Reliances Industries’ KG-D6 supplies to power plants stop
6 March 2013 5:52 AM IST
Natural gas supplies from Reliance Industries Ltd’s (RIL) KG-D6 block to power plants has completely stopped after output from the eastern offshore fields dropped to an all-time low. Beginning this week, none of the 25 power plants that are allocated gas from KG-D6 fields, are getting any supplies, industry sources said.
This follows KG-D6 output dipping to an all-time low of 17.3 million standard cubic meters per day (mmscmd) this week. Of this, about 15.2 mmscmd was supplied to top priority urea-making fertiliser plants and about 2 mmscmd was consumed by state-owned GAIL India Ltd’s LPG extraction units.
The rest was used to fire the East-West pipeline that transports the fuel from its landfall point at Kakinada, Andhra Pradesh, to Brauch, Gujarat. This left no gas for power plants, which are placed third on the priority list of consumers receiving KG-D6 gas.
A Reliance Industries Ltd spokesman could not be immediately reached for comments.
The Bay of Bengal KG-D6 fields, which began gas production in April 2009, had hit a peak of 69.43 mmscmd in March 2010 before water and sand ingress led to shutting down of more than one-third of the wells. This peak output comprised of 66.35 mmscmd from Dhirubhai-1 and 3, the largest of the 18 gas discoveries on the KG-D6 block and 3.07 mmscmd from MA field, the only oil discovery on the block.
D1&D3 output has since fallen to 12-13 mmscmd while gas production from the MA field, which had hit a peak of 6.78 mmscmd in January 2012, has fallen to just about 5 mmscmd. Sources said that when KG-D6 gas production began to dip sharply, the government in 2011 ordered a pro-rata cut in supplies to 25 power plants which had an original allocation of 28.90 mmscmd of gas.
However, there was no cut in the 15.668 mmscmd allocation to 16 fertiliser plants, who were given top priority in gas allocation. The fall in KG-D6 output has already led to shutting down of the 1,967 mega-Watt power plant at Dabhol in Maharashtra.
Ratnagiri Gas & Power Pvt Ltd (RGPPL), the firm that now runs the Dabhol plant, was allocated 7.6 mmscmd of KG-D6 gas. Last week supplies from the KG-D6 fields ran dry.
Sources said that most of the power plants either had gas allocation from state-owned Oil & Natural Gas Corp (ONGC) or had tied-up imported liquid gas (LNG). With imported LNG costing three times the $4.205 per million British thermal unit price of KG-D6 gas, power companies are finding it difficult to operate their plants based on just imported fuel.
CAIRN TO START RAJASTHAN GAS OUTPUT THIS MONTH
After giving the nation a massive oil discovery, Cairn India is now ready to begin natural gas production from its prolific Rajasthan block and has sought government approvals to begin sale to consumers by month end.
Cairn currently produces small volumes of natural gas along with crude oil from the fields in the Barmer basin block. The gas produced in used for power generation for internal consumption. It, however, sees the resource base supporting commercial production of about 1 million standard cubic metres per day.
Anil Agarwal, Executive Chairman of Vedanta Resources, which owns majority stake in Cairn India, has written to Oil Minister M Veerappa Moily saying that the company ‘will be ready to achieve sale of natural gas from the block in March 2013’.
Cairn and its partner Oil & Natural Gas Corp (ONGC) ‘have been working towards ensuring development and commercial production of the natural gas resources in the block and have achieved substantial progress’, he said.
Gas sales, he said, would begin upon ‘approval of price and gas allocation from Ministry of Petroleum and Natural Gas as per the Gas Utilisation Policy’. The company has already sent a letter seeking approval of a price for the gas to the ministry on January 30, he said.
Agarwal invited Moily to the fields to inaugurate the sale of natural gas from the Rajasthan block. Sources said Cairn is installing equipment to remove carbon-dioxide (CO2) from the gas before it is sold to consumers like power plants.
