Reliance: KG-D6 gas output to rise

Reliance Industries, which has seen output from its prolific KG-D6 fields fall by 15 per cent, can raise production to 67-68 million cubic metres of gas a day by next month if it can drill additional wells.

"As per the approved field development plan (FDP), gas production should rise to 67 mmscmd in April," said S K Srivastava, the Director-General of the sectoral regulator, the Directorate General of Hydrocarbons, here. Reliance is currently producing 50-51 mmscmd of gas from KG-DWN-98/3 block, also known as KG-D6, off the Andhra Pradesh coast.

The output is lower than the 60 mmscmd average production in the April-June quarter of 2010. The output is made up of gas output from the Dhirubhai-1 and 3 fields, known as D1 and D3, and the D-26, or MA oifield. D1 and D3 have seen output fall from 53-54 mmscmd in mid-2010 to 42-43 mmscmd at present.

The MA oilfield in the same block is producing about 8 mmscmd of associated gas. Together, the current output from KG-D6 stands at 50-51 mmscmd. Srivastava said that 18 wells have been drilled so far and completed out of 22 development or production wells approved in Phase-I of the field development plan (FDP) for the D1 and D3 fields.

Gas is being produced from 16 wells and two more wells are complete, but not put on production. Another two wells are yet to be connected to production system. "Reliance needs to drill two more wells by April," Srivastava said, but did not say if the company can actually complete the task in less than a month's time.

He also did not say what action can DGH and the government take if Reliance fails to meet its commitment. "Once all 22 wells come onstream sometime in April, gas output (from D1 and D3) will again touch 60 mmsmcd," he said.

The total investment in KG-D6 to date is $7.8 billion. As per the approved FDP, the D-1 and D-3 gas fields -- which began gas production in April, 2009 -- have a field life of 13 years, with a plateau period of six years.

Peak output of 80 msmcmd is projected sometime in 2012-13. Together with gas output from the MA field in the same block, KG-D6 production is pegged to touch 88.5 mmscmd in 2012-13. According to the production profile prepared by the DGH, production from KG-D6 will be 86-87 mmscmd between 2013 and 2016 before dipping to 81.24 mmscmd in 2017-18.

Subsequently, the output will gradually taper down to less than 40 mmscmd by 2020-21. The company is currently selling 14 mmscmd of gas to fertiliser plants, 24 mmscmd to power plants and the remaining 13 mmscmd to other sectors like sponge iron plants, LPG, city gas distribution (CGD), petrochemical plants and refineries. It produces about 17,000 barrels of crude oil per day from MA field.

Reliance has so far made 19 oil and gas finds in Krishna-Godavari Basin Block KG-DWN-98/3, or KG-D6, which it won in consortia with Niko Resources of Canada under the first round of the New Exploration Licensing Policy (NELP) in 2000. Of these, two gas (D1 and D3) and one oil (MA) have been put on production.

D1 and D3 commenced output from April 1, 2009, while MA started production from September 17, 2008. Reliance has been forced to restrict production from the MA oil field to about 17,000 barrels per day due to high water and gas output, sources said, adding that the field was yielding more water than oil and that even 8 mmscmd of gas in comparison to oil output was considered quite high.

The MA field had five oil producing wells and one gas producer. Reliance has so far drilled 16 development or production wells in the D1 and D3 gas fields. Two exploration or probe wells have been converted into development wells.

Similarly, the company has turned two wells drilled for appraising discoveries into production wells. Of the total, 18 wells are connected to production facilities, while the remaining two are yet to be hooked up. Reliance will have to drill two more wells to meet its commitment of 22 production wells by April, 2011, which would help it produce up to 60 mmscmd gas from D1 and D3 fields.

If Reliance works as per the plan, the cumulative output from the KG-D6 block will be 67-68 mmscmd in April. Furthermore, four discoveries have been declared commercially viable, while the FDP for nine satellite finds was submitted on July 14, 2008, for approval.

The FDP for the nine satellite fields was not found techno-economically viable and Reliance submitted an Optimised FDP (OFDP) for four of these nine satellite fields on December 29, 2009.

The OFDP is under evaluation by the DGH. One discovery is under appraisal and Reliance has so far not submitted a declaration on the commerciality of two other finds.