Report FFF

Revised Field Development Plan
Kalol Discoveries (SE4 Cluster Area)

CB-ONN-2002/3 Block

Gujarat State Petroleum Corporation Limited
Gandhinagar, Gujarat, INDIA
October 2014

GSPC-JOGPL-HPCL-GGR CB-ONN-2002/3 | FDP | Sanand Part-A - ii -
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EXECUTIVE SUMMARY

GSPC-led consortium of GSPC-JOGPL-HPCL-GGR carried out the 6-year exploration
program in the Block CB-ONN-2002/3 which was spread into two areas namely Part-A
(Sanand area) and Part-B (Miroli area). Total 17 exploratory wells were drilled with 7
discoveries and 3 appraisals wells were drilled to appraise 2 discoveries (SE8 & M1).
There were 5 oil discoveries in Part-A, out of which two were in shallower Kalol
Formation (SE8 and SE10) and 3 were in deeper Intra-Cambay Formation (SE-2, SE-4
and SE-5). There were 2 discoveries (M1 and M6) in Part-B - both in Intra-Cambay
Formation and their integrated development was duly approved by Management
Committee (MC) of the block on 5/11/12 and presently contemplated for commercial
production.

As a part-fulfillment of discovery maturation process pursuant to the PSC provision,
Article 10.5, GSPC as the Operator on behalf of consortium partners submitted an
integrated report on Declaration of Commerciality (DoC) for Oil Discoveries in Part A of
the block (Sanand area). All the discoveries were combined into three clusters viz. SE-8
discovery, SE-10 Discovery and SE4 cluster (SE2, SE4 & SE5 discoveries) for integrated
development leveraging commercial merit. The integrated DoC of the discoveries was
first deliberated in the MC meeting dated 5/7/11 and MC advised contractor to come
up with more improved economics through revisit to current work. Accordingly,
Contractor submitted a revised DoC on 9/3/12 to DGH for a review. The DGH-
recommended report was duly approved by MC on 5/11/12. MC endorsed the pre-
development of above 5 discoveries with an estimated oil inplace of 15.45 MMBBL and
estimated ultimate recovery of 568,000 BBL. MC noted DGH-reviewed peak oil rate of
230 BOPD and recommended for initial development with 6 existing oil wells along with
1 new horizontal well. The oil well, SE3 which was not earlier declared discovery on
geological pay analogue with other discoveries was also duly recognized by MC to be
included under forward strategy.

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As a part of integrated development strategy for Sanand Part-A Clusters, GSPC as the
Operator on behalf of Contractor hereby put forth an initial Field Development Plan
(FDP) in order to commission the field initially with 6 existing wells, to be followed by
1 new horizontal well as a part of improved oil recovery.

During the FDP work, all the three Cluster well(s) namely SE8(+SE8-A1), SE10 and SE2-
(SE3)-SE4-SE5 were independently assessed through necessary reservoir modeling
(both static and dynamic) leading to estimate of oil inplace and its recovery through
prediction over a period of 15 years.

The current estimate of combined oil inplace for 3 clusters after reservoir simulation
was initialized to 24.75 MMBBL (SE4 Cluster: 13.03 MMBBL, SE8: 10.52 MMBBL and
SE10: 1.2 MMBBL). The initial production from existing wells in all clusters is expected
to be in the order of 110 BOPD (SE8 Cluster: 32, SE10:13, SE4 Cluster: 65), while with
the MC-recommended proposed horizontal well in SE4 cluster, fluid production is
envisaged to be additional 135 BOPD to existing field oil rate. The terminal oil
production cumulative of all clusters including horizontal well came out to be 714,100
BBL with a recovery of 2.88%. Production of Associated Natural Gas (ANG) is expected
to be minimal and would be utilized internally; hence the same was not commercially
evaluated.

The field with 6 oil wells would be commissioned immediately after MC approval of FDP.
The produced crude would be stored with minimum facility at the 4 well sites namely
SE8, SE8-A, SE10 and SE4 Cluster and transported using tankers to local market. It was
recommended that the field being marginal in nature, its performance would be
reviewed after one year of production as current estimates were essentially biased to
standard correlations with a little support of hard data. Based on encouraging field
performance, the proposed horizontal well would be matured for drilling along with

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multi-stage hydraulic fracturing.

The project with past expenditure will not yield to positive economic returns. However,
considering only the future development CAPEX of US$ 10.11mn (new well cost: 7.20mn
and facility cost: 2.91mn) and OPEX of US$30/BBL, the project works out to be
profitable. Under such scenario, the pre-tax NPV of profit of project at 10% discount
rate and crude price of US$ 100/BBL stood at 9.78mn with IRR of 73.0% and payback of
3.5 years.

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C O N T E N T S Page No.
Introduction
1
1. Block Summary
2
2. Geological Brief
3
3. Background of RFDP
12
4. Revised Field Development Plan
13
4.1. Reservoir G&G
5.1.1 Seismic Interpretation
5.1.2 Petro-physics
5.1.3 Geo-cellular Model
5.1.4 Oil Estimate
13
4.2. Dynamic Reservoir Model
5.2.1 SE8 Cluster Wells
5.2.2 SE10 Well
5.2.3 SE4 Cluster Wells
28
4.3. Development Strategy
5.3.1 Initial Field Development
5.3.2 Supplementary Development
5.3.3 Production Engineering
5.3.4 Proposed Mining Lease
37
4.4. Economic Model
5.4.1 Inputs & Assumptions
5.4.2 Analysis & Outcomes
41
Conclusions
46

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LIST OF F I G U R E S
1. ------------------------------------------------------------
1.1. Location Map of Block in Cambay Basin

2. ------------------------------------------------------------
2.1. Tectonic Map of Cambay Basin
2.2. N-S Geological Section of Cambay Basin

3. ------------------------------------------------------------
3.1. Location Map of all drilled wells in Sanand (Part A) area

5. ------------------------------------------------------------
5.1.
5.1.1.
5.1.1.i. Time-structure Map on top of Intra-Cambay Formation - Sanand (Part A) Area
5.1.1.ii. Time-structure Map on top of Kalol Formation - Sanand (Part A) Area
5.1.1.iii.
5.1.1.iii.a. Well-to-Seismic Tie at Well SE8
5.1.1.iii.b. Well-to-Seismic Tie at Well SE10
5.1.1.iii.c. Well-to-Seismic Tie at Well SE4
5.1.1.iv.
5.1.1.iv.a. Time-vs-Depth Section across Kalol Reservoir - SE8 discovery
5.1.1.iv.b. Time-vs-Depth Section across Kalol Reservoir - SE10 discovery
5.1.1.iv.c. Time-vs-Depth Section across Intra Cambay Reservoir - SE4 cluster
5.1.1.v.
5.1.1.v.a. RMS Amplitude Map showing area of interest SE8 discovery
5.1.1.v.b. RMS Amplitude Map showing area of interest SE10 discovery
5.1.1.v.c. RMS Amplitude showing the Area of Interest (AOI) of SE 4 cluster
5.1.1.vi. Depth Structure Map SE4 Area
5.1.1.vii. RMS Attribute Map SE4 Area
5.1.1.viii. RMS Attribute Map SE4 Area
5.1.2.
5.1.2.i.
5.1.2.i.a. Formation Evaluation Logs (wells SE8 - SE8A1)
5.1.2.i.b. Formation Evaluation Logs (well SE10)
5.1.2.i.c. Formation Evaluation Logs (well SE4)
5.1.2.i.d. Formation Evaluation Logs (well SE2)

