RIL plans to convert two sick oil wells into gas wells

The oil behemoth is also planning a new gas well on the MA oilfield

Reliance Industries plans to drill one gas well and convert two sick oil wells into gas wells on the MA oilfield in the predominately gas-rich KG-D6 block as part of its attempts to boost gas production.

RIL has so far drilled six wells on the MA oilfield, the only oil discovery among the 19 oil and gas finds the company had made in the eastern offshore KG-DWN-98/3 or KG-D6 block.

Besides producing oil, the field also produces natural gas. But the closure of two out of the six wells due to high water and sand ingress has led to drop in output from over 8 million standard cubic meters per day (mmscmd) three years ago to 5.53 mmscmd this month.

To address the problem, RIL and its partner BP Plc of UK submitted a Revised Field Development Plan for MA oilfield in February this year, sources privy to the development said. The revised plan envisages drilling of a new gas well and conversion of two sick (or closed) oil wells to gas wells in order to maximise the gas production from the field, they said.

Together with 21.93 mmscmd of output from Dhirubhai-1 and 3 or D1&D3 gas field, the KG-D6 block currently a little less than 27.5 mmscmd of gas.  Sources said in the revised field development plan, RIL has scaled down the investment required for developing the MA oilfield by $276 million to $1.96 billion.

RIL had in 2006 proposed to invest $2.234 billion in developing the Dhirubhai-26 or MA discovery, the only oil find in KG-D6 block in Krishna Godavari basin off the east coast.

Besides gas, the field has also lagged behind targets in oil production. The field, which started production in September 2008, is producing less than half of the estimated peak output of 20,000 barrels of oil per day due to water and sand ingress in wells.

Sources said in the Revised Field Development Plan, submitted to the government for approval, capital expenditure at MA field has been estimated at $1.96 billion as against a capex of $2.234 billion approved in 2006.

The RFDP is based on reduction in volumes -- oil goes down from 159 million barrels to 122 million barrel and gas from 941 billion cubic feet (bcf) to 924 bcf.

The lower capex includes allocation of $111 million for drilling of seventh well on the field and work-overs or maintenance of two existing ones, including the ones currently shut, at the cost of $164 million.

Sources said RIL-BP would submit a revised development plan for D1&D3 gas fields, the main producing area in KG-D6, by October.

RIL had in the original field development plan for D1&D3 proposed a capital expenditure of $8.836 billion. Of this, about 60% has been spent so far.