RIL-BP to submit field devt plan for KG-D6 by Oct

With KG-D6 output hitting an all-time low, Reliance Industries (RIL) and partner BP will submit to the government by October an integrated development plan to produce natural gas from all the 18 discoveries in the block.

RIL and BP made a presentation to the Oil Secretary GC Chaturvedi on March 16 detailing "an integrated and capital efficient plan for block development," sources in know of the development said.

The duo projected first gas from R-Series, the third-largest gas find in the eastern offshore KG-DWN-98/3 or KG-D6 block, by 2015 and production from satellite fields by 2016 subject to timely regulatory approvals.

RIL began production from Dhirubhai-1 and 3 (D1&D3) fields, the largest among the 18 gas and one oil find, in April 2009 but output has fallen from a peak of 54 million cubic metre per day (mmscmd) in March 2010 to 28.16 mmscmd this month.

Together with 6.46 mmscmd of gas production from D-26 or MA oil field in the same area, block output is 34.62 mmscmd.

The plan would help in cost savings of over $1 billion due to integration and optimisation. In addition, un-incurred phase-II cost of D1&D3 field development plan ($3.1 billion out of total cost of $8.8 billion) would not be required to be spent, the presentation said.

Sources said RIL-BP plan to connect R-Series and four satellite fields, for which a $1.529 billion field development plan was approved by the government in January, to the existing infrastructure used to produce gas from D1&D3 and MA. Also other satellite fields would be hooked up to these.

R-series and four satellite fields alone have potential to add 30 mmscmd of output.

RIL-BP, however, stressed that delay in approvals of even few months would lead to first gas from R-series delayed by at least a year.

Once the integrated plan is approved, RIL-BP would relinquish most of the 7,645 square kilometre KG-D6 block.

Sources said RIL-BP told Chaturvedi that based on nearly 3 years of production data of D1&D3, decline in pressure and production was "far higher than originally predicted."

Discounting the theory that output was less because of drilling of lesser number of wells, they said four additional wells were drilled on the instance of Directorate General of Hydrocarbons (DGH) to access unconnected volumes but only one of them encountered disconnected unrecoverable volume.

"Based on nearly 3 years of production data, it appears that the gas volumes within the main area [of D1&D3] connected to the existing wells are lower than envisaged. Gas volumes in the area outside the main channel area are not participating in production [disconnected] with small uneconomic volumes," the presentation stated.