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5.1.2.i.e. Formation Evaluation Logs (well SE5)
5.1.3.
5.1.3.i. Depth Structure Map of Reservoir Bottom of Zone B2
5.1.3.ii. Well Correlations across SE8-SE8A1-SE8A2 -SE14 wells
5.1.3.iii. Gross Thickness Map of Reservoir Zone A & B
5.1.3.iv. Zone Disposition along Well Profile
5.1.3.v. Gross Thickness Map of Reservoir Zone B2
5.1.3.vi. Reservoir Property Geo-statistics - Facies
5.1.3.vii. Reservoir Facies Profile scaled across Seismic Amplitude
5.1.3.viii. Reservoir Property Geo-statistics - PHIE
5.1.3.ix. Effective Porosity Map across Model
5.1.3.x. Reservoir Property Geo-statistics - NTG
5.1.3.xi. Reservoir Net Sand Thickness Map across Model 1P, 2P & 3P
5.1.3.xii. Reservoir Property Geo-statistics - SW
5.1.3.xiii. Depth Structure Map of Reservoir Top of Zone3
5.1.3.xiv. Zonation in well SE10
5.1.3.xv. Gross Thickness Map of Reservoir All Zones
5.1.3.xvi. Zone Disposition along Well Profile
5.1.3.xvii. Gross Thickness Map of Reservoir Zone3
5.1.3.xviii. Reservoir Property Geo-statistics - Facies
5.1.3.xix. Reservoir Facies Profile scaled across Seismic Amplitude
5.1.3.xx. Reservoir Property Geo-statistics - PHIE
5.1.3.xxi. Effective Porosity Map across Model
5.1.3.xxii. Reservoir Property Geo-statistics - NTG
5.1.3.xxiii. Reservoir Net Sand Thickness Map across Model P2
5.1.3.xxiv. Reservoir Property Geo-statistics - SW
5.1.3.xxv. Well Log Correlation along SE2-SE5-SE4-SE3
5.2.
5.2.1.
5.2.1.i.
5.2.1.i.a. Predicted Production Profile Case 1- SE8 existing wells
5.2.1.i.b. Predicted Production Profile Case 2- SE8 existing wells and one new well
5.2.2.
5.2.2.i. Predicted Production Profile SE10
5.2.3.
5.2.3.i.
5.2.3.i.a. Predicted Production Profile SE 4 Cluster
5.2.3.i.b. Predicted Production Profile SE 4 existing wells + new horizontal well
5.3.
5.3.2.
5.3.2.i. HCPV Map with Proposed Location
5.3.3.
5.3.3.i.
5.3.3.i.a. Surface Facility Diagram
5.3.3.i.b. Layout Model For Proposed EPS

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5.3.4.
5.3.4.i. Proposed Development Area

A N N E X U R E S

I. Basic Well data

II. Master Log Data Summary

III. Well Test Summary

IV. Reservoir Study (Well Test Interpretation & Production Profile)

V. Proposed Horizontal Well Path

VI. CAPEX/OPEX Breakup

VII. MC Resolution dated 5.11.12 (Excerpt)

VIII. MC Resolution dated 23.3.11 (Excerpt)

IX. Participants List (TCM, dated 13/5/13)

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INTRODUCTION
Operator on behalf of contractor submitted the Integrated DoC to DGH in July 2010 with
for a review and recommendation to MC. Accordingly, the study was presented to MC
on 5/7/2011 along with DGH observations. Given the fact that profit petroleum would
be a distant reality due to marginal nature of field production and recovery, MC advised
Operator to submit a revised study with particular focus on higher productivity and the
improved economics. Operator revisited the work and submitted a revised report of
commerciality analysis in March 2012. The report was reviewed by DGH and
recommended to MC. MC in its meeting dated 5/11/12 reviewed the DoC and advised
contractor to come up with a FDP that would be based on existing oil wells (SE2, SE3,
SE4, SE5, SE8, SE8-A1 and SE10) and 1 new horizontal well with multi-stage hydraulic
fracturing.

Operator embarked on field development planning in line with DGH technical review
and findings. All achievable field development scenarios were worked out to improve
the oil recovery at a modest development spending. Operator demonstrated a case
where new but proven technology of multi-stage fracturing of horizontal well could be
a possible option to achieve favorable returns. In such effort, Operator carried out
further refinement in interpretative model of SE4 cluster, taking cue from positive
drilling results of adjoining GSPC-operated field.

The static reservoir models as built from sub-surface interpretations were all simulated
with the inputs of dynamic reservoir properties for all 3 clusters (SE4 Cluster, SE8
Cluster and SE10). The production forecast was run for 15 years and economics carried
out under various scenario of OPEX and market conditions.

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1. BLOCK SUMMARY
Exploration block CB-ONN-2002/3 was awarded to GSPC-JOGPL-HPCL-GGR consortium
with GSPC as the Operator with participating interests of 55%, 20%, 15% and 10%
respectively. This block (Fig.-1.1) has two parts Sanand area (Part-A) in the North and
Miroli area (Part-B) in the South. In the Part A, the oil discoveries made in the 2 wells
namely SE8, SE10 belonged to Kalol Formation while the discoveries made in the 3 wells
namely SE2, SE4 and SE5 belong to Intra Cambay Formation. In the Part B, oil
discoveries were made in the Intra Cambay Formation only.

The block had 6 years of exploration period which was split into three phases of 2.5 +
2.0 + 1.5 years for Phase I, II and III respectively. However, Phase I was extended twice
to 4.0 years cumulatively at the expense of Phase II period, which was effectively
reduced to 0.5 year. Following break-up of timelines would further illustrate the
duration of each phase:

29.07.2004 28.01.2007 :: Phase I (2.5 year)
29.01.2007 28.07.2007 :: Phase I 1st Extension (0.5 year)
29.07.2007 27.07.2008 :: Phase I 2nd Extension (1.0 year)
28.07.2008 27.01.2009 :: Phase II (0.5 year)
28.01.2009 27.07.2010 :: Phase III (1.5 year)

The total area of the block was originally 285 sq km and the effective area at the end of
exploration period stood at 142 sq km after relinquishment of 50% of original area (25%
in Phase-I and 25% in Phase-II). As a part of MWP carried out in 3 phases GSPC as the
Operator re-processed all available 650 LKM of 2D seismic data, collected/analyzed
200 geo-chemical samples and acquired/processed/ interpreted 200 sq km of 3D data.
As earlier narrated, two extensions of 6 months and 12 months were taken from Phase-
II in order to complete the committed MWP under Phase-I with the following additional
work program:

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1. Detail interpretation and building of a comprehensive geological model based on
3D seismic data and the results of drilled wells
2. AVO processing to identify possible stratigraphic traps present
3. Inversion of 3D seismic and refinement of appraisal locations

As was seen from the above table, exploration in the block had since completed and 20
wells were drilled by the GSPC-led contractor. 5 wells were notified as oil discoveries in
Part A (SE2, SE4, SE5, SE8 & SE10) and 2 wells in Part B (M1 & M6). The discoveries
namely SE8 and M1 were appraised through drilling of SE8-A1, SE8-A2 and M1-A1
wells. The well, SE3 was an oil well but not declared a discovery as it was reported to
have analogue pay with discoveries in SE4 cluster. The Part B discoveries namely M1 and
M6 were integrated and duly approved by MC of their initial development on 5/11/12
and the oil pool was contemplated for commercial production soon.

2. GEOLOGIC BRIEF
Cambay Basin was regarded as a narrow, elongated, intra-cratonic rift basin situated in
the north western part of Precambrian Shield in the state of Gujarat. The basin was a
Tertiary graben with the sediment fill in the basinal part of Deccan. It was split into 5
tectonic blocks from south to north, namely Narmada-Tapti, Broach-Jambusar,
Cambay-Tarapur, Ahmadabad-Mehsana, and the Patan-Tharad block (Fig.-2.1).

The discovery area (SE8, SE10 & SE4 cluster), which was reportedly located in the block
that belonged to AhmedabadMehsana tectonic sub-block (Fig.-2.2), which was
segmented longitudinally into two major half grabens, each with two prominent
basement faults. There was a number of ONGC oil and gas fields in the immediate area
to the north and east of Sanand-Miroli block, namely Balol, Bechraji, South Kadi, Kalol,
Jhalora, Sanand, Nawagam and Dholka.

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Fig.-2.3 shows the generalized stratigraphy of the onshore Cambay Basin. In the
following sections, different formations/ members were described from base upwards
to demonstrate a brief account of geology in terms of tectonics, sedimentation,
depositional environment and resultant lithology.

Olpad formation (Paleocene)
The Olpad formation was reported to commonly contain reworked volcanics as
trapwash, along with conglomerate, sandstone, siltstone and claystone. Sediments of
the Olpad Formation were deposited primarily as a series of sub-aerial alluvial fans and
fluvial facies. At places lower part of Cambay shale inter-fingered with the alluvial units
of the Olpad Formation.

Wells SE2, SE3, SE4, SE5, SE8 and SE10 were drilled down to Olpad Formation and
encountered the Olpad Top at more or less same depth. The respective depths at which
wells SE2, SE3, SE4, SE5, SE8 and SE10 encountered Olpad Formation were 1818m,
1977m, 1774m, 1821m, 1758m and 1851m TVDSS.

Cambay Shale formation (Early Eocene)
The Cambay Shale Formation is a lithostratigraphic unit with a thickness of around 340-
400m across different discoveries (SE2, SE4, SE5 & SE8) made in Part-A Sanand area.
The Cambay Shale formation is informally divided into lower (Older Cambay Shale) and
upper (Younger Cambay Shale) subdivisions, based on lithostratigraphic log
correlation.

