In findings that lend weight to the charge that Reliance Industries Ltd. deliberately curtailed production from its KG basin gasfields because it felt gas prices were too low, a key technical report submitted to the Petroleum and Natural Gas Ministry in 2011 had blamed the fall in output on the failure of the Mukesh Ambani-owned company to drill an adequate number of wells as per the Approved Development Plan (ADP).
Commissioned by the Directorate-General of Hydrocarbons (DGH), the 13-page report, ‘Analysis of well and pools performance: D1 & D3 fields, KG Basin (RIL),’ was prepared by a one-man committee headed by internationally renowned reservoir expert P. Gopalakrishanan.
“The shortfall in gas production is due to non-drilling of the adequate number of wells as per ADP, and therefore drilling as per the ADP may be undertaken immediately,” notes the report, a copy of which is with The Hindu. “The well completion policy, and tubing sizes may be re-looked to optimize the wells and the reservoir areas each one targets. Delays in commissioning additional producers would trigger water drive in the reservoir and consequent reduction of the ultimate recovery as a result of water encroachment as well as permanent loss of some of the gas reserves,” the report states.
Surprisingly, the report was kept under wraps for more than two years by the Ministry. And though its findings are categorical, the Ministry continues to regard as open-ended the question of why RIL has not managed to produce the contracted volume of gas from its KG basin operations.
Referring to the production performance of the fields, the Gopalakrishnan committee states: “We have seen that the behaviour of the field during the first year was very much as per our expectations. After that period, wells were not introduced into the system as per the plan, whereby the gas rate declined. Pressure decline was also slowed down as a result of the aquifer support. All these are quite expected from the initial reservoir stimulation study.”
“This report has exposed the dubious designs of those sitting in the Petroleum Ministry to give undue benefit to RIL and weaken the government case in arbitration… [it] clearly nails the lie of geological uncertainty being used by RIL for shortfall in production of gas. Since this report has been accepted by both the DGH and Petroleum Ministry, the Cabinet should not succumb to the devious ploy of the Petroleum Minister,” CPI MP Gurudas Dasgupta said here on Friday.
On their part, RIL executives have dismissed the report’s findings and questioned the credentials of its author.
The Petroleum Ministry had stated in May 2012, when Jaipal Reddy was minister, that $457 million of cost would be disallowed for 2010-11 and $1.005 billion for 2011-12 totalling around $1.5 billion. The penalty came after RIL had served an arbitration notice on the government in November 2011 anticipating such a penalty.
The Gopalakrishnan report says the KG D6 field has been started and produced as per the expectations for a year or so, but the operator did not drill the wells as per the Field Develop Programme (FDP) by the end of the first year, affecting a rate-decline, and a consequent partial regain of the reservoir pressure. It had said new wells are required at the earliest to maintain the required gas withdrawal rates within the developed part, targeting un-drained areas. Already the reservoir pressure depletion is not as per the FDP, and if this is allowed to continue, reserves may be lost by water encroachment. New wells are also required in the 2P region, especially in the inter-channel area. Wells outside the 2P polygon might also be necessary to prove additional reserves, which is also part of the ADP, the report adds.
The report further states GIIP in D1-D3 field is adequate to achieve the planned gas rates as per the ADP. The performance of individual wells as well as the field performance has been as per the initial expectations, and there is no geological or reservoir constraints to achieve the recommended gas production rates as per the ADP. The laminated sand reservoir would perhaps require a different well completion policy. Drilling may extend also to the 2P areas in the reservoir area, and the inter-channel areas to prove their potential.