The company currently produces about 170,000 barrels per day of crude oil from Mangala and Bhagyam oilfields in the Rajasthan block. Mangala and Bhagyam are the biggest among the 25 oil and gas finds Cairn has made in the desserts of Rajasthan.
This follows KG-D6 output dipping to an all-time low of 17.3 million standard cubic meters per day (mmscmd) this week. Of this, about 15.2 mmscmd was supplied to top priority urea-making fertiliser plants and about 2 mmscmd was consumed by state-owned GAIL India Ltd’s LPG extraction units.
The rest was used to fire the East-West pipeline that transports the fuel from its landfall point at Kakinada, Andhra Pradesh, to Brauch, Gujarat. This left no gas for power plants, which are placed third on the priority list of consumers receiving KG-D6 gas.
A Reliance Industries Ltd spokesman could not be immediately reached for comments.
The Bay of Bengal KG-D6 fields, which began gas production in April 2009, had hit a peak of 69.43 mmscmd in March 2010 before water and sand ingress led to shutting down of more than one-third of the wells. This peak output comprised of 66.35 mmscmd from Dhirubhai-1 and 3, the largest of the 18 gas discoveries on the KG-D6 block and 3.07 mmscmd from MA field, the only oil discovery on the block.
D1&D3 output has since fallen to 12-13 mmscmd while gas production from the MA field, which had hit a peak of 6.78 mmscmd in January 2012, has fallen to just about 5 mmscmd. Sources said that when KG-D6 gas production began to dip sharply, the government in 2011 ordered a pro-rata cut in supplies to 25 power plants which had an original allocation of 28.90 mmscmd of gas.
However, there was no cut in the 15.668 mmscmd allocation to 16 fertiliser plants, who were given top priority in gas allocation. The fall in KG-D6 output has already led to shutting down of the 1,967 mega-Watt power plant at Dabhol in Maharashtra.
Ratnagiri Gas & Power Pvt Ltd (RGPPL), the firm that now runs the Dabhol plant, was allocated 7.6 mmscmd of KG-D6 gas. Last week supplies from the KG-D6 fields ran dry.
Sources said that most of the power plants either had gas allocation from state-owned Oil & Natural Gas Corp (ONGC) or had tied-up imported liquid gas (LNG). With imported LNG costing three times the $4.205 per million British thermal unit price of KG-D6 gas, power companies are finding it difficult to operate their plants based on just imported fuel.
CAIRN TO START RAJASTHAN GAS OUTPUT THIS MONTH
After giving the nation a massive oil discovery, Cairn India is now ready to begin natural gas production from its prolific Rajasthan block and has sought government approvals to begin sale to consumers by month end.
Cairn currently produces small volumes of natural gas along with crude oil from the fields in the Barmer basin block. The gas produced in used for power generation for internal consumption. It, however, sees the resource base supporting commercial production of about 1 million standard cubic metres per day.
Anil Agarwal, Executive Chairman of Vedanta Resources, which owns majority stake in Cairn India, has written to Oil Minister M Veerappa Moily saying that the company ‘will be ready to achieve sale of natural gas from the block in March 2013’.
Cairn and its partner Oil & Natural Gas Corp (ONGC) ‘have been working towards ensuring development and commercial production of the natural gas resources in the block and have achieved substantial progress’, he said.
Gas sales, he said, would begin upon ‘approval of price and gas allocation from Ministry of Petroleum and Natural Gas as per the Gas Utilisation Policy’. The company has already sent a letter seeking approval of a price for the gas to the ministry on January 30, he said.
Agarwal invited Moily to the fields to inaugurate the sale of natural gas from the Rajasthan block. Sources said Cairn is installing equipment to remove carbon-dioxide (CO2) from the gas before it is sold to consumers like power plants.
The company currently produces about 170,000 barrels per day of crude oil from Mangala and Bhagyam oilfields in the Rajasthan block. Mangala and Bhagyam are the biggest among the 25 oil and gas finds Cairn has made in the desserts of Rajasthan.
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