BP focuses on 'Next Wave' strategy to boost KG-D6 output

With gas output from Reliance Industries' (RIL's) showpiece KG-D6 fields dropping by 23%, the firm's new partner BP has expressed confidence that the slump in production can be reversed by focusing on a 'Next Wave' strategy of developing satellite fields.

Following up on BP Chief Executive Bob Dudley's whirlwind visit late last month, the UK firm's India CFO Kris Sliger has written to the Oil Ministry saying that Europe's second-largest oil firm is preparing to explore newer areas of D6 as part of a 'Next Wave' strategy.

"From what we know now, we believe the best path forward is to enhance the focus on the 'Next Wave' of new developments in D6 -- the R-series and all the satellites," he wrote.

"These new 'Next Wave' D6 developments have the potential to add large new volumes of production capability to continue the successful launch of a new basin for furthering the India E&P energy security pursuit," he said.

RIL on Saturday reported a 23% drop in production from the Krishna-Godavari basin D6 fields to 147.2 billion cubic feet, or 45 million standard cubic metres, per day during the July-September quarter. Production from KG-D6 had touched 61.5 mmsmcd in March last year and was projected to rise to 69.2 mmscmd by this time, but has instead slumped.

"With the existing decline and the knowledge of the existing reservoirs well understood, we know that there are essentially no options to materially change the trajectory without adding new development potential, since we know D6 remains the 'golden block' and gas demand will continue to rise with time," the BP India executive wrote.

BP asked the Oil Ministry for approval to begin pre- development activities at both the R-Series and satellite fields that surround the currently producing Dhirubhai-1 and 3 fields.

"As discussed with you, in order to expedite the required new work, we support the operator RIL's intentions to begin the required pre-development activities on the potential 'Next Wave' of developments in the coming winter weather window -- December, 2011, to March, 2012," Sliger wrote.

Tests by RIL have shown that gas-bearing layers of sand in the Dhirubhai-1 and 3 fields of KG-D6 block are thinner than initially estimated and extraction may require costlier drilling techniques. Satellite fields in the KG-D6 block and discoveries, also known as the 'R-Series', together are estimated to have the potential to produce 35 mmscmd.

RIL has submitted plans to invest $1.5 billion on developing four satellite fields to produce up to 10 mmscmd of gas by 2016. BP wants the government to quickly approve plans for additional satellite and R series reservoirs so as to begin the process of engineering and hike production of gas from KG-D6 by 2014.