KARACHI: The Oil and Gas Development Company Limited (OGDC) has discovered a hydrocarbon bearing horizon in its exploratory well Zin x-1, located in District Dera Bugti, Balochistan, Eram Ali Aziz, company secretary to the OGDC, announced on Tuesday.

OGDC holds 95 per cent working interest in Zin Exploration License and the remaining five per cent is held by its joint venture partner Government Holdings Private Limited.

The numerous oil and gas exploration companies, private and unlisted, operating in the country keep information about such discoveries close to the chest. But being a public listed company, with its shares traded on the stock exchanges, the OGDC like the rest of the listed entities, is bound to convey all material information to the exchange so as to comply with the requirements of code of corporate governance.

The OGDC said that Zin X-1 well was drilled down to the depth of 2300 metres targeting to test the hydrocarbon potential of Pub Sandstone and Sui main limestone formations.

“Significant reserves of hydrocarbons have been found at Zin X-i well,” OGDC secretary claimed and added that the first targeted zone Pab Sandstone of Cretaceous age had tested 5.48 mmcfd gas through 32/64 inch chokes at well head flowing pressure 1050 psi.

“This discovery will add to the hydrocarbon reserves base of the company and its joint venture partner,” said the company secretary.

Oil and gas sector analyst Mohammad Fawad Khan at brokerage KASB Securities, quoting Pakistan Petroleum Information Service (PPIS), stated that the OGDC had formally announced discovery in Zin XI.

The discovery flow rate of 5.48 mmcfd from deeper formation significantly fell short of what the government and the OGDC officials had claimed during the drilling phase. He observed that combined with gas flow rate on shallow formation (SLM), total flow rate on the well was likely to be 10-11 mmcfd.

“The btu value of gas is expected to be below 400 which is another negative as it would take more time to develop the field for either power generation or fertiliser production,” analyst Fawad Khan commented.

He believed that after completion of testing on deeper formation, the company was likely to evaluate its plans for future reserve assessment / development which face difficulty from low btu, low gas production and law and order situation. Earlier, also quoting PPIS, analyst Mohammad Ali Taufiq at brokerage BMA Capital stated that the discovery flow rate at the new discovery in Zin block, was in the vicinity of 5.5mmcfd levels, which fell extremely short of expectations.

“The gas obtained from the field has low heating value 400 btu / mmcfd, hence it can only be used for power generation,” the analyst said.

He observed that in the post-development scenario, gas flows from the field may double, yet it was unlikely to add significantly to the company's production profile, until multiple wells were drilled as happened in case of Uch.

“Although reserve estimates for this field have not been released, yet there is little confidence regarding any huge reserve value, given low current flow rate and low energy content value of the gas,” said the analyst, who observed that regardless of the disappointment, the OGDC remained aggressive on exploration and production front.

It currently has huge investments in six development projects, including Sinjhoro, KPD/TAY, Naspha, TAL and Uch II.