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India mulls incentives policy for adoption of enhanced recovery methods at oil-, gasfields

18th January 2018

By: Ajoy K Das

Creamer Media Correspondent

     

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KOLKATA (miningweekly.com) – The Indian government is working on a policy framework to offer incentives for the adoption of enhanced oil recovery (EOR) and enhanced gas recovery (EGR) methods at all operating oil- and gasfields across the country.

The draft policy in circulation among industry stakeholders notes that the average recovery factor from oil- and gasfields across India has remained below the global average.

The government believes the adoption of EOR and EGR methods, along with unconventional production techniques, will be an effective tool to ensure it achieves the goal set out in its energy security programme to reduce crude oil imports by 10% by 2022.

The adoption of enhanced recovery (ER) methods is, however, capital intensive and technologically complex and the government, therefore, proposes incentives that will enable operators to increase production from existing operational hydrocarbon assets.

The policy framework defines ER as the deployment of recovery techniques and all efforts that lead to at least a 50% increase in the production of crude oil beyond the current recovery, and a 75% increase in the case of gasfields.

Among the EOR methods that government expects operators to adopt are the injection of fluids, which interact with the reservoir rock fluid system, resulting in the alteration of fluid properties and swelling; viscosity reduction; and a phase recovery system.

The proposed EGR methods include the injection of nitrogen and other inert gases into reservoirs to increase pressure or the deployment of dewatering techniques to increase the yield from the reservoirs.

To encourage the adoption of the varied ER methods, the government proposes that operators be eligible for a deduction from business income tax of up to 150% of any expense paid for ER pilot projects. Such deductions will be applicable until March 31, 2025.

Another proposal is that operators will be eligible for a 50% waiver of applicable cess on the gross production of crude oil from wells that use approved EOR methods for a period of ten years.

In terms of the adoption of EGR in gasfields, the government has proposed an incentive equivalent to 10% of the gas well-head price on gross production from the designated well where approved EGR methods have been adopted for a period of ten years.

However, the incentive payable would be capped at $0.60 per million metric British thermal unit in the case of offshore fields and $0.30 per million metric British thermal unit for onshore fields.

The government will appoint an Enhanced Recovery Committee, comprising representatives of government and various upstream regulators, to review and approve the eligibility criteria for incentives, pilot projects, ER technologies and unconventional production techniques.

It has also been suggested that the renewal of operators’ contracts with the government will be subject to the operator committing to adopting EOR or EGR methods for their respective assets.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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