DGH to target Reliance for fall in KG-D6 production

Oil regulator DGH may next week use a report by an independent consultant to target Reliance Industries for fall in production at KG-D6 gas fields even though the document itself has come up for questioning for not seeking the company's comments before finalisation.

P Gopalakrishnan in his report on performance of Dhirubhai-1 and 3 gas fields in the eastern offshore KG-D6 block has stated that "shortfall of gas production is due to non-drilling of the adequate number of wells".

The study, according to a note of the Directorate General of Hydrocarbons (DGH) to the Oil Ministry, was carried out in DGH office.

Gopalakrishnan did not seek any information or data on performance of the field from Reliance besides not approaching it for any comment, sources privy to the development said adding the report was also not given to the company.

The report held that output at D1 and D3 fields would have been 61.88 million cubic meters per day if Reliance had drilled its committed 22 wells. Production instead is 42 mmcmd from 18 off the 20 wells drilled so far.

Current output is lower than 53-54 mmscmd achieved in March 2010 due to sharp drop in pressure at the wells, among other things, source said.

They said Gopalakrishnan in his report observed increased water cut in most of the wells and also predicted this would effect at least three wells as a result.

DGH has called a meeting of the Management Committee, that overseas the operations of the KG-D6 fields, on May 2 to ascertain reasons for RIL not meeting its drilling commitment that has led to the drop in production.

The regulator will use Gopalakrishnan report in addition to the field visit by three of its officials earlier this week, to pin Reliance, sources said.

Reliance had in 2006 won government nod to invest $8.836 billion in Dhirubhai-1 and 3 fields in KG-D6 block after promising an output of 61.88 million cubic meters a day from 22 wells by April 2011 and 80 mmscmd from 31 wells by 2012.

But situation on ground has been markedly different with Reliance only producing about 42 mmscmd from 18 wells drilled so far on D1 and D3 field in the Bay of Bengal block. Another 8 mmscmd is produced from MA oilfield in the same block.

The Management Committee or MC as it is called, comprises of representative of the oil ministry, the DGH and the contractor (Reliance and its partner Niko Resources of Canada).

Reliance holds 90% interest in the block KG-D6, where 18 gas and one oil discovery has been made. D1 and D3 gas and MA oil finds have so far been put into production. Niko has the remaining 10% in the block.