RIL says on track to produce gas from new field in KG-D6 block by mid-2020

Reliance Industries has so far made 19 gas discoveries in the KG-D6 block

Reliance Industries Ltd has said that it is on track to start production from a new gas field in the flagging KG-D6 block in the Bay of Bengal from mid-2020 even as output from its existing fields continued to fall.

Reliance and its partner BP Plc of the UK had in June 2017 announced an investment of Rs 40,000 crore in the three sets of discoveries to reverse the flagging production in KG-D6 block.

These finds were expected to bring a total 30-35 million cubic metres (1 billion cubic feet) of gas a day onstream, phased over 2020-22.

The three sets of discoveries are R-Cluster, Satellite Cluster and MJ field. R-Cluster will be first to come on stream.

"On track for gas from R-Cluster in mid-2020," Reliance said in an investor presentation post announcing its second quarter earnings.

The company has already drilled all the six wells on the field and "second campaign for installation of subsea production system (SPS)" was progressing, it said.

Drilling of three out of the five wells on Satellite Cluster has been completed and engineering and fabrication for SPS was on track, it said.

Satellite Cluster is to begin production in 2021.

For MJ, first phase of drilling will commence in January-March 2021, it said.

Reliance has so far made 19 gas discoveries in the KG-D6 block. Of these, D-1 and D-3 -- the largest among the lot -- were brought into production from April 2009 and MA, the only oilfield in the block, was put to production in September 2008.

The output from D-1 and D-3 has fallen sharply from 54 million standard cubic metres per day (mmscmd) in March 2010 to 1.68 mmscmd in the July-September, the presentation said.

The fields had produced an average of 1.76 mmscmd of gas in April-June 2019. MA field ceased to produce last year.

"D1-D3 fields in a late life stage and affected by low pressure and water ingress related challenges," the presentation said.

Reliance is the operator of the block with 66.6 per cent interest while BP holds the remaining stake in the block.

MJ gas find is located about 2,000 metres directly below the currently producing Dhirubhai-1 and 3 (D1 and D3) fields in the KG-D6 block and is estimated to hold a minimum of 0.988 trillion cubic feet (Tcf) of contingent resource.

Besides MJ-1, four deepsea satellite gas discoveries -- D-2, 6, 19 and 22 -- are planned to be developed together with D29 and D30 finds on the block. The third set is the D-34 or R-Series find.

The government had in 2012 approved a USD 1.529 billion plan to produce 10.36 mmscmd of gas from four satellite fields of block KG-DWN-98/3 (KG-D6) by 2016-17.

The four fields have 617 billion cubic feet of reserves and can produce gas for eight years.

However, the companies did not begin the investment citing uncertainty over gas pricing.

After the government allowed a higher gas price for yet-to-be-developed gas finds in difficult areas like the deep sea, RIL and BP decided to take up their development.

RIL-BP have kept the USD 3.18 billion investment plan for D-34 or R-Series gas field in the same block, which was approved in August 2013. About 12.9 mmscmd of gas for 13 years can be produced from D-34 discovery, which is estimated to hold recoverable reserves of 1.4 trillion cubic feet.

Other discoveries have either been surrendered or taken away by the government for not meeting timelines for beginning production.