DGH rejects RIL's proposal for single test in 3 discoveries

Says separate tests are required as the three finds are distant and unconnected

The DGH has rejected Reliance Industries' proposal to do a single test to confirm three natural gas discoveries in the flagging KG-D6 block, saying separate tests are required as the three finds are distant and unconnected.

The Directorate General of Hydrocarbons (DGH), the technical arm of the oil ministry, has since February 2010 not recognised the D-29, 30 and 31 as discoveries as RIL had not performed its prescribed tests to confirm the finds.

Sources said RIL and its partner BP Plc on October 8 proposed to do a single Drill-Stem Test (DST) on the three finds to establish them as commercially viable finds.

"Gas discoveries D-29, 30 and 31 were notified and accepted as independent discoveries, as reservoir pools were distinct and unconnected. Hence operator's (RIL's) submission that all three discoveries have same geological system is not adequate," DGH wrote to RIL on November 27.

DGH, however, wants three separate DSTs to be done before approving their declaration of commerciality (DoC). DoC is pre-requisite for any discovery to be developed.

"DST in each of the three discoveries is necessary to establish absolute open flow potential (AOFP) and other reservoir parameters in order to review the DoC of D-29, 30 and 31," DGH said.

"The PSC also requires the flow to be measured at the surface by conventional petroleum industry testing methods, so as to establish sustainable production levels," it added.

The three finds are part of the cluster that is called the R-Series in the eastern offshore KG-D6 block. RIL believes D-29, 30 and 31 together with the largest discovery in cluster, D-34 hold gross in-place reserves of 2.207 trillion cubic feet and the four could together produce a peak output of up to 20 mmscmd.

A block oversight committee headed by DGH, however, disassociated D-29, 30 and 31 and approved only D-34 with 1.267 tcf of reserves. D-34 alone can produce 14.68 mmscmd of gas from 11 wells for eight years on an investment of USD 2.338 billion.

Sources said RIL-BP believes the three discoveries have resources of around 350 billion cubic feet which has the potential to add 5-7 million standard cubic meters per day (mmscmd) to the KG-D6 production in four-five years.

DGH said RIL's proposal to undertake DST in one discovery well was acceptable with the condition that a successful test would lead to drilling of development wells in that particular reservoir only.

Output from KG-D6 has fallen to 23 mmscmd after hitting a peak of 62-63 mmscmd in August 2010 and the satellite finds are crucial in plans of RIL-BP to reverse the trend.