The Older Cambay Shale (OCS) is typically grey to dark grey in color, with a high
amount of fines, altered volcanic material, slightly carbonaceous and contains beds of
red clays. The Younger Cambay Shale (YCS) is dark grey to black in color, with shale

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and siltstones. Interestingly coals are commonly found within YCS.

All the wells were drilled through the Cambay Formation. Cambay top encountered in
the wells SE2, SE3, SE4, SE5, SE8, SE8-A1, SE8-A2 and SE10 were 1413m, 1637m,
1373m, 1426m, 1404m, 1410m, 1438m and 1512m TVDSS respectively.

Kalol formation (Middle Eocene)
The Kalol Formation represents three episodes of sea level fluctuation. The regressive
depositional system is comprised of sandstone, siltstone, carbonaceous shale and coal
whereas the transgressive depositional system results in widespread deposition of
shale.

Two discoveries namely SE8 and SE10 made in the Part-A area, have discoveries in the
siltstones/fine-sandstones associated with the coal bands of the Kalol Formations. Such
reservoir bodies are fairly-developed over sandstone-dominated fluvio-deltaic
sediments.

Tarapur Shale formation (Late Eocene to Oligocene)
The Tarapur Shale formation is of Late Eocene to Oligocene age and conformably
overlies the Kalol formation. As the name implies, the Tarapur Shale formation is
dominated by shale with very limited reservoir potential.

All the wells were drilled through Tarapur Formation with Tarapur Top encountered at
more or less same depth.

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3. BACKGROUND OF REVISED FIELD DEVELOPMENT PLAN (RFDP)
Integrated FDP for Sanand Part-A area was submitted to DGH on 23.05.13 for two
reservoir formation namely - Kalol formation in SE-8; SE-10 discovery area and Intra-
Cambay formation for SE-4 cluster area. All the discovery areas were independently
assessed through necessary reservoir modeling (both static and dynamic) leading to
estimation of oil in-place and its recovery through prediction over a period of 15 years.

The FDP for the wells SE4 Cluster area (SE3, SE4, SE5) was for Intra Cambay Formation
(deeper level) but the indications and log behavior were also found to be interesting in
Kalol Formation (Shallower level) which was deliberated in the submitted FDP as upside
potential.

Subsequent to submission of FDP, Opeartor continued with G&G syudies and based on
the revised petro-physical evaluation integrated with cutting sample analysis and
success in testing result of Kalol formation in adjoining block CB-ONN-2000/1 block,
consortium decided to test the Kalol formation of SE4 and SE3 respectively as per article
10.2 of PSC. Operator on behalf of Consortium perforated the Kalol formation in the
interval 1219m-1222m (SE-4) and 1484m-1488m(SE-3) which flowed oil about 30-35
cubic meter per day in both the wells.

Significant oil Discovery in Kalol formations in the well SE3 and SE-4(in SE-4 cluster
area) has led to revise the development strategy for proper exploitation of natural
resource in a better manner. Detailed study involving re-interpretation of 3D Seismic
data (horizon and fault mapping), Seismic attribute analysis of Kalol formation,
Petrophysical evaluation, Volumetrics, Simulation, Production strategy and techno-
economic analysis have been carried out and is submitted for approval.

As a forward step under project maturation path, this FDP was formulated for DGH
review and recommendation to MC ahead of formal deliberation towards approval

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for field commissioning.

5. REVISED FIELD DEVELOPMENT PLAN
Since Integrated FDP for Intra Cambay Formation (SE4 cluster area) has already
approved with an ML of 18 sq.km area, hence RFDP of SE4 cluster area prepare in a
strategic way. The existing oil wells namely SE3 and SE4 (which is already tested in
Kalol Formation and flowed oil) would be opened and put on commercial production
as a part of initial development strategy and additional 4 development wells may
drilled within granted ML area. This would stream-in hard data on vital reservoir
fluid parameters that would reduce model assumptions and revised model with a
greater ML area may be justified.

5.1 RESERVOIR G&G
Reservoir of the SE-4 cluster area consists of siltstones/fine-sandstones
associated with the coal bands of the Kalol Formations. Such reservoir bodies are
fairly-developed over sandstone-dominated fluvio-deltaic sediments

5.1.1 SEISMIC INTERPRETATION
CGG Processed PSTM volume combined with Block CB-ONN-2002/3
and part of CB-ONN-2000/1 has been converted to depth domain by
isometric Velocity grid which has been prepared with the help of GSPC

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/ ONGC drilled well velocity. Depth conversion has been carried within
the depth range of 1100 m to 1800 m.

Initially Seismic
Interpretation were carried
out separately in time
migrated SEGY volume in
Sanand area as well as
depth converted RAI
volume (CGG Processed) in Combined area. Later on, In-house Seismic
interpretation of combined area has been carried out on extended
depth converted seismic volume. Three Key seismic horizons namely
Kalol Top, Reservoir Top and kalol Coal Top have been mapped both in
time and depth domain. All the possible faults have been mapped and
seismic surface attribute Analysis (Minimum Amplitude, RMS
Amplitude) carried out for delineation of reservoir.
Careful examination of several
structural and stratigraphic
attributes, a channel like feature is
identified which is likely to be
extending from GSPC operated Block
CB-ONN-2002/3 to Block CB-ONN-2000/1. Spectral Decomposition of
migrated SEGY volume at Sanand area on higher side frequency (43 -
47 Hz) also gives the support of similar features and its extension.

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Seismic attribute analysis depicts the
subtle channel running North to South
in CB-ONN-2002/3 block and swings
towards east in CB-ONN-2000/1
block. Wells SE-1 & SE-1A have been
drilled in this E-W corridor of channel
which again takes turn towards south,
making a complete meandering
channel. It is interpreted that the
energy condition of this channel could
have been very low in our study area and therefore sedimentary
deposits are also very thin. The shoulder of the channel could not be
seen on the seismic data as it is beyond the seismic resolution.
However, Seismic attribute map suggests that channel has fluctuated in
east-west direction due to which wells (e.g. SE-4, SE-5) falling beyond
the mapped channel are also containing similar thickness of sand with
varying petro-physical properties and are also charged with
hydrocarbon.
The position of SE3 and SE4 is controversial; either it present in the
levee part of the present channel or in a mid part of a different paleo
channel which may shifted later. Special data processing and advanced
attribute analysis may required.

2.3.2 PETROPHYSICAL INTERPRETATION
INTERPRETATION

SE-5
SE-4
SE-3
SE-1SE-1A
SE-2
SE-DEV1 SE-A1
235000 235500 236000 236500 237000 237500 238000 238500 239000 239500 240000 240500 241000
235000 235500 236000 236500 237000 237500 238000 238500 239000 239500 240000 240500 241000
2 5 4 1 0 0 0
2 5 4 1 5 0 0
2 5 4 2 0 0 0
2 5 4 2 5 0 0
2 5 4 3 0 0 0
2 5 4 3 5 0 0
2 5 4 4 0 0 0
2 5 4 4 5 0 0
2 5 4 5 0 0 0
2 5 4 5 5 0 0
2 5 4 6 0 0 0
2 5 4 6 5 0 0
2 5 4 7 0 0 0
2 5 4 7 5 0 0
2 5 4 8 0 0 0
2 5 4 8 5 0 0
2 5 4 9 0 0 0
2 5 4 9 5 0 0
2 5 5 0 0 0 0
2 5 5 0 5 0 0
2 5 5 1 0 0 0
2 5 5 1 5 0 0
2 5 5 2 0 0 0
2 5 4 1 0 0 0
2 5 4 1 5 0 0
2 5 4 2 0 0 0
2 5 4 2 5 0 0
2 5 4 3 0 0 0
2 5 4 3 5 0 0
2 5 4 4 0 0 0
2 5 4 4 5 0 0
2 5 4 5 0 0 0
2 5 4 5 5 0 0
2 5 4 6 0 0 0
2 5 4 6 5 0 0
2 5 4 7 0 0 0
2 5 4 7 5 0 0
2 5 4 8 0 0 0
2 5 4 8 5 0 0
2 5 4 9 0 0 0
2 5 4 9 5 0 0
2 5 5 0 0 0 0
2 5 5 0 5 0 0
2 5 5 1 0 0 0
2 5 5 1 5 0 0
2 5 5 2 0 0 0
0 250 500 750 1000 1250m
1:30000
27000
24000
21000
18000
15000
12000
9000
6000
3000
0
-3000
-6000
-9000
-12000
-15000
-18000
-21000
-24000
-27000
Surface attribute

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Kalol formation is mainly argillaceous Sandstone/siltstone with intercalation
of dark grey shale, carbonaceous shale and coal. Full suite of logs consisting
GR-SP-Cal, Resistivity-Density-Neutron logs were available. The Indonesian
equation is used for estimation of water saturation. The petro-physical
interpretative results for all wells are summarized below. Processing
parameters used for Kalol formations, well-wise are tabulated below.

