Review blames RIL for falling D6 output

An independent review of Reliance Industries' operations in the KG D6 block off the east coast has found the company responsible for the fall in gas production from the country's most-prolific field.

The report, submitted to the government last week, says the slow pace of field development is the reason production has fallen to 50 million standard cubic metres a day (mscmd) from a peak of 60 mscmd last year.

The review was commissioned by the oil regulator, the directorate general of Hydrocarbons.

The report said non-drilling of four additional wells was behind the fall in production.

It said by the end of the current financial year, 31 wells would be required, compared to the 18 operational ones at present, to increase production to the projected level of 80 mscmd.

"The shortfall in production is due to non-drilling of adequate number of wells according to the development programme and therefore drilling must be undertaken immediately," said the report, prepared by P Gopalakrishnan, an internationally-renowned reservoir consultant.

At present, RIL is producing 50 mscmd, of which 41-42 mscmd is from its D1 and D3 fields, and the rest from the MA field.

The report said 22 wells were required to be on stream in the second year to produce 61.8 mscmd.

But, it said, not only was the company still producing from the 18 wells that went on stream in the first year, the two wells that had been drilled were awaiting completion and connection, while two others had not been drilled yet.

While a mail to RIL remained unanswered, the company, in a presentation to investors last week, said the D6 reservoir appeared more complex than earlier envisaged.

"Efforts are on to identify the well locations for incremental production. Other options for augmenting production such as re-completion of wells and compression are also being studied," it said.

The company is also conceptualising an integrated development plan for all other discoveries in the KG-D6 to augment production.

Last Friday, director general of Hydrocarbons S K Srivastava said DGH was not satisfied with the reasons given by RIL and the company would be called for a meeting in early May.

Srivastava was responding to queries after a meeting called by petroleum secretary S Sundareshnan to take stock of the fall in production along with complaints from the user industries.

The report was discussed at the meeting, said an official, who did not want to be quoted.

Because of lower production, gas supply to critical sectors such as power, fertilizer and steel has been affected.

RIL has so far signed up customers for 60.76 mscmd gas, while production is around 50 mscmd.

The government has given priority to fertiliser plants, followed by LPG extraction units, power plants and city gas distribution projects.

With production falling, RIL has cut supplies to customers on a pro-rata basis.

But the government has asked RIL to divert gas from sectors such as steel and petrochemicals to fertilizer and power in line with its gas-use policy.