Reserves: Tight gas production starts from Zarghun block

KARACHI: 

The production of tight gas has started from Zarghun South Block in Balochistan with initial flows from the field stated to be 4 million cubic feet per day (mmcfd), according to one of the partner companies that control the lease.

Tight gas is natural gas found trapped in impermeable rock and non-porous sandstone or limestone formations, typically at depths greater than 10,000 feet below the surface.

Approximately 80% of Zarghun South’s reserves are certified as tight gas under the Pakistan’s Tight Gas (Exploration and Production) Policy 2011 that is entitled to a price of $6.74 per million British thermal unit (mmbtu), said Canada-based Jura Energy Corporation.

Jura owns Frontier Holdings Limited and Spud Energy Limited, which together holds interest in nine fields across Pakistan. The information related to Zarghun was shared with Canadian securities regulators last month.

The corporation said it expects monthly revenue of $170,000 from Zarghun South, a lease that covers 124 square kilometres in the western part of the Sulaiman Fold and Thrust Belt of the Middle Indus Basin.

Jura holds 40% working interest in Zarghun, which is operated by Mari Petroleum Company Limited with 35% stake.

Tight gas is priced higher than the output of a conventional field. The contribution of tight gas is minimal in the 4,000 mmcfd produced locally.

The 4 mmcfd being sold to Sui Southern Gas Company is off-specification but the Zarghun joint venture partners will be commissioning an Amine Sweetening Unit, used to remove unwanted chemical components, by October 2014, it said.

In the six months to June 2014, Jura Energy reported a loss of $1.577 million and accumulated losses amounted to $32.2 million.

According to its website, Jura’s interim chief executive officer is Shahid Hameed who also headed the operations for Dewan Petroleum.

Of the 27 companies engaged in petroleum exploration and production in the country, half of them are controlled by Pakistanis.

Industry officials say that except for the major multinationals and four big local firms, most have not invested any substantial sums for drilling. “There are many reasons but the security situation and low gas price are the top most concerns for the investors,” said an official