Production testing of correlatable layers within Kalol Formation in the wells -
SE-3 and SE-4 measured oil influx. Following table shows the reservoir
boundary that was captured for Kalol reservoir top & bottom.

The reservoir in Kalol formation in three wells namely SE-3, SE-4 and SE-5
was correlated with the help of wire line logs (standard suite of Gamma-
Resistivity-Neutron-Density (Fig. 2.3.2.1).

A comprehensive Correlation table for Kalol reservoir top and bottom (CB-
Well Name Rw @ Deg F a m n Saturation
equation
SE-DEV-1 0.22 @ FT 1 2 2 Indonesian
SE-A1 0.22 @ FT 1 2 2 Indonesian
SE-1 0.22 @ FT 1 2 2 Indonesian
SE-1A 0.22 @ FT 1 2 2 Indonesian
SE-3

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ONN-2002/3 area ) is appended below.
Well
Reservoir Top
(m MD/TVDSS)
Reservoir Bottom
(m MD/TVDSS)
Fluid
SE3 1483.7/1191.0 1488.7/1195.4
OIl
SE4 1219.3/1188.6 1222.6/1185.9
SE5 1268.2/1167.7 1269.8/1169.2 Yet to Test

Discussion of Results
The sand/silt layer in the Kalol formation has been interpreted as
hydrocarbon bearing. The summary of the petrophysical evaluation along with
lithology descriptions are tabulated below (Table-5).

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5.1.3GEO-CELLULAR MODEL
3D geo-cellular reservoir model for Kalol Formation combined with SE4
cluster area (CB-ONN-2002/3) and part of adjoining Sanand East area
CB-ONN-2000/1)was carried out using M/s Schlumbergers Petrel
2013. The reservoir dimension as captured through seismic markers
and well tops was snapped to geo-cellular layered grid of 50x50m as
the first step for model creation. The reservoir properties were
assessed to appropriately preserve the heterogeneity and grouped into
zones and layers for subsequent grid-level population through pre-
defined statistical procedures.

Area of Interest (AOI)
Taking into consideration same type discovery in
co-relatable layers of Lr. to Mid. Eocene Kalol
pay, Static Modeling has been carried out for a
greater area of 30 sq.km. taking 4 wells in GSPC
operated Block CB-ONN-2002/3 and 4 wells (SE1,
SE1A, SE1A1, SEDev1) in Block CB-ONN-2000/1.

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Out of the whole modeled area, Sanand Discovery area is
approximately 13 sq.km.

Facies Identification and Classification
Five types of lithofacies have been
identified, classified and demarcated for the
entire Kalol Formation based on the cut-off
of density (RHOB) and Vshale (VCL) log. The different lithofacies
identified are coal, shale, carbonaceous shale, siltstone and sandstone
Kalol Reservoir layer that tested hydrocarbon in SE3 and SE4 is mainly
composed of silty sandstone (sand with minor amount of silt and
shale). Thickness of the sandstone interval is in the range of 3 to 4 m.
Well log Correlation
Entire Kalol Reservoir has been co-related based on the response of
basic wire line logs like GR-Resistivity-Density-Neutron.Different
markers has been picked such as Reservoir Top, Bottom, Coal-1, Coal-
2 , Coal-3 top and Cambay Shale Top. Reservoir layer is well correlated
among all the 4 wells (Fig 3.2.1 depicts the well correlation).
STRUCTURAL MODELING
1. Fault Modeling
Six interpreted faults has been considered
Structural modeling. Out of the six faults, one
fault is extending throughout the study area,
there by bisection it into two different
segments. Except SE2 all the wells drilled in the
block CB-ONN-2002/3 is present in the eastern
segment.

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2. Pillar Gridding
Pillar gridding approach has been carried out
taking i, j increment of 50m x 50m. Most of
the grid cells are aligned in approximately in
N-S & E-W direction. All the six modeled
faults has been used during pillar gridding

3. Horizon Modeling
Kalol Reservoir Top interpreted in the
seismic and well log level has been tied and
made as the top boundary of the 3D grid

4. Zonation and Layering
Two zones have been made down the
reservoir top using two well markers i.e.
Reservoir bottom and Coal -1 Top. Fig. 3.3.
represents the isochore thickness of the Top zone (Zone 2) that lie between
Reservoir Top and Reservoir Bottom.
The topmost and bottommost part of the resulting 3D grid belongs to the
depth of 1140m TVDSS and 1336m TVDSS respectively. Out of the two zones,
Zone-2 (lying between Reservoir Top and Reservoir Bottom) is the zone of
Interest and considered during modeling. 18 layers has been made in the
Zone -2 in proportional meters. The total number of grid cells made in the i, j
and k direction is 74 x 86 x 43 respectively, making the total number of grid
cell to 2, 73,652.
PROPERTY MODELING
1. Scale up well log

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Different Averaging scheme has been used during the well log scale up for
discrete properties like facie and continuous properties like porosity, water
saturation etc.
Most of method has been used for facies scale up
Arithmetic average method has been used for Porosity and Saturation
biased to facies

2. Facies Modeling
In the modeled reservoir zone "Z2", only three typ es of
lithofacies viz. sandstone, siltstone and shale are
present. At the scaled up log level shale, siltstone and
sandstone belongs to 38%, 43% and 19% respectively.
Facies modeling has been carried out using Sequential Indicator Simulation
(SIS) algorithm.
Vertical proportion curve and variogram control of the wells has been
used in Facies modeling.
Horizontal trend map derived from the seismic attribute (sum of
negative amplitude) for siltstone and sand stone has been also used
After facies modeling, the percentage of shale, siltstone and sandstone in the
3D grid falls to 40%, 25% and 35% of the total grid population

3. Porosity Modeling
Porosity modeling has been carried out
facies wise using Sequential Gaussian
Simulation (SGS) algorithm under
Petrophysical Modeling Module. Following
consideration has been undertaken for the

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porosity modeling purpose.
Variogram control of wells have been used during modeling
Instantaneous frequency and Relative Acoustic Impedance (RAI) cube
has been used under kriging and co-kriging categories respectively
Shale facies has been assigned 0% porosity whereas other two facies
i.e. siltstone and sand has been modeled.
After Porosity modeling percentage of grid population falling in the class
interval of 0-8, 8-16, 16-24, 24-32 & 32-40 changes from 45-57%, 6-4%,
11-6%, 26-25% and 12-8% respectively. Fig 3.4 represents the average
porosity map for the reservoir zone Z2
Fig 3.6. shows the average porosity Map for Zone2

4. Saturation Modeling
Based on the interpreted/processed log
supplied by the petro physicist, well SE2 which
is situated at the western segments shows a
different saturation pattern as compared to the
wells drilled in the eastern segments which may
be due to the effect of a distinct fault running N-S. The only well in the
western segment i.e. SE-2 is becoming 100% water saturated at the depth of
1203 m TVDSS whereas the well in the eastern segment have been tested
hydrocarbon up to a depth of ......... m TVDSS in well SE-A1. Hence these
depths were taken as Free Water Level @1203m for western and @1231.45m
TVDSS for eastern segment respectively. Hence to address this issue a
saturation height function was conceived based on cross plot between height
above free water level function and upscale well saturation, later this
saturation height function was conceived as a secondary variable during
population of oil saturation in entire 3D grid (modeled) area.

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Finally Saturation modeling has been carried out facies wise, shale facies has
been assigned 100% water saturated. For sand and silt saturation (SW) was
modeled using Saturation Height function as a secondary variable (Co-
Kriging) as well as porosity as a tertiary variable (Collocated co-kriging).
Fig 3.6. shows the average Water Saturation Map for Case-2

NET PAY CALCULATION

An integrated workflow of re-processed 2D and processed 3D seismic
data was established for prospect evaluation. 5 prominent horizon tops
namely Olpad, Intra-Cambay, Cambay Shale, Kalol and Tarapur
formation were picked up for interpretation.

Olpad with trap-wash constituents has a strong impedance contrast
against shale-dominated Cambay Shale formation. All the exploratory
wells (SE2, SE3, SE4, SE5, SE8, and SE10) were drilled into Olpad at a
comparable structural level. Intra-Cambay being a regressive litho-unit
within monotonous shale of Cambay Shale is a difficult horizon to pick,

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however there is good correlation across well logs of SE2-SE3-SE4-
SE5, which helped the mapping process. Fig.-5.1.1.i shows TWT
structure map on top of Intra-Cambay formation. Cambay Shale top
denotes the end of monotonous shale sequence and fairly mappable.
Kalol has a strong impedance contrast with overlying shale sequence of
Tarapur formation and can be easily picked up. The marker is also
well-correlatable with well logs of SE8-SE8-A1-SE10-SE14. Structural
anomalies like faults can be easily interpreted. Fig.-5.1.1.ii shows TWT
structure map on top of Kalol formation. Tarapur of Oligocene age
represents lithological contrast of marine shale with the coarse clastic
sequence of Babaguru formation of Miocene age.

