Looks to BP to address the problem
Mukesh Ambani owned Reliance Industries Ltd. (RIL) has projected a 13 per cent further decline in its gas output from KG basin fields.
The continued trend of declining output from the KG basin gas fields certainly is a worrisome development and it would take best of the expertise of its new partner BP to fix the problem.
RIL has projected that gas output from Dhirubhai-1 and 3 (D1 and D3) gas fields in the block KG-DWN-98/3 (KG-D6), will be 38 million standard cubic meters a day in 2012-13 from the current production level of 43-44 mscmd. It has submitted these estimates to the Directorate General of Hydrocarbons (GDH) in its annual work programme.
The D-26 or MA oilfield in the same block is expected to produce current levels of 8-9 mscmd, taking the total output from the deep-sea area in Bay of Bengal to around 47 mscmd. At present, KG-D6 block is producing around 51-52 mscmd.
The D1 and D3, the largest of the 18 gas discoveries, had touched 53-54 mscmd of output in mid-2010 but the production has fallen since. “The fields have enough reserves to support peak output of 80 mscmd. But RIL has learnt that the gas is stored in isolated pools which are not connected to each other. It is not able to derive entire volumes out. It is argued that drilling more wells could solve the problem but RIL is of the view that the cost of drilling, completing and connecting the well to the production system exceeds the economic value of the gas to be produced.
Officials in the Petroleum Ministry said BP could provide the solution to this problem through its expertise in this area. “BP has faced similar issues around the world and its expertise will help Reliance overcome the problem,'' the officials said. The field development plan (FDP) approved some years ago, envisaged a total of 22 wells producing 61.88 mscmd of gas from D1 and D3 fields by April 1. This was to rise to 80 mscmd by April 1, 2012, with 31 wells. The MA field was to contribute another 8 mscmd.
“The production plan in FDP is a guidance and not a firm commitment. In fact, RIL had touched 60 mscmd of output with just 16-17 wells in mid-2010. However, soon production started to fall,'' an official said.
The DGH had on Thursday convened a meeting of the management committee of the block to discuss the issue of KG basin in detail. RIL has projected crude oil output from the MA field in the same block to fall to 12,050 barrels a day in 2012-13 from the current production of about 17,000 bpd.
According to the FDP, Reliance was meant to put on stream 22 wells in the D1 and D3 fields by April, 2011, to achieve a production level of 61.88 mscmd. As of now, only 18 wells are in production. Output from these wells at 43.44 mscmd is lower than the 53.4 mscmd planned in the FDP.
As per the FDP, production in the block is expected to go up to 86.92 mscmd in 2013-14 and the output would start declining from 2018-19.
Keywords: Reliance Industries