Studies conducted by Reliance Industries so far reveal that the decline in gas output from Dhirubhai-1 and 3 fields in its Krishna Godavari Basin's D6 block could be ‘irreversible'. These fields have seen a drop of almost 42 per cent since the peak of 60 mmscmd in end-2009.
This means industries buying D6 gas will now have to depend on expensive imported gas. While imported gas is available at $8.5/mBtu and $14/mBtu (excluding other levies and taxes), D6 gas is available at $4.2/mBtu (excluding the levies and taxes).
Satellite fields
The only solution for RIL may be to develop the satellite fields around the currently producing fields in the block and bring them to production. So far, five gas fields have been discovered in D6 block. Of this two are producing.
Initial estimates show that the satellite fields can produce 30 mmscmd or more of gas. Together, with the producing fields the block output will be around 65 mmscmd. At present, RIL is producing 35 mmscmd of gas from 15 wells out of the 18 wells that have been drilled and hooked up.
Reassessment
Sources told Business Line that RIL and its partners are re-assessing the Dhirubhai-1 and 3 fields output and working out a strategy to maximise production.
The drop in production has been caused by a decline in reservoir pressure and the ingress of water. Recently, RIL has partnered with British major BP Plc, which has deepwater expertise. The other partner in the block is the Canadian firm Niko Resources.
The partners would submit a revised development plan to the Directorate-General of Hydrocarbons, the technical arm of the Ministry for Petroleum & Natural Gas. The first field development plan was submitted in 2004, which was revised in 2006. Both these plans were submitted prior to the actual production started in 2009.
According to the initial field development plan, RIL had to drill more wells to raise the output to 61-62 mmscmd by April 1, 2011, and 80 mmscmd by April 1, 2012. Reliance had committed in 2006 to invest $8.836 billion in Dhirubhai-1 and 3 fields.
RIL had recently drilled two more wells – one in the main channels. Sources said the well drilled within the main channels was tapping the same gas which is already under production. The well drilled outside the channel did not have sufficient gas to make it commercially viable.
Industry observers say it does not make economic sense to spend $150-170 million (the amount required to drill and hook up a deepwater well) on wells that do not offer returns on gas being sold at $4.2/mBtu. Drilling such high-cost wells, which do not offer enough quantum of produce to break even, is unviable proposition, they argue.