SE4 Cluster
AoI of 2.0 sq km was modeled based on refined interpretation in depth
domain. Seismic attribute, RAI was used to train the propagation of
reservoir properties. The apparently inconspicuous reservoir top was
mapped after applying double derivative on seismic trace. Two NNW-SSE
trending faults were mapped one on the eastern fringe and another to the
west of SE4 well. A transverse fault north of SE3 well apparently
corroborates structural entrapment of oil accumulation. The faults were
picked up on every inline and refined thereafter on cross-lines. All faults
are normal and in conformity with regional principle stress (ENE-WSW
direction). Average throw of fault is 5-10 m with low to moderate heave.

Reservoir belongs to Intra-Cambay formation, which is well-marked at
top while bottom is inconspicuously mappable. A detail well-to-well wire-
line log correlation is given with an illustrative account of major well tops
and markers (Fig.- 5.1.3.xxv).

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Top of the reservoir as
given in the adjoining
picture shows a gentle
culmination following
structural axis in NNW-SSE,
commensurate with
longitudinal faults and
local high around wells, SE5 and SE3. It may be noted that SE2 well is
located in different structural block compared to other wells.

The reservoir is distinctly recognizable on well log as it is present just
below the prominent high-GR marker. Using two more well markers
including the reservoir top (mapped on seismic), 3 zones were created
(Zone_U1, Zone_U2 and Zone_L1) as illustrated below:

The bottom-most zone, Zone_L1 is the principal reservoir zone with 70
layers built proportionally.

The reservoir is predominantly siltstone,
often shaly. Volume of shale (VSH) was
modeled following SGS algorithm and
using secondary property of seismic RAI
attribute which was appropriately
normalized between 0 and 1 to match
VSH values as explained alongside. VSD was computed from 1-VSH
(modeled) and used as a general NTG function.

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PHI was modeled using NTG as the
secondary variable. In order to make
the distribution tight, well-based
porosity map was used as a
conditional variant. Variogram
ranges (MajorMinor=500m,
Vertical=10m) were used empirically
on conceptual basis without
modeling on account of sparse well
data. The extreme values were truncated to eliminate outliers to normal
distribution.

For modeling SW, Free Fluid
Index (FFI) was conceived as
PHI*(1-SW) and modeled using
PHI as the secondary variable.
The distribution was
simultaneously refined using
reservoir top as the co-variant. The modeled FFI was thereafter de-
convolved to compute SW in the following manner:-

SW=if(PHI>0.05,if(FFI=PHI,0.4,(1-(FFI/PHI))),1)

SW was assumed 0.40 as underlined above based on average oil
saturation in the best porous zone. It was necessitated to eliminate
incongruent interpolated FFI values.

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5.1.4 OIL ESTIMATE
The hydrocarbon inplace was worked out on revised interpretation and
subsequent reservoir modeling. The oil estimate for SE8 cluster and
SE10 discovery were considered the same as given in the DoC report.

The re-worked oil inplace for SE8 pool as reviewed by DGH and
deliberated in the MC-meeting dated 5/11/12 is listed below:-

Area Hg NTG PHI SW FVF OIIP
5.36 sq km 5.5m 0.57 0.17 0.35 1.10 10.62 MMBBL

The input reservoir parameters encountered at wells (SE8 and SE8-A1)
were laterally extended over the entire area without factoring
heterogeneity across the model as earlier conceived at the time of
preparing the initial DoC.

SE10 discovery was not further studied and the DoC/Revised DoC
consideration was continued for inplace estimate. The average
reservoir properties as per contractors submission are as follows:
Bulk Volume: 26.0 MMSCM
Uncertainty
Scenario
Principal
Reservoir
Unit
Net
Volume
(MMSCM)
Mean
NTG
Pore
Volume
(MMSCM)
Mean
Porosity
Mean Oil
Saturation
HCPV
(MMSCM)
OIIP
(MMBB
L)
Best Zone 3 7.0 0.27 1.0 0.14 0.20 0.201 1.15

DGH however reviewed the discovery with a reported inplace of 0.93
MMBBL.

Given the fact that SE4 cluster was re-interpreted with new
drilling/production results from the adjoining GSPC-operated Sanand
East field, this cluster has been worked out with changed volumetric
estimate. 3 cases of uncertainty scenarios, namely Low, Best, and High
were considered based on various probability assumptions. The

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summarized results of volumetric estimate are listed in the following
table:

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SE4 Cluster (Discovery/oil wells SE2, SE3, SE4, SE5)
Bulk Volume: 317.664 MMSCM
(Zone U1= 121.569 MMSCM, Zone U2= 26.934 MMSCM, Zone L1= 169.161 MMSCM)
Uncertainty
Scenario
Principal
Reservoir
Unit
Net
Volume
(MMSCM)
Mean
NTG
Pore
Volume
(MMSCM)
Mean
Porosity
Mean Oil
Saturation
HCPV
(MMSCM)
OIIP
(MMBBL)
Low
Zone L1
18.402 0.48 2.515 0.14 0.45 1.141 6.525
Best 28.676 0.46 3.747 0.13 0.42 1.563 8.942
High 59.114 0.35 6.756 0.11 0.32 2.166 12.384

DGH in its review of DoC reported an estimate of 3.90 MMBBL for the
SE4 cluster.

Methodology
Different methods for each cluster were applied to carve out
uncertainty polygons. SE8 cluster was quantified as follows:

Low case: AoI based on seismic RMS attribute distribution (1.22 sq km)
Best case: AoI based on OWC at -1316m TVDSS (5.36 sq km)
High case: AoI based on HKW at -1325m TVDSS (8.52 sq km)

Being a small pool, SE10 was conceived as a single case (best case)
only. Petrel-generated seismic RAI attribute was used to create AoI of
0.35 sq km.

The SE4 cluster was delimited to 2.0 sq km by seismic attributes,
supported by both RMS-amplitude and RAI. The uncertainty cases were
measured using petro-physical cut-off as illustrated below:

Low case: Modeled NTG and where SW<0.67 and PHI>0.11
Best case: Modeled NTG and where SW<0.73 and PHI>0.095
High case: Direct model parameters without any cut-off
In all such considerations, oil shrinkage factor of 1.10 was considered

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to compute stock tank oil inplace. Production of Associated Natural
Gas (ANG) would remain sub-commercial and be used for internal
consumption on bath heater.

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5.2 DYNAMIC RESERVOIR MODEL
Dynamic reservoir simulation was carried out separately for three areas
namely SE8, SE10 and SE4 Cluster. Following sections would illustrate various
aspects of reservoir simulation ranging from input assumptions to
methodology and final outcomes:-

5.2.1 SE8 CLUSTER WELLS
Following parameters were used in the model for SE8 cluster wells:

Input Considerations
Fluid properties
In absence of PVT study, standard correlations were used to derive PVT
parameters. Reservoir fluid data used in the model are as follows:
API Gravity: 17.45
O
API
Gas Gravity: 0.7
Rs: 5 rm3/sm3
Water salinity: 12,490 ppm
Reservoir temperature: 182
O
F
Bo: 1.04 @ reservoir pressure of 2,758.5 psia

The wells SE#8 & SE#8A1 are not in self flow. Therefore based on the
influx study data of the well SE#8, average reservoir pressure is
calculated. Drawdown pressure transient equations are used to
calculate average reservoir pressure. From the calculations, estimated
average reservoir pressure for SE-8 area was close to 2758.5 psia
(Table 5.2.1.a Annexure IV).

Relative permeability curves were generated from Corey functions
(Corey co-efficient: gas 6, oil/water 3, oil/gas 3 and water 4) and the

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rock compressibility was calculated from Newmens formula for a silty-
sandstone of porosity 0.17. Calculated rock compressibility was
estimated to 3x10
-6
psi
-1
.

Fluid saturations
In absence of capillary pressure data, log-based well-average
saturation was used for populating initial saturations in the model.

Grid & Rock Properties
There was no core data available for study. As an analogue, Poro-Perm
relations from equivalent Kalol formation core from GSPC-operated
Tarapur-6 oil field were used to populate permeability in the reservoir
model.

However, average porosity and NTG were taken from geo-cellular static
model. Reservoir model consists of 100x113x84 grid cells with an
average cell size of 50x50m.

