Australia's Santos finds new gas in Bay of Bengal

DHAKA Wed Feb 15, 2012 7:22am EST

DHAKA Feb 15 (Reuters) - Australian oil and energy firm Santos has found commercially viable reserves of natural gas in the Bay of Bengal in one of three wells drilled at Sangu off Chittagong port, the company's chief representative in Bangladesh said on Wednesday.

"We are pleased to have found new volumes of gas that (we) can supply (to) the Chittagong market," John Chambers, president of Santos in Bangladesh, told reporters.

"Further gas discoveries will still be needed to supply the market in the medium to long term," he said, adding that the "mixed success of this programme is a reminder of the risks and challenges associated with gas exploration."

Besides the country's main port, Chittagong is a growing hub of manufacturing industries and other businesses that were threatened due to lack of natural gas.

Santos had abandoned two other wells in the same block in the Bay because they either did not contain enough recoverable hydrocarbon or had no reserves at all.

This is the second time that commercially viable gas reserves have been found in offshore Bangladesh, following the previous discovery by the UK's Cairn Energy in 1996.

A senior official of the state-run Bangladesh Oil, Gas and Mineral Corporation known as Petrobangla said that from the newly discovered well Santos might explore up to 30 million cubic feet of gas a day (mmcfd).

Santos said the discovered gas is of good quality and the well will be ready to supply "incremental gas" to Chittagong in the coming months once marketing arrangements have been finalised.

Work is continuing to assess volumes and flow potential of the reservoir, Santos said.

This was the third of a 3-well drilling campaign in block 16 in the Bay of Bengal that commenced in September last year.

Chambers earlier told Reuters it would invest $126 million for the three-well programme in the Bay.

Santos first came to Bangladesh in 2007 when it acquired interests in block 16 from Cairn Energy, then the operator.

At present, Santos has 75 percent stake in the block as operator while U.S. firm Halliburton has the remaining 25 percent.

Bangladesh produces around 2.04 billion cubic feet of gas a day against demand of more than 2.5 bcfd.

Its proven gas reserve is 6.0 trillion cubic feet while probable reserve is 5.5 tcf.

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