Reliance discovers gas in Mahanadi basin block

Reliance Industries Ltd (RIL) has found natural gas reserves in a well drilled on its NEC-25 block in the Mahanadi basin, off the Orissa coast, the company’s junior partner Niko Resources of Canada said today.

Gas was discovered in the well AJ2 last month, Toronto-listed Niko added in a regulatory filing.

A source said this was not a new discovery but an appraisal of earlier gas finds. “AJ2 is an appraisal well drilled to access the potential in the previous A6 and J1 discoveries. Gas was struck in AJ2 but it is not a new pool.”

Since AJ2 is an appraisal well and not a new discovery, RIL — the operator of the block NEC-OSN-97/2 or NEC-25 — has not made any announcement.

Niko Resources holds 10 per cent interest in the Mahanadi basin shallow water block covering an area of 10,755 sq km in water depths ranging between 20-600 meters. RIL holds 90 per cent interest in the Bay of Bengal block.

RIL has so far made eight gas discoveries in NEC-25, off which six were declared commercially exploitable and development plan submitted to the Directorate General of Hydrocarbons (DGH) in 2007.

Field Development Plan (FDP) is an investment proposal for bringing to production oil or gas finds. Operators like RIL can only begin such investments after getting the necessary approval from DGH, the sector regulator.

Niko did not give potential reserves in the AJ2 well but the source said the discovery “looks promising”.

“Approximately 1,000 square kilometers of 3D seismic have been acquired along the central portion of the northwest boundary of the previous 3D survey,” the Canadian firm added.

The discoveries in NEC-25 are besides the 19 gas and one oil find RIL made in the Krishna Godavari basin deepsea block KG-D6. Of these, two gas finds were put to production in April this year and are currently producing 36.25 million standard cubic metres per day.

The MA oil discovery in KG-D6 started output in September 2008 and is currently producing 13,000 barrels per day (bpd).

Niko, which holds 10 per cent interest in KG-D6, said oil production is targeted to reach up to 35,000 bpd before March 2010.