Initialized Oil Estimate
The static estimate of oil inplace (10.62 MMBBL) was initialized to
10.52 MMBBL and thus fairly holding on comparable terms.

Simulation Results & Discussions
Well capacity (Kh) was modified by varying absolute rock permeability
Kx, Ky, Kz and relative permeability (Krw & Kro) to match with the
present well test flow rates and pressure data.

Fluid production was forecast by depletion drive and therefore recovery

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would mainly depend on total reservoir compressibility (Oil +
Dissolved Gas + Water + Rock Compressibility).

Production Strategies
Case 1: SE8 existing wells
High drawdown is required due to viscous flow and low perm reservoir.
Both the wells SE8 and SE8-A1 need to be produced by SRP.

Being seemingly heavy oil with low GOR and low compressibility, oil
recovery under depletion drive was predicted to be 0.71%. Predicted
production profile for 15 years is given in the (Table 5.2.1.b
Annexure IV & Fig.-5.2.1.ia).

Case 2: SE8 existing wells and one new well
One additional vertical well (SE8-D1) was proposed along with the
existing wells. Owning to viscous nature of flow and low perm, all the
wells SE8, SE8-A1 and SE8-D1 need to be produced by SRP.

Since one well was added, recovery was improved to 0.90%. Predicted
Production profile for 15 years is given in the (Table 5.2.1.c
Annexure IV & Fig.- 5.2.1.ib).

For both the cases, periodic build-up and pressure monitoring are
required to be carried out as this might help make material balance
calculations to find the drainage area and further validate contributing
STOOIP (Stock Tank Originally Oil In Place).

Even though water production was not seen during well testing but
well logs appeared to be underlain by water zones, perhaps due to
capillary effect. Being apparently heavy oil with adverse mobility ratio,

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water with w=0.35cp and o=9.0cp would flow approximately 25
times faster than oil. Based on the present saturation distribution,
followed by the simulation studies, it is expected that water cut might
start within a year from the start of production.

Discussions
This study is at a very preliminary stage. Model needs to be updated
after acquiring one to two years of production data to give better
prediction. As PVT data is not available, efforts need to be put in place
to acquire Flash Liberation, Differential Liberation and Separator Test
performed on the reservoir fluid samples to minimize the uncertainty.
As core data is not available, SCAL data for facies analogues in GSPC-
operated oil fields needs to be acquired. This would help fine-tune the
relative perm and capillary pressure data to match with the historical
production data.

Oil Recovery by depletion drive has been predicated below 1%.
Recovery may be improved by secondary recovery mechanism. However
in absence of enough hard data, the field needs to be examined for
about two to three years to understand behavior of the reservoir in
terms of reservoir connectivity, its boundary and presence of aquifer, if
any.

Since its a low permeable and heavy oil reservoir, recovery can be
improved by pressure maintenance and reducing viscosity of the heavy
oil (avg. =9cp). Technology like Miscible CO2 Injection and steam
injection might be thought over at any future point when field
performs commercially.

5.2.2 SE10 WELL

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Following parameters were used in the model for SE10 well:

Fluid properties
API Gravity: 34.58
O
API
Gas Gravity: 0.7
Rs: 25 rm3/sm3
Reservoir temperature: 184.82
O
F

The fact that well SE10 is not in self flow. Therefore based on the
influx study data of the well SE#10, average reservoir pressure is
calculated. Drawdown pressure transient equations are used to
calculate average reservoir pressure. From the calculation, estimated
average reservoir pressure for SE-10 area was close to 1470.8 psia
(Table 5.2.1.d Annexure IV).

estimated to 3x10
-6
psi
-1
.

Fluid saturations
In absence of capillary pressure data, log-based well-average
saturation was used for populating initial saturations in the model.

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There was no core data available for study. As an analogue, Poro-Perm
relations from equivalent Kalol formation core from GSPC-operated
Tarapur-6 oil field were used to populate permeability in the reservoir
model.

average cell size of 50x50m.

The static estimate of oil inplace (1.15 MMBBL) was initialized to 1.20
MMBBL and thus fairly holding on comparable terms.

Even though well SE#10 is not self flow tried matching the well influx
rates & pressure data. During the process, well capacity (Kh) was
modified by varying absolute rock permeability Kx, Ky, Kz and relative
permeability (Krw & Kro).


Case 1: SE10 existing well
High drawdown is required due to low perm reservoir. The well needs
to be produced by SRP since inception.

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Since reservoir was modeled under depletion drive, oil recovery was
achieved 2.46%. Predicted Production profile for 15 years is given in
the (Table 5.2.1.e Annexure IV & Fig.- 5.2.2.i).

Periodic build-up pressure monitoring needs to be carried out which
would help to make the material balance calculations & hence to find
the well reservoir drainage area & contributing STOOIP.

Discussions
production data.

Oil Recovery by depletion drive has been predicated only 2.46%.
any.

Since its a low permeable reservoir, recovery can be improved by
pressure maintenance. Technology like Miscible CO2 Injection might be

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thought over at any future point when field performs commercially.

5.2.3 SE4 CLUSTER WELLS
Following parameters were used in the model for SE4 cluster wells:

Fluid properties
API Gravity: 32.09
O
API
Gas Gravity: 0.7
BP 1,200 psia (from static pressure gradient of Well SE5)
Reservoir temperature: 228.14
O
F

estimated to 3x10
-6
psi
-1
.

Fluid saturations
In absence of capillary pressure data, static model-derived saturation
was used for populating initial saturations in the model. Since best-
case had cut-off applied, high case was used as unbiased support.


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There was no core data available for study. As an analogue, well test
average permeability of Kx=Ky=0.958 MD was populated in the
reservoir model. K/Kh was assumed to be 10%.

average cell size of 50x50m

The static estimate of oil inplace (12.384 MMBBL) was initialized to
13.03 MMBBL, which is marginally higher than static estimate.

Well capacity (Kh) was modified by varying absolute rock permeability
Kx, Ky, Kz and relative permeability (Krw & Kro) to match with the
present well test flow rates and pressure data.


Case 1: SE4 existing wells
High drawdown is required due to low perm reservoir. The wells
namely SE4 and SE3 need to be produced by SRP since inception. Since
SE5 was fractured, it would be by self flow for nearly three months
thereafter production would have to be by SRP. SE2 well seemed to
have watered out post hydraulic fracturing. With current evidence
supported by sub-commercial nature of pool, the well stands

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liquidated from current study.

the Table.-5.2.1.f-Annexure IV & Fig.- 5.2.3.ia.


Case 2: SE4 existing wells + new horizontal well
As per Case 1, at the end of the 15 years of production average
reservoir pressure was found to be 1941.8 psia. It means reservoir
open area would not be sufficient to deplete the field within 15 years.
Already proposed horizontal well with hydraulic fracturing (reviewed by
DGH under DoC evaluation) would supplement additional recovery.

the Table.-5.2.1.g-Annexure IV & Fig.- 5.2.3.ib.


Discussions

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production data.

Presently sealing faults were not considered in the absence of
extended well test data. Future production data can provide necessary
information regarding sealing nature of fault from material balance
calculation or determination of the boundaries from the semi steady
state pressure response.

Oil Recovery by depletion drive has been predicated only 4.69%.
any.

Since its a low permeable reservoir, recovery can be improved by
pressure maintenance. Technology like Miscible CO2 Injection might be
thought over at any future point when field performs commercially.

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5.3 DEVELOPMENT STRATEGY
The Sanand Part A discoveries are matured into moderate-to-marginal fields.
The assessment of sub-surface data and their predictability in absence of limited
well test data do not recommend full-scale development at the outset. Keeping
this in mind, a cautious strategy is proposed with implementation of initial
development plan that would be based on putting existing wells on production
at the first instance. Experiencing the field behavior for initial one year,
subsequent strategy may be adopted holding commercial side of the project.

5.3.1 INITIAL FIELD DEVELOPMENT
All existing oil wells namely SE8, SE8-A1, SE10, SE2, SE5, SE4, and SE3
from north to south of the Part A area are recommended to produce. The
operational difficulties associated to production like wax deposit, water
cut or GOR may be continuously monitored and matched with prediction
so that the model may be reviewed to further chalk out any interim
strategy. Such a strategy should continue at least for a year, during which
good amount of sub-surface and surface hard data would be gathered
and used thereafter to generate a more realistic picture of likely field
performance.

