RIL scales down investment in KG-D6 gas fields by USD 3 bn
9 Oct 2012 12:32 AM GMT
Reliance Industries has scaled down investment on the flagging gas fields in KG-D6 block by almost USD 3 billion to USD 5.92 billion on back of an unexpected drop in reserves.
RIL in August submitted a revised field development plan [FDP] for the Dhirubhai-1 & 3 [D1&D3], the only producing gas fields among a total of 18 gas discoveries made so far in the KG-D6 block in Bay of Bengal, sources with direct knowledge of the development said. The company, which had in 2006 proposed an investment of USD 8.836 billion in two-phases on the fields, in the revised FDP has outlined a further investment of only USD 235 million over and above USD 5.693 billion that has already been spent.
Sources said RIL in the revised FDP submitted to the Directorate General of Hydrocarbons [DGH] has stated that the remaining reserves in the fields do not justify drilling of any more wells and the additional USD 235 million spending would be for raising gas compression capacity.
In the 2006, it had proposed to drill a total of 31 wells capable of producing 80 million standard cubic metres per day [mmscmd] of gas by 2012. However, the company has so far drilling only 22 wells on the fields. Out of these only 18 have so far been put on production while the last four drilled in 2011 have not been connected to production system as they contain uneconomical reserves.
D1&D3 are producing less than 22 mmscmd of gas, down from 53-54 mmscmd achieved in March 2010. The output fell as the company shut six out of the 18 wells due to high water and sand ingress.
RIL, which according to the 2006 approved FDP was to drill the 31 wells by end of March 2011, believes that the field has not behaved as predicted and so indiscriminate drilling would be a big drain on cost. The Oil Ministry had, however, seen non-drilling of the committed wells as a violation under the Production Sharing Contract [PSC] and slapped a notice disallowing over USD one billion in cost as a penalty. Together with about 5.5 mmscmd of output from MA oilfield in the same block, KG-D6 output is around 27.5 mmscmd currently. Sources said investment downgrade follows only 3.10 Trillion cubic feet [Tcf] of gas reserves remaining in D1&D3 instead of 10.03 Tcf estimated in the 2006 plan. RIL, which is the operator of the KG-D6 block with 60 per cent interest, believes gas reserves lie in the satellite finds around D1&D3 and wants to develop them quickly to produce up to 30 mmscmd of additional gas. RIL, DGH and the oil ministry have been under attack for raising capex estimates for D1&D3 gas fields .Â
PURSE POWER
RIL in August submitted a revised field development plan [FDP] for the Dhirubhai-1 & 3 [D1&D3], the only producing gas fields among a total of 18 gas discoveries made so far in the KG-D6 block in Bay of Bengal, sources with direct knowledge of the development said. The company, which had in 2006 proposed an investment of USD 8.836 billion in two-phases on the fields, in the revised FDP has outlined a further investment of only USD 235 million over and above USD 5.693 billion that has already been spent.
Sources said RIL in the revised FDP submitted to the Directorate General of Hydrocarbons [DGH] has stated that the remaining reserves in the fields do not justify drilling of any more wells and the additional USD 235 million spending would be for raising gas compression capacity.
In the 2006, it had proposed to drill a total of 31 wells capable of producing 80 million standard cubic metres per day [mmscmd] of gas by 2012. However, the company has so far drilling only 22 wells on the fields. Out of these only 18 have so far been put on production while the last four drilled in 2011 have not been connected to production system as they contain uneconomical reserves.
D1&D3 are producing less than 22 mmscmd of gas, down from 53-54 mmscmd achieved in March 2010. The output fell as the company shut six out of the 18 wells due to high water and sand ingress.
RIL, which according to the 2006 approved FDP was to drill the 31 wells by end of March 2011, believes that the field has not behaved as predicted and so indiscriminate drilling would be a big drain on cost. The Oil Ministry had, however, seen non-drilling of the committed wells as a violation under the Production Sharing Contract [PSC] and slapped a notice disallowing over USD one billion in cost as a penalty. Together with about 5.5 mmscmd of output from MA oilfield in the same block, KG-D6 output is around 27.5 mmscmd currently. Sources said investment downgrade follows only 3.10 Trillion cubic feet [Tcf] of gas reserves remaining in D1&D3 instead of 10.03 Tcf estimated in the 2006 plan. RIL, which is the operator of the KG-D6 block with 60 per cent interest, believes gas reserves lie in the satellite finds around D1&D3 and wants to develop them quickly to produce up to 30 mmscmd of additional gas. RIL, DGH and the oil ministry have been under attack for raising capex estimates for D1&D3 gas fields .Â
PURSE POWER
- Reliance had in 2006 proposed an investment of USD 8.836 billion in two-phases on the fields
- In the revised FDP, it has outlined a further investment of only USD 235 million over and above USD 5.693 billion that has already been spent
- The company has so far drilling only 22 wells on the fields. Out of these only 18 have so far been put on production while the last four drilled in 2011 have not been connected to production system as they contain uneconomical reserves
- D1&D3 are producing less than 22 mmscmd of gas, down from 53-54 mmscmd achieved in March 2010
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