Reliance Industries Ltd (RIL) and BP on Friday announced their second gas discovery in the Cauvery deep-water block.
According to a statement issued by the partners, the well flowed gas at the rate of 35.2 million standard cubic feet a day (one million standard cubic metres a day), with condensate at the rate of 413 barrels a day, during a test.
Though the flow of gas in this discovery is good, the field is smaller than the Krishna-Godavari Basin’s D6 block.
Critics say the timing of the discovery could not be better, as the Government is set to increase the price of domestically produced gas from next year.
Falling gas production in the country has been a cause of concern, particularly because of a significant drop in output from the Reliance Industries-operated D6 block.
The well-flow only signifies good potential; only time will be tell how much it can be commercialised, say those associated with the industry.
The discovery will not start reaping commercial benefits before 2017-18, they point out.
The first discovery in the block, CY-DWN-2001/2 (CYD5), situated 62 km from the coast in the Cauvery Basin, was made in July 2007. That find is yet to be declared commercial.
Appraisal wells
The Cauvery deep-waters, like the Kerala-Konkan belt, have been termed wildcat, as not much is known about the basin. RIL and BP will now have to submit a Declaration of Commerciality (DoC) to the Directorate General of Hydrocarbons (DGH). But, prior to this, they may drill one or two more appraisal wells.
A DoC is necessary to develop any discovery.
In their statement, the companies said the Government and DGH have been notified about the discovery, named D-56.
Reliance has planned a $1.452 billion investment to develop the first find it made in the block, in 2007.
Price hike
RIL had submitted a DoC for the find, D-35, in March 2010, after drilling an appraisal well. But, it was not approved by the DGH on the grounds that it was not viable at a price of $4.2/unit (gas is measured in million British thermal units).
Now, with the Government deciding to raise the price with effect from April 2014, RIL has requested the block Management Committee to review the price.
According to a DGH analysis, the discovery was viable at a gas price of about $6/unit. The first find held 719 billion cubic feet of gas reserves, of which 62 per cent was recoverable. It also had a small amount of oil.
RIL is the operator of the block, with 70 per cent equity, while BP has a 30 per cent share.
The companies said they had reached the total depth of the second well in early August. RIL, as the operator, conducted a drill stem test to evaluate the potential of the discovery.
The well-flow rates during such tests are limited by the rig and test equipment configuration, the statement added.
With this find, the RIL-BP combine has something positive to talk about. Until now, the contractors have been facing criticism on their inability to check the fall in output from the prolific KG D6 block.