5.3.2 SUPPLEMENTARY DEVELOPMENT
One horizontal well with multi-stage hydraulic fracturing was proposed
by contractor, examined by DGH and duly reviewed by MC. The well was
placed in an area towards SE3 well in the south-eastern fringe. The area is
proved to be water-free production as evidenced by GSPC-operated
adjoining Sanand East field. The well was conceived during submission of
Revised DoC (March 2012), demonstrating a fact that such strategy
(horizontal section along with multi-stage hydraulic fracturing) would

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help improve oil recovery from tight siltstone reservoirs. The location
(SEH-1) was matured with well path in X-Y shown in the Table No. 5.3.2.a
Annexure VI. The location and its proposed fracture path were generated
in line with preferential enrichment of hydrocarbon (distribution of HCPV
across the study area) with particular reference to local geo-mechanical
stress. The well path may be refined after incorporating drillable and
completion parameters. After drilling the horizontal section, it would be
suitably fractured at 3 to 4 stages to open and drain wider area of
reservoir. The well is planned to be drilled during the current fiscal and
added to the field after detail production testing.

In a separate scenario while working on SE8 development as described
under reservoir simulation section, one new well (SE8-Dev1) was
proposed to be drilled as a subsequent strategy for improvement of oil
recovery (Fig.- 5.3.2.i). However, it is neither recommended now nor
taken into implementation program during the first year of performance
review.

Upside Potential
Siltstone layers developed in the Kalol Formation was interpreted
hydrocarbon bearing. The reservoir is present in all the wells in the
adjoining GSPC-operated Sanand East field with LKO (Lowest Known Oil)
encountered at a depth of 1258.5m TVDSS. In the well, SE4, this zone is
present at a depth of 1186.0m TVDSS and interpreted to be hydrocarbon-
bearing. However, the zone at SE2 (at 1201.5m TVDSS) and SE5 (at
1239.0m TVDSS) are considered water-bearing.

Based on well correlation, log analysis and cutting data the interval,
1219-1222m MDRT at well, SE4 is recommended for testing and

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subsequent development suitably.

5.3.3 PRODUCTION ENGINEERING
The oil pools being of marginal nature, produced crude would be
managed through well-site storage and tank-transport to private buyers.
Owing to differently located, there would be facilities, proposed at the
well-sites namely SE8, SE8-A1, SE10 and SE4 Cluster. It was planned that
these facilities would be managed independently by operation and
maintenance contractors. The facility cost is factored annually on rental
basis. A detail overview of facilities is described in the following sections:

Surface Facilities
Minimum production facility would be constructed at the above-
mentioned well sites for the handling of produced crude. As production
potential is considered marginal, production is envisaged with the help of
suitable artificial lift to be used only for 3 to 4 hrs on daily basis. No
heating system would be maintained to treat the produced emulsified
crude, which is planned to be sold in open market.

Handling of Produced Fluid
Produced hydrocarbons from well would first enter to 4-inch over ground
oil flow line to oil header:

- From the header, fluid (both oil and gas) flows into the separator for
separation of oil and gas
- Gas is piped to the gas flow line after measurement through gas meter
and thereafter to the flaring point for controlled flaring
- While oil flows into the over-head storage tank for measurement and

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subsequent storage
- If there is settlement of free water, same will be drained in effluent
drain pit and thereafter disposed as per GPCB (Gujarat Pollution
Control Board) guideline
- From the tank, crude oil will be loaded in tankers for the sale to
private authorized agency. In case, crude gets congealed, steaming
will be appropriately done to make the crude mobile for lifting

Surface Facilities at Well-site
Storage facility: 45 m3 tanks 1 nos (Maximum Capacity: 45 m3 )
Separator Facility: Horizontal Two phase Separator: 1 nos (Handling
Capacity - liquid: 100 BBL/day & Gas: 0.28 MMSCFD, Working
Pressure - 6 Kg.cm2)
a. Oil Loop to inlet of tanks.
b. Gas Loop to flare and gas scrubber
Oil Loading Platform.
Water fire fighting system:
Diesel-driven centrifugal pump: 1 no (Cap: 100 m3/hr at 7 ksc)
Jockey pump: 1(Cap: 15HPx10ksc) for maintaining water-line press
Stand post type water cum foam monitors: 3 no
Stand post type water hydrants with double outlet: 2 no
Wall mounting type hose cabinet with 2 no of 63x15m, non
percolating fire-hoses IS-636 with female and male instantaneous
coupling and one shot branch with nozzle as per IS-903
Fire extinguishers (DCP-4.5 kg-2 no, 10 kg-2 nos, DCP cylinder
with trolley-25 kg:1no,Co2 cylinder with trolley-25 kg:1nos,3 fire
buckets stand)
Water reservoir cement tank : 400 m3
Electrical panel room

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The diagram for surface facility and Layout for Proposed EPS is as shown
(Fig. -5.3.3.ia & 5.3.3.ib).

Revised Cost Projection
While planning the facilities across four well sites, it was noted that there
had been considerable variation of plan costs from what estimated during
submission of Revised DoC (March 2012). Following paragraph explains
the revision as worked out during current estimate:

In a major change order, the earlier planned costs towards crude oil
transportation to ONGC CTF, crude handling and processing by ONGC
were dropped on account of proposed sale of crude to local buyers
directly. Similarly earlier-proposed rental on storage tanks was also
removed as current proposal is in place to erect the tanks as a part of EPS
facility creation at four well-sites. Number of EPS is now revised to 4 from
3 nos. while SRPs increased to 7 from 4 nos. The revised CAPEX on facility
expenditure is now US$ 2.91mn, revised from earlier projected figure of
0.9mn as illustrated in Table No. 5.3.2.b Annexure VI.

On operating expenditure, major revision was towards land rental,
operation and maintenance contract, steaming charges to emptying tank
for fresh storage and hot-oil circulation in wells to ease out congealing of
crude. The streaming charges would be new, as gas availability from wells
is uncertain as per current studies. The revised cost estimate is given in
the Annexure VI.

5.3.4 PROPOSED MINING LEASE
Two non-contiguous areas around SE8 Cluster and SE10-SE4 Cluster
wells, admeasuring 11.2 sq km and 18.2 sq km respectively were

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demarcated (Fig.-5.3.4i) and proposed as Petroleum Mining Lease (PML)
Area for development of Sanand Part A oil discoveries. The area was
based on all sub-surface support and surface accessibility/ logistics. The
areas were also deliberated and proposed in the MC meeting dated
23/3/11 under Agenda#4 (Annexure VIII). The matter was noted by MC
recommending that it would be taken up at the time of evaluation of FDP.

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5.4 ECONOMIC ANALYSIS
Economic analysis was carried out in close conformity with workings as
presented during DoC submission. However, as it was explained earlier,
consequent upon upward revision of planned costs, workings were recast to
accommodate latest costing to bring out a more realistic case. Two scenarios
were conceived as under:

Scenario 1: Absolute economics considering past costs for Sanand Part A
Scenario 2: Incremental economics considering only new costs

5.4.1 INPUTS & ASSUMPTIONS
Production profile as available from three clusters (SE8, SE10 and SE4)
under MC-recommended variant (existing wells + proposed horizontal
well) was combined and used as principal element to cash flow analysis as
illustrated in the below table:

Year
SE8 Cluster
(existing wells)
SE10 well
SE4 Cluster
(existing wells +
horizontal well)
All cluster
Annual Production (BBL)
1 11,680.0 4,745.0 73,000.0 89,425.0
2 10,801.1 4,397.7 73,000.0 88,198.7
3 8,337.1 2,752.0 73,200.0 84,289.1
4 7,135.4 2,010.8 63,322.4 72,468.6
5 5,978.3 1,748.6 49,262.3 56,989.2
6 5,151.5 1,620.0 41,273.5 48,045.0
7 4,482.9 1,567.9 36,243.8 42,294.5
8 3,886.7 1,482.9 32,405.3 37,775.0
9 3,391.7 1,380.2 29,519.8 34,291.7
10 2,960.6 1,331.3 27,208.9 31,500.8
11 2,654.5 1,252.5 25,414.3 29,321.4
12 2,381.8 1,227.4 23,652.4 27,261.6
13 2,135.5 1,210.7 22,181.1 25,527.4
14 1,918.8 1,192.4 20,866.9 23,978.0
15 1,732.0 1,179.7 19,821.9 22,733.7
Total 74,628.0 29,099.2 610,372.6 714,099.9

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Oil Recovery & Project Life
The three discrete oil pools have been combined to build a
comprehensive economic analysis of predicted oil production for 15 years
of project life.
Reserves/Production Assumptions
In-Place - Most Likely (MMBBL) 24.75
RF (%) 2.88
Recoverable Reserve (MMBBL) 0.714
Project Life (yrs) 15
Production Commencement (yr) 2014

