Reliance debunks charges on KG-D6 output fall

Reliance debunks charges on KG-D6 output fall

New Delhi: Reliance Industries has debunked charges that KG-D6 gas field output fell due to non-drilling of an adequate number of wells, saying the phenomenon was a result of reservoir complexity and indiscriminate drilling would have lead to infructous capital expenditure.

The drop in production from over 61 million cubic metres per day achieved in March 2010 to under 50 mmcmd was a result of the main reservoir channels not behaving in the manner predicted in 2006.

“Reliance has told us that pressure in wells has fallen rapidly and some wells haven shown early water ingress," an oil ministry official said. “They made a detailed presentation on the problems being faced at the field on May 2 and by the look of it, we feel there are some genuine reservoir issues."

More wells on the main channel area of the Dhirubhai-1 and 3 fields, the largest of the 18 gas finds in the block that were put into production in 2009, is unlikely to either raise production rate or recovery as they will drain the same resource, he said.

Reliance will identify disconnected gas volumes and drill wells on them, an exercise that will take 3-4 years.

It has drilled 20 out of the 22 wells committed in the field development plan (FDP) as it now feels that drilling of additional wells unmindful of the reservoir behavior would have resulted in huge capital expenditure which would have been difficult to justify later.

Oil regulator DGH (Directorate General of Hydrocarbons) is pushing for drilling of 11 committed wells by 1 April 2012 to raise output. Reliance wants UK’s BP Plc, the world’s best deep water production and reservoir management firm, to come on board first.

BP is buying 30% interest in KG-D6 and 22 other blocks for $7.2 billion.

Once the government approves the stake buy, Reliance plans to sit with BP to come up with most optimal solution to the reservoir problem including drilling of additional wells.

Reliance is allowed to recovery every penny spent on the field from sale of gas before profits are split with the government. Investment in injudicious additional wells would have led to reduction in government’s profit in petroleum.

Sitting in water depths of up to 1.2 kilometers, the KG-D6 is the first deep sea field in South Asia to go on production and there are no deep water analogs available for reference on how the reservoir will behave.

As a result, Reliance had to depend on its own resources and some global industry consultants for the characterization, modelling and development of this complex deep water reservoir system.

Current wells have no contribution from the areas outside the main channel area, contrary to what was predicted at the time of FDP in 2006.