The Directorate-General of Hydrocarbons (DGH) has rejected Reliance Industries Ltd's contention that geological complexities stopped it from firming up appropriate drilling locations in D6 block.
The DGH has reported that reasons for lower output from the D1 and D3 gas producing fields in the block may be attributed to drilling fewer development wells (or producing wells) as against what was envisaged by the block management committee approved development plan. This information was given by the Minister of State for Petroleum and Natural Gas, Mr R.P.N Singh, to the Rajya Sabha on Tuesday.
Reliance Industries and its partners in the Krishna-Godavari Basin block have been asked to comply with the field development plan (FDP) by drilling more wells in D1 and D3 gas fields and achieve the approved gas production profile, the Minister said.
Dip in Output
Currently, the D1 and D3 fields are producing 28.93 mmscmd and the MA field 6.64 mmscmd of gas. The DGH has reported that the average natural gas production from D1 and D3 as well as MA fields of the block during February was about 35.57 mmscmd, against the planned production of 70.38 mmscmd in 2011-12, according to the approved FDPs.
The decline in production from the D1 and D3 fields is due to drilling only 22 wells (18 gas producing wells and four wells drilled but not connected or put on production) against the 31 producing wells approved for drilling up to March 2012, according to the FDP.
In addition, five out of the total 18 producing wells in D1 and D3 have ceased to produce due to water loading/sand ingress. While in the MA field, out of six wells one has ceased to produce due to water loading.
Gas allocation
On gas allocation, the Minister said that because of the decline in D6 gas output his Ministry in July 2010 had ordered applying pro-rata cuts in the supply against the firm allocation to all customers on days when the total production is less than the signed gas sale and purchase agreements.
Since the gas output continued to decline, the Ministry in March 2011 directed that Reliance meet the firm allocation for the core sectors – fertiliser, LPG, power and city gas distribution – apart from the gas needed for operation of East-West Pipeline. This is before any supply is made to other sectors, irrespective of the production levels.
Further, if there is any shortfall in meeting the firm demand of remaining sectors due to fall in production, pro-rata cuts should be imposed on non-core sector customers, the March order said. If the output is still insufficient to meet the demand of core sector, then cuts would be imposed in the reverse order – the sequence of CGD, power, LPG, and lastly fertiliser, the Minister said.