Discovery of Natural Gas in Andaman Shallow Offshore Block

Discovery of Natural Gas in Andaman Shallow Offshore Block

Why in News?

Recently, Oil India Limited (OIL) announced the discovery of natural gas at its second exploratory well in the Andaman Shallow Offshore Block. The finding highlights the company’s ongoing efforts to strengthen the nation’s energy security.

Highlights of Oil India Limited Discovery

• Location: Oil India Limited has announced the occurrence of natural gas in its second exploratory well named Vijayapuram-2, under the Ministry of Petroleum and Natural Gas. The discovery has been made in the Andaman Shallow Offshore Block AN-OSHP-2018/1. This block lies in the waters of the Andaman Basin, which has been considered a frontier area for hydrocarbon studies for years. 

• Significance: The confirmation of natural gas is important for India’s larger energy security goals. This is the first hydrocarbon indication during the current exploration campaign in the region. The results could also provide clues about the migration pathways and hydrocarbon sources, which are critical for shaping drilling strategies.

• Future Steps: Oil India has planned further tests, including gas isotope studies, to better understand the origin of the gas. This step will help identify whether the occurrence points to a larger accumulation of hydrocarbons. Based on results, the company may revise its exploration and drilling roadmap in the region.

What is the Andaman Shallow Offshore Block?

• The Andaman Shallow Offshore Block is a designated region within the Andaman Basin that has been identified for oil and gas exploration. 
• The block is referred to as AN-OSHP-2018/1, and it is one of the areas allocated to Oil India Limited for exploration activities. 
• Offshore blocks are usually classified as shallow, deepwater, or ultra-deepwater depending on their depth and geological features. 
• The Andaman Shallow Offshore Block falls under the shallow category, which generally indicates water depths of less than 200 meters.
• Offshore blocks extend into shallow waters near the continental shelf, making them different from deepwater exploration zones. 
• The exploration campaign in the Andaman Shallow Offshore Block is part of India’s broader energy roadmap.

Understanding the Andaman Basin

• The Andaman Basin lies in the Andaman Sea, which forms part of the eastern extension of the Bay of Bengal. It is located near the Andaman and Nicobar Islands, a Union Territory of India. 
• The basin extends into offshore waters, which include both shallow and deep areas. The Andaman Basin is unique because of its tectonic setting along the subduction zone of the Indian Plate and the Burma Plate.
• The Andaman Basin covers an area of approximately 47,000 square kilometers, though estimates vary depending on geological surveys. 
• The basin is elongated in shape and extends in a north-south direction parallel to the Andaman Islands. It consists of multiple sub-basins separated by ridges and faults. These structural variations create potential zones for hydrocarbon accumulation. Sediment thickness in some parts reaches over 4,000 meters, which is favorable for natural gas and oil deposits.
• The Andaman Basin consists of thick sedimentary sequences that have accumulated over millions of years. These sediments contain organic material.

Importance of the Andaman Basin for Oil Exploration

• Frontier Hydrocarbon Potential: The Andaman Basin is considered a frontier region with significant hydrocarbon potential. Geological surveys indicate that the basin contains thick sedimentary layers, some exceeding 4,000 meters, which could host oil and natural gas. Exploration in this area offers India a chance to discover new reserves beyond traditional basins like Krishna-Godavari and Mumbai Offshore. 

• Contribution to Energy Security: Developing resources in the Andaman Basin can reduce India’s dependence on oil imports, which currently accounts for over 80% of crude consumption. Domestic production from frontier basins helps stabilize supply and prices. The basin could play a crucial role in meeting India’s growing energy demand projected to rise by 30% by 2030, according to government forecasts.

• Strategic Location: The basin is located near the Andaman and Nicobar Islands, close to international shipping lanes. This strategic position allows easier logistics for offshore operations and potential export of hydrocarbons in the future. The proximity to Southeast Asia also opens opportunities for regional energy cooperation. India can use this location to develop infrastructure to support international trade.

Initiatives to Boost Oil Exploration in Andaman Basin 

• Hydrocarbon Exploration and Licensing Policy (HELP): This was introduced in 2016, replacing the older New Exploration Licensing Policy (NELP). HELP created a more industry-friendly environment by providing a single license for all hydrocarbons, including oil, natural gas, shale gas, and coal bed methane. It also introduced a revenue-sharing model, where the government receives a fixed share of revenue instead of auditing costs.

• Open Acreage Licensing Policy (OALP): Under OALP, companies can select exploration blocks of their choice throughout the year. This provides flexibility to investors and allows customized investment strategies. It complements HELP by offering freedom in marketing and pricing of oil and gas.

• Deep Andaman Offshore Survey: In 2020, Oil India Limited conducted the Deep Andaman Offshore Survey. The survey identified mud volcanoes and Baratang formations, indicating the presence of hydrocarbons. These discoveries highlighted the potential for oil and gas in the basin. The survey provided essential geological information to guide future exploration and drilling activities.

• National Data Repository (NDR): National Data Repository (NDR) is an integrated platform containing extensive exploration and production data from all Indian sedimentary basins. The survey results of 2020 were added to this platform in 2023. The repository helps companies make informed investment decisions.

• Incentives for Exploration: HELP and OALP policies include royalty incentives for high-risk areas such as deepwater and ultra-deepwater blocks. These incentives reduce financial pressure on companies and encourage exploration in challenging terrains.

Challenges Involved in Oil Exploration

• Difficult Geological Conditions: The Andaman Basin has complex geological structures. Faults, fractures, and deep sediment layers make drilling technically challenging. These conditions require advanced geological surveys and specialized equipment to accurately locate hydrocarbon deposits.

• Deepwater Exploration Risks: Many parts of the basin are located in deepwater zones with depths exceeding 1,000 meters. Drilling in these areas is high-risk and expensive. Harsh sea conditions, strong currents, and unpredictable weather increase operational difficulty.

• High Operational Costs: Exploration in frontier areas like the Andaman Basin involves significant financial investment. Various types of costs include drilling, equipment, seismic surveys, and logistics with deepwater operations increasing expenses further. These high upfront costs may discourage smaller companies, slowing exploration progress.

Way Forward

• Companies should invest in detailed seismic and geological surveys. Integrating seismic imaging, satellite data, and 3D modeling can provide a comprehensive understanding of the basin’s geology.
• Companies should invest in modern rigs, remotely operated vehicles, and robust safety systems that can operate in harsh sea conditions and strong currents. Such technological upgrades will increase operational efficiency and safety.
• A sustainable approach to exploration is necessary to protect the fragile marine ecosystem around the Andaman Basin. Companies must adopt stringent environmental protocols and develop contingency plans for potential ecological impacts.
• Strategic partnerships between national and international companies can bring in technical expertise, capital investment, and innovative solutions. Coordinated efforts between policymakers and research institutions will strengthen India’s position in offshore hydrocarbon development.