In what may bring some relief to Reliance Industries Ltd (RIL), the government has approved drilling the development well at the company’s KG-D6 gas fields off the east coast. Sources told NDTV that the Petroleum Ministry’s technical wing, the Directorate General of Hydrocarbon (DGH), has granted the approval of drilling the development well named KG-D6-G2 in Dhirubhai-19. DGH has also made a “positive recommendation” for the final approval from the Petroleum Ministry.
RIL, along with British energy giant BP and Canadian oil major Niko, operates the KG-D6 oil and gas block. Earlier, the consortium had proposed a $1.529 billion plan for developing four satellite gas discoveries (small gas fields), namely Dhirubhai-2, Dhirubhai-6, Dhirubhai-19 and Dhirubhai-22. The four fields together have a potential of producing about 10 million units of gas every day (mmscmd). Presently, the main gas fields in KG-D6 are producing about 25 mmscmd gas, much lower than its potential of 80 mmscmd.
Though approval for drilling in D-19 is now in place, the approvals for a $2.338 billion expenditure in D-24 (R-series) gas discovery in the block is still pending. Once the approval comes through, RIL-BP-Niko will be able to monetize about 15 mmscmd gas.
Officials, on condition of anonymity, told NDTV that the approval for drilling the development well in D-19 has come at the right time. The official said that this is the only “weather window” available to start the work in the satellite fields. The companies have six to seven months before next-year’s monsoon season begins. Sources added that RIL has already informed the DGH about the deployment of the drilling rig for the development well.
RIL has indicated to the government that only if the work begins now will the consortium be able to start the production from the financial year 2015-16. Petroleum Ministry officials, who didn’t want to be quoted, told NDTV that the DGH in its communication has informed the Petroleum Ministry that the approval of the oversight committee headed by DGH itself had approved the optimized field development plan (OFDP) for the four satellite fields in the beginning of the year itself.
The development well in D-19 will also give an idea about the “reservoir characteristic” for the satellite field and the consortium will be able to make the right projection for the fields.
From all the main discoveries (18 of them), the RIL-led consortium has put only three fields in production: D-1, D-3 and MA. And because of the complex nature of the reservoir, the consortium firms failed to anticipate the production flow. Gas production from the three fields diminished from peak of about 65 mmscmd in August 2010 to 25 mmscmd now.