RIL tests presence of natural gas in contentious discoveries

RIL last week completed Drill Stem Test on Dhirubhai-29 gas discovery that established presence of hydrocarbon

Reliance Industries has successfully tested presence of natural gas in one of the two KG-D6 block natural gas discoveries which the sector regulator DGH had previously refused to recognise.

RIL last week completed Drill Stem Test (DST) on the Dhirubhai-29 (D-29) gas discovery that established presence of hydrocarbon, sources privy to the development said.

A rig used to conduct the DST will now be moved to the other find, D-30 in the Bay of Bengal for conducting similar test, they said.

The Directorate General of Hydrocarbons (DGH) had refused to recognise the 2007 gas discoveries of D-29, 30 and 31 in the eastern offshore KG-D6 block in absence of its prescribed conformity test, DST.

RIL had done its own conformity tests but in absence of surface flow that could be established through DST, the DGH refused to recognise them and the company could not bring them to production.

After protracted wrangling, the Government in April made an offer to RIL and other operators who faced similar derecognition of discoveries, to conduct DST under limited cost to retain the finds.

RIL opted to do confirmatory test on two of the three contentious gas finds in the KG-D6 block and one of the two discoveries in question in NEC-25 block.

It along with its partners BP plc of the UK and Canada's Niko Resources decided to relinquish discoveries D-40 in NEC-25 block off the Odisha coast and D-31 in KG D6 block, they said.

After DST on D-29 and D-30, similar test will be conducted on D-32 in block NEC-25 later this month.

The cabinet committee on economic affairs (CCEA) had in April approved a policy to allow operators to develop a dozen contentious natural gas discoveries worth about Rs 1 lakh crore at current prices.

The new policy gives companies options to either develop the finds at their own risk or perform upstream regulator DGH-prescribed conformity tests before developing them and recouping the entire cost.

Sources said the policy approved by CCEA settled long pending issue with regards to 12 discoveries in five blocks pertaining to Oil and Natural Gas Corp (ONGC) (six discoveries) and RIL (six discoveries).

The 12 finds hold reserves of around 90 bcm of gas. The CCEA allowed companies to either relinquish the blocks or develop the discoveries after conducting DST with 50 per cent cost of DST being disallowed as penalty for not conducting the test on time.