The Telegraph
Saturday , March 8 , 2014
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Reliance-BP drill to up gas output

New strategy

New Delhi, March 7: Global energy major BP is working with Reliance Industries to extend the life span of the operational gas fields in the KG-D6 basin off the Andhra coast.

“Following approval by the relevant authorities in 2012, a number of activities are being progressed to arrest the decline in production rates and to extend the life of the KG-D6 producing fields. These include new work-over wells and the installation of additional compression and water handling capacity,” BP said in its 2013 annual report.

BP, which bought a 30 per cent stake in RIL’s 21 oil and gas blocks, including KG-D6, for $7.026 billion in 2011, is working with RIL to arrest the output decline in the fields.

RIL is the operator of the KG-D6 block with a 60 per cent stake, while Niko Resources of Canada holds another 10 per cent.

The KG-D6 fields, which began production in April 2009, hit a peak output of 69.43 million metric standard cubic metres per day (mmscmd) in March 2010 before water and sand ingress led to more than a third of the wells shutting down.

At present, Reliance is producing over 13mmscmd gas from KG-D6, sharply lower from 60mmscmd at the end of 2010.

Reliance and partner BP have cited geological complexities for the fall in output but the oil regulator believes they have failed to drill enough wells.

Falling output had prompted the government to disallow proportionate cost recovery to Reliance, leading to arbitration proceedings.

According to RIL’s estimates, production from these fields would go down to 6.26 mmscmd by 2020-21 and would drain out by 2021-22.

However, the contract period for the block ends in 2029 and efforts are on to extend the life span.

D1 & D3, the largest of the 18 gas discoveries in the block, produced 66.35 mmscmd at its peak, while 3.07 mmscmd came from the MA field, the only oil discovery in the block. Output dropped to about 11.7 mmscmd last year.

Remedial steps helped to reverse the declining trend and output rose to 13.6 mmscmd last month.

“In 2013, we made two significant gas and condensate discoveries in the Krishna-Godavari and Cauvery basins (blocks KG-D6 and CYD5), a key milestone for our partnership with Reliance,” BP said.

“In August, the government approved the field development plan for the R-Series project in the KG-D6 block and has reviewed the appraisal plan for the KG-D6 discovery,” BP added.

These resources have the potential to help meet India’s growing demand for energy by increasing gas supplies from 2018, it said.

RIL-BP have surrendered most of the 21 blocks they partnered in 2011 as they did not hold commercially viable oil and gas. They currently hold only six blocks.