters of procurement of drilling tools and accessories.  Russian company GAZPROM was given contract for drilling development wells in Petrobangla’s gas fields. Observers complained about very poor works executed by GAZPROM-engaged drilling contractor. An over ambitious 108 wells drilling program was given to BAPEX. As expected, BAPEX failed to execute the project. The success of resolving maritime boundary dispute with Myanmar and India brought no fruits due to Petrobangla failures in engaging IOCs through PSCs in deep water exploration. Neither could BAPEX and Petrobangla find any joint venture partner to further explore identified gas structures in greater Chattogram and Chattogram Hill Tracts. All these contributed to alarming gas crisis as for managing demand growth about 13 Tcf gas got used up in 21 years from 2000. Against this, new addition is only about 2 Tcf.

Petrobangla has finalized an updated PSC, but a vested quarter interfering at the higher level frustrated the Petrobangla efforts for engaging contractors for multi-client surveys in deep water. Experts, however, observed that Petrobangla could use extensive data the IOCs left behind during exploration from 1974-77 and also at different times since then. Now with the outbreak of coronavirus, it is uncertain when Petrobangla can go for PSC bidding. Even if it happens in 2021, there is no possibility of any gas coming from deep water before 2030.

LNG Import

The LNG import initiative since 2010 -2014 suffered from poor vision, lack of far sight and contradictory decisions. If planned properly, the first RLNG should have been injected to gas grid by 2014. After wasting year after year, the first FSRU came into operation in 2018 and the second in 2019. In the meantime, GTCL successfully constructed two pipelines from Moheshkhali to Anowara on the upstream and Anowara – Faujdarhat – Feni – Bakhrabad on the down stream. RPGCL can deliver 1000MCFD and GTCL has the capacity for evacuating 1,200 MMCFD. But RPGCL is handicapped with restrictions of PPR in availing low price LNG purchase from the spot market. There are limits of purchase through two long term contacts as well. The vested quarter misguiding the government wasted time and energy with too many FSRUs and even unrealistic small FSRUs at CUFL and KAFCO jetty. There have been long delays for land-based terminal at Matarabari. In this situation, there is no possibility of any additional RLNG injection in gas grid before 2025.

Gas Transmission Scenario

Huge unplanned investment in gas transmission infrastructure has created a possibility of economic meltdown of GTCL. Without assured supply of gas, GTCL upon dictation of Petrobangla and EMRD has made huge investment in gas transmission Infrastructure – gas grid has been extended all the way from Bonpara–Ishwardi-Bheramara–Khustia–Jashore–Khulna. But apart from supplying power plants in Bheramara, gas has not been supplied so far to any consumer in 5 years. On false assurance of possible discovery of substantially large gas structure at Sunetra, a 98-Kilometer long 42 inches expensive Bibiyana-Dhanua gas transmission pipeline has been constructed. Experts disputed the decision as three compressor station construction (Muchai, Ashuganj and Elenga) of GTCL under ADB loan was at the final stage. The government in a controversial manner took out Muchai compressor station construction from GTCL and let Chevron build it under cost recovery provision of PSC. Experts alleged that Chevron as an operator of gas fields cannot construct any facility beyond its battery limit (downstream flange of custody transfer metering station). A media report of alleged scam over such controversial decision appeared in the media. The construction of Bibiyana-Dhanua pipeline and construction of compressor station at Ashuganj and Elenga were accomplished by GTCL almost at the same time. Chevron increased production and started depleting from Bibiyana faster. Consequently, the reality now is that Elenga compressor station remains almost idle and GTCL compressor station never got its desired feed to operate anyway near to its designed capacity.

GTCL under assurance of Petrobangla of required gas supply extended gas transmission network from Bonpara – Rajshahi and Bonpara – Khulna. But for last several years, very few customers have been supplied gas from these expensive gas pipelines on excuse of gas supply deficits. Under instruction of higher authority, GTCL also constructed Ashuganj-Bakhrabad gas transmission loop line although Ashuganj-Bakhrabad pipeline built in 1997 never achieved capacity transmission. A very novice design of pig receiver station of the pipeline few kilometers upstream of the terminal point has created operational hazard as dirt and spoils carried with the gas deposits in this leg from time to time. Another pipeline from Dhanua – Savar was also built to increase gas supply in the region for meeting additional gas requirements for CNG under Dhaka Clean Fuel Projects.