Fiscal Terms & Share of Profit Petroleum
Given below is the Investment Multiple table which qualifies individual
share of profit between Contractor and Goo:-

Fiscal Package (PSC)
Cost Recovery 100%
Profit Oil Tranches % to GoI
PTIM 0 - 1.5 30%
PTIM 1.5 - 2.0 35%
PTIM 2.0 - 2.5 40%
PTIM 2.5 - 3.0 45%
PTIM 3.0 - 3.5 50%
PTIM > 3.5 55%

Tax Liabilities to Project
Given under is the summary table of taxation. There is no cess to GoI as
per PSC and tax holiday is 7 years. State government gets royalty while

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other major taxes include corporate income tax and minimum alternate
tax:

Taxation applicable (%)
Royalty (%) 12.5%
Corporate Income Tax 33.99% (30%*10%*3%)
Min Alternate Tax 20.96% (18.5%*10%*3%)
Tax Holiday Period (yr) 7
End of Tax Holiday (yr) 2020

Project Costs
As per unaudited expenditure as of 31/3/13, total reported past
expenditure in the block amounts to approximately US$ 46.78 mn
(Annexure VI). The project is the second development after Miroli-1&6
(Part B) which was accounted for part-expenditure of US$26.59 mn. The
present project (i.e. Sanand Part A) considered the remaining unaccounted
past costs of US$ 20.19 mn. The development cost of US$ 10.11 million
(escalated from DoC-planned cost of US$ 8.1 million) includes mainly
drilling, completion, hydraulic fracturing and testing of a horizontal well
in addition to costs towards facility creation (EPS) and installation of
artificial lifts. Regarding OPEX, the inputs were taken as described under
Sec.-5.3.3 (Revised Cost Projection). Given below is the summary table of
CAPEX/OPEX load on the project.

5.4.2 ANALYSIS & OUTCOMES
CAPEX Assumptions
Total Exploration Cost (US$MM) in Part A (Sanand Area) 20.19
Total Development Cost (US$MM) in Part A (Sanand Area) 10.11
OPEX Assumptions
Production Cost, US$/BBL (Minimum-Most Likely-Maximum) 25-30-35

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The project was predicted for 15 years field life with Estimated Ultimate
Recovery (EUR) of 2.88% of best-estimated oil inplace of 24.75 MMBBL.

Economic Outcomes
Two scenarios of OPEX were worked out based on oil price of US$80/bbl,
US$90/bbl and US$100/bbl. A discount factor of 10% was assumed to run
the economic model. It was shown that OPEX at current assessment was
averaged at US$33/bbl and economic analysis was carried out under
three OPEX scenarios, US$25/bbl, US$30/bbl and US$35/bbl. As earlier
narrated, CAPEX was considered for two scenarios (i) considering past
exploration costs pertaining to Part A (Sanand Area) of the block, CB-
ONN-2002/3 and (ii) without considering past costs (only forward
development costs were considered). Future development costs would
include cost of drilling of new horizontal well and creation of production
facilities. Following tables illustrate the economic outcomes of the first
scenarios:

OPEX at US$25/bbl US$
Oil Price (US$/bbl) 80 90 100
Pre-TAX NPV ($MM) -11.39 -8.04 -4.96
Post Tax NPV ($MM) -12.48 -9.57 -6.56
Pre-Tax IRR (%) -1% 2% 5%
Post Tax IRR (%) -3% 0% 3%
Payback Period (yrs) 0.00 0.00 0.00

Pre-TAX NPV ($MM) -13.56 -9.88 -6.70
Post Tax NPV ($MM) -14.14 -11.34 -8.26
Pre-Tax IRR (%) -3% 1% 3%
Post Tax IRR (%) -5% -2% 1%


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Scenario at $25/bbl
Oil Price Scenarios 80 90 100
Development Case 1 2 3
Pre-TAX NPV ($MM) 6.37 8.69 11.09
Post Tax NPV ($MM) 4.93 6.71 8.56
Pre-Tax IRR (%) 43% 62% 88%
Post Tax IRR (%) 37% 51% 68%
Scenario at $30/bbl
Pre-TAX NPV ($MM) 4.94 7.41 9.78
Post Tax NPV ($MM) 3.79 5.73 7.54
Pre-Tax IRR (%) 34% 51% 73%
Post Tax IRR (%) 30% 43% 58%
Scenario at $35/bbl
Pre-TAX NPV ($MM) 3.44 6.01 8.47
Post Tax NPV ($MM) 2.57 4.65 6.54
Pre-Tax IRR (%) 25% 40% 60%
Post Tax IRR (%) 23% 35% 49%
Oil price $/bbl
Oil price $/bbl
Oil price $/bbl
Pre-TAX NPV ($MM) -15.73 -11.94 -8.49
Post Tax NPV ($MM) -15.89 -12.89 -10.01
Pre-Tax IRR (%) -5% -1% 2%
Post Tax IRR (%) -6% -3% -1%

The fact that estimated NPV did not yield to positive outcomes, alternate
method was carried out under second scenario considering all future
costs. The given table below illustrates such calculation under various oil
price and OPEX assumptions:-

The budgetary provision for future investments was not accounted under
WP&B FY 2013-14 and this would be taken into consideration while
approving the project at JV level. As earlier said, the future costs would be

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towards creation of production facilities at four well sites (SE8, SE8-A1,
SE10 and SE4 cluster) and drilling/ fracturing of the proposed horizontal
well.

Revision to Model post TC Meeting dated 13/5/13
The FDP was presented to JV in Delhi on 13/5/13 (Participants List,
Annexure IX) in order to deliberate the study by Operator towards
expediting the signing of OC Resolution. During the deliberation, it was
agreed to re-look the Economic Model based on internal reviews by JOGPL
and HPCL. The other partner, GGR duly concurred to the OC Resolution
dated 8/5/13. Both HPCL and JOGPL were provided working sheets of
GSPCs assumptions to complete their respective review. Subsequently,
HPCL confirmed on 15/5/13 to have accepted the GSPCs working. GSPC
has reviewed JOGPLs alternate methodology of factoring past costs
taking contractors revenue to be equal to sum of cost oil and profit oil.
GSPC in its working has considered this analyzing cash flow by
appropriately loading the past costs at the start of the project. Operator
accordingly maintained its working, however updated the assumptions of
taxation and project pasts costs. It may be noted that the block as a
whole has as of 31/3/13 unaudited accounts incurred US$46.78mn, out
of which Sanand part A should be accounted for US$20.19mn, the
remaining amount of US$26.59 was duly accounted for Part B during FDP
work for Miroli-1& 6 oil field.

Replying to other queries by JV on optimization of production costs,
Operator emphasized that the cost on management of waxy crude,
pumps, sand control etc are of preliminary assessment and reduction of
such services are indeed factored under low case estimate of OPEX
(US$25/BBL). Similarly discount on account of waxy nature of crude stays

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in built within crude oil sensitivity analysis (US$80-100/BBL).

Operator recommends that the report in its present form may be
submitted to DGH and should it be necessary, further discussion may be
held by JV with DGH at the time of their evaluation.

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CONCLUSION
The reservoir, particularly in the SE4 cluster is sufficiently tight and discrete with poor
petro-physical properties. Despite the fact, wells could not be assessed through a
longer production testing spell due to contractual constraints as a result, the inputs to
dynamic modeling were biased more to standard correlations than to hard data sets.
The fact that the oil pools are marginal to moderate compared to envisaged reserves, a
cautious development strategy was formulated as an initial plan for development.
Commercially, it was opined that the project would be viable with a pre-tax IRR of 73%
with NPV of US$ 9.78mn assuming only future development costs (US$10.11mn). It is
recommended that the field be allowed to produce for a year to acquire more hard data,
minimize initial uncertainties of field development and monetize by recovering the past
project costs through initial production. Implementation of high-end technology like
horizontal drilling with multi-stage hydraulic fracturing would indeed come at a cost
but hold promise of production enhancement in an area which was proved by
performance of analogue GSPC-operated field, next to the SE4 cluster. Given the
disparity between current estimate of oil inplace and MC-reviewed DoC figures, the
present study attempted to best-capture the reservoir properties through geo-cellular
modeling supplemented with reservoir simulation study. With the commissioning of the
field, the work could be re-visited after a year of commercial production and at that
point of time, a more rigorous assessment may be made on project economics, which
could form the basis for drilling and testing of proposed new horizontal well.

Pursuant to PSC Article 10.7, the report, entitled Field Development Plan for Sanand
Part A Oil Discoveries is intended to be submitted to DGH upon OC approval per JOA of
the block. Operator hereby recognizes that all costs proposed under the Plan would be
put up to JV towards finalization of necessary budget for implementation programme.

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