The government may feel safe about its energy policy and Chevron may make a profit, but Bibiyana gas field, whose production expansion was inaugurated by the prime minister on November 29, is being pushed to the brink of disaster.
Bibiyana gas field in Habiganj is capable of remaining in service until 2032, but if Chevron’s extraction plans go into full effect, the field will be exhausted by 2024. Chevron data, presented to Petrobangla recently, warns of production declines as early as 2018.
Government’s decision to allow US oil company Chevron to extract 1,200 million cubic feet of gas per day (mmcfd) from the Bibiyana gas field starting in January 2015 follows a certain political and business logic. But experts warn that such a high rate of extraction could kill the gas field, or at the least maim it badly.
“It is a combined effort to make a significant difference to help solve the energy crisis in Bangladesh,” the Prime Minister’s Energy Adviser Tawfiq-e-Elahi Chowdhury said in 2012 when Chevron announced its $500mn Bibiyana expansion project.
The government’s desire to parlay the massive rate of gas extraction at Bibiyana into the generation of power reveals how crucial the sector is in terms of electoral politics, and how eagerly the government wants to win public confidence by claiming a success in the sector.
Ministers have also said the extra gas would go to propping up flagging enterprises like the country’s defunct fertiliser factories.
Chevron, meanwhile, will be able to maximally exploit the resources at Bibiyana and turn a handsome profit.
But according to the production sharing contract (PSC), a company should not produce more than 7.5% of the proven and probable reserve of gas in a year. As we will show, from January 2015 Chevron will be producing at a rate of 10.4%.
Given that the remaining reserve is 4.2 trillion cubic feet (tcf), annual production should not be more than 315 billion cubic feet (bcf), which translates into a daily production rate of 863 mmcfd.
At present, Chevron already is over producing gas to the tune of nearly 1,000 mmcfd. In January 2015, the company has announced that it will produce 1,200 mmcfd.
That means that Chevron is planning to produce 39% more than it should according to the PSC.
According to the PSC, a gas field is considered to have a 25-year lifespan. Since production started in March 2007, Bibiyana gas field is expected to be viable until 2032. But Chevron, in a recent presentation to Petrobangla, said production from Bibiyana would start to decline after 2018. Why then is the company be willing to produce gas at a rate that will almost certainly hasten the gas field’s demise?
After all, Chevron, if it extracted the proven reserve at a more leisured pace, would not only make a good return on its investment but would also be able to take advantage of a five-year extension built into its contract to prolong its business here.
“If the gas runs out before Chevron’s contract expires or if over extraction impedes production or shuts it down, who will bear the responsibility for it?” Ijaz Hossain, professor at the Bangladesh University of Engineering and Technology (Buet), asked.
Over production
According to the Bangladesh Economic Review 2014, the initial reserve of gas at Bibiyana was 7.4 tcf, of which 5.7 tcf was proven and recoverable. This is bigger than the last assessed figure of the country’s oldest producing field, Titas, the reserves of which are currently being reassessed.
At the beginning of 2014, the remaining reserve amount at Bibiyana gas field was 4.2 tcf.
Bibiyana is now the largest producing gas field of the country, currently producing about 40% of Bangladesh’s total domestic natural gas supply.
Chevron’s bid to extract 1,200 mmcfd starting in January 2015 will exceed the maximum extraction limit by 337 mmcfd.
The geological structure of the gas field is at risk of irrevocable decimation because of the aggressive extraction policy agreed to between the government and Chevron, experts say.
Experts say excessive extraction of gas can destroy a gas field, a situation already witnessed at the Bakhrabad and Sangu fields.
Ijaz said: “The expected gas production could not be achieved at the Bakhrabad and Sangu gas fields because of over extraction. Over extraction is a danger to gas fields.”
The Bakhrabad gas field used to produce 250 mmcfd, but that rate has plummeted to a mere 36 mmcfd.
Sangu once produced more than 150 mmcfd; it has now been shut down.
The Bibiyana expansion project undertaken by Chevron has drilled 14 new wells at Bibiyana over the last three years.
The company has built two new gas processing trains and an enhanced liquids recovery unit that will produce an additional 4,000 barrels per day of condensate.
Ijaz said: “Experience clearly teaches us that over extraction is bad for gas fields. Petrobangla should seriously keep this in mind.”
He was sceptical about whether Petrobangla monitors possible over extraction of gas.
Processing plant
The processing plant at Bibiyana gas field could become inoperable any day because it is producing more gas than it has the capacity to handle.
Industry insiders say processing plants should ideally be run at 90% of capacity in order to ensure a long service life.
Chevron’s updated figures indicate with the two new trains, the processing plant has a capacity of 1,250 mmcfd. If the production rate adheres to the 90% rule, the maximum amount the plant should process is 1,125 mmcfd.
But Chevron says it is gearing up to produce gas at the rate of 1,200 mmcfd.
If production exceeds the 90% limit, there is a chance that unprocessed gas might enter the national grid, giving rise to severe complications.
Processing plants separate dust, water and condense the raw gas extracted from under the earth for use.
Adverse impacts
On June 23, 2013 the supply of gas was disrupted almost everywhere in the country for nearly 20 hours following a leak at the processing plant of the Bibiyana gas field.
Daily life in most of the country, including the capital, was severely disrupted because of shortages of gas, electricity and water supplies.
In short, a fault at a single gas field of Bibiyana’s size and importance can cripple the country.
Buet professor Ijaz Hossain called the government’s plan to augment the already massive output of gas from Bibiyana a “risky gamble” for the nation.
Istiaque Ahmad, chairman of Petrobangla, told the Dhaka Tribune that he was not in charge when the contract was signed, and said that he did not want to comment on it.
But he added that the government must have had its reasons for making the deal.
Chevron’s response
Since Bangladesh has just one big source of natural gas – Bibiyana – the question is should the gas be extracted at a safe and moderate pace or should it be finished off within a decade?
Naser Ahmed, external affairs director of Chevron Bangladesh, told the Dhaka Tribune: “Allegations about over production causing lower recovery are baseless and unfounded.”
But the energy major admitted that gas production in the country faced imminent decline.
“Bangladesh’s gas production will decline unless investments in seismic acquisition, exploration drilling and development are increased,” Naser said, adding that the extraction levels his company had planned were approved by the government.
“The Bibiyana Expansion Project was approved by Petrobangla, and it is consistent with the Gas Sales Purchase Agreement (GSPA) and the PSC signed with them,” he said.
Declining to give information about Bibiyana’s prospects and safety situation, Naser said: “As per long-standing policy, we do not release production figures on a well-by-well, or even field-by-field basis.
“Chevron production from Bibiyana plus Chevron’s two other gas fields is expected to reach 1.4 billion cubic feet per day,” he said.
Chevron has two PSCs in Bangladesh, covering Block 12 (Bibiyana field) and Blocks 13 and 14 (Jalalabad and Maulvibazar fields) in the north eastern Sylhet region.