GTCL also constructed Bakhrabad–Siddhirganj pipeline for meeting the exponential growth of gas demand in the Meghnaghat, Siddhirganj areas. Possibly the pipe used for this line was substandard. Allegations of corrosive metallic products are being reported in this section of GTCL transmission line.

Most of the above pipelines and facilities of GTCL have now become white elephants as the gas usage projected during DPP has not been achieved and possibly would never be achieved.

RLNG Evacuation

The GTCL however successfully constructed two large pipelines from Moheshkhali – Anowara, constructed large city gate stations at Anowara and Faujdarhat and a large pipeline from Faujdarhat – Bakhrabad via Feni for evacuating RLNG from two FSRUs set up at Maheshkhali offshore. This infrastructure was however necessary and GTCL must be credited for accomplishing these facilities on time despite a very challenging circumstances. However, a dispute with the supplier has created an impediment for the operation of a metering station at Anowara for metering gas supply to BGDCL-operated ring main from Anowara CGS. GTCL would require building additional facilities for evacuation of RLNG that would be imported using land based LNG terminal station under planning at Matarbari.

Financial Stress on GTCL

Some of the huge infrastructure that the GTCL has constructed since 2010 are essential while some are unnecessary and poorly conceived. It has created huge financial stress on the GTCL. The operational activities of GTCL have been affected. The company spent huge amount of money for imparting training to large number of officials in different countries, but could not acquire capacities for operating the compressor stations. The EPCM contract with the contractor required extension. The genuine questions are being asked now why GTCL technical resource can not operate the compressor stations. Meanwhile, the investment made by Chevron for construction and operation of Muchai station may also been transferred to GTCL. This compressor station was built at a time when GTCL had almost finalized award of contract to its contractor. Chevron built it at much higher than GTCL negotiated price with its contractor.

Major gas facilities of GTCL are now in Maheshkhlai and Anowara area. Operation division requires a major office in greater Chittagong and sub zonal offices at Khulna and perhaps at Bogura when gas supply to Rangpur is materialized. GTCL SCADA system also needs to be fully operational.

Gas System Management is in a Mess

Rapid depletion of gas production from the gas fields has already created concern about possible huge gas deficit which is apprehended to start emerging by the end of 2021. There is no possibility of additional gas discovery to boost gas supply in less than 3-5 years from onshore and 8-10 years from offshore. There is also no chance of additional LNG import in less than 5 years. But there is a possibility that local gas production may deplete to 1,500 MMCFD or below. We are not sure whether Petrobangla and EMRD have worked out possible remedy to confront the possible crisis in 2024 and beyond. In such a situation, the GTCL is extending the gas grid to Ranpur and constructing another pipeline from Bakhrabad towards Naryanganj and Padma Multipurpose bridge.

Construction and keeping ready gas transmission infrastructure for possible evacuation of additional gas on time is smart decision. But making huge investment on the downstream with any possibility of additional gas supply is a poor decision. Perhaps business mafia syndicates got benefitted as huge money has gone down the drain for procurement of materials expeditiously under Speedy Power and Energy act. There have been allegations of substandard construction of some pipeline and poor quality materials.

Conclusion

GTCL should reassess its gas transmission assets and approach BERC for required compensation for investment recovery through adjusting wheeling charge. It must acquire capacity of operating its compressor stations and fully operational SCADA facility. At the moment it only acquires data but cannot control. After reviewing the system, decision must be taken on how the compressor station lying idle at Elenga can be better used. Chevron should be asked to carry out additional investigation on its assigned blocks 12, 13 and 14 for new gas resource. SGFL must also carry out investigation at Surma Basin for new resources. There must be new exploration at Sunetra through spotting drilling locations if required through further seismic survey. GTCL operation directorate must be further staffed. If necessary, four sub-zones must be created. Operation and system management should be segregated. Now senior officers, GM and above, are reluctant to stay outside Dhaka. But the system has been extended from Moheshkhali to Khulna and from Beanibazar to Bogura. In near future, it will be extended to Payera in Patuakhali. If necessary, GTCL should enter into a joint venture with reputed international transmission company for operating the system. Alternately, some activities can be out-sourced. Petrobangla must immediately let out PSC for engaging IOCs for exploration in the onshore frontier and deeper prospects of discovered fields. The gas fields at Shahbajpur must be linked with gas grid as soon as possible.