Oil Min, DGH order RIL to drill 2 wells in KG-D6 by June

Dhirubhai-1 and 3 fields in the eastern offshore KG-D6 block are producing 41-42 million standard cubic meters per day of gas as opposed to 61.88 mmscmd planned due to fall in reservoir pressure and water ingress in wells.

At a meeting of the Management Committee (MC) of KG-D6 block on May 2, Reliance pleaded for putting in place a technical committee comprising of global experts for advice on the best way forward on the issues facing the fields, a source privy to the minutes of the meeting said.

DGH and oil ministry choose to ignore Reliance call and 'advised' Reliance to drill two wells and complete a similar number of wells drilled previously by the first quarter of 2011-12 fiscal (June end). Also, they wanted another nine wells to go on stream before the end of the fiscal in March 2012.

DGH representative, according to the minutes, remarked that any additional well will take three years from the date of approval for well location by MC and, therefore, the additional production from these wells is unlikely to commence before 2014.

Weather window for drilling in Bay of Bengal almost at the end and yet DGH asked Reliance to drill 11 wells by March. The source said Reliance suggested that instead of additional wells, those wells showing increasing trend in water production be considered for work over jobs. The firm said it has already planned for work over jobs in six wells.

At the meeting, Canada's Niko Resources, which owns 10 per cent interest in Reliance-operated KG-D6 block, rejected DGH suggestions to drill well outside the main reservoir channel as economically unjustified.

Reliance-Niko, the source said, explained that they have complied with field development plan (FDP) in all respects except for the drilling of a few wells. They also provided the technical reasons related to the reservoir complexities with reservoir behaviour being different from what was envisaged/considered at the time of 2006 FDP leading to delayed drilling of wells compared to the FDP.

DGH representative, according to the minutes, remarked that the Reliance has drilled wells in the main channel area where 40 per cent of the reserves are present and additional wells will have to be drilled in the remaining 60 per cent of the outside channel area.

Reliance explained that all the existing 18 production wells are in the main channel area as envisaged in the FDP. The geological model in the FDP, which was approved by DGH and the oil ministry in 2006, anticipated that wells in the main channel area would be able to drain resources from within the main channel area as well as area outside the main channel.

However, based on two years of production data and the understanding of the reservoir that has matured over this time, it appears volumes outside the main channel area are not contributing through the existing wells, Reliance stated.

Two additional wells drilled in the second half of 2010 have also validated this understanding. The source said DGH insisted that since the volume exists beyond the main channel area, Reliance must drill and connect the wells to increase the production.

To this Niko enquired whether in DGH's opinion these additional wells would be able to produce sufficient volume to justify the investment. It was brought to the attention of MC that the area outside the main channel is dominated by thinly laminated, sparsely dispersed sands for which justifying independent wells are a key challenge.

The source said the Field Development Plan (FDP) of Dhirubhai-1 and 3 (Dl & D3) gas field envisaged 22 producer wells would be put on stream by April 1, 2011 with production rate of 61.88 mmscmd and by 31 by April 2012 to produce 80 mmscmd.

Presently, only 18 producer wells are under production and average production is in the range of 41-42 mmscmd. Further, Reliance has drilled two development wells and has proposed to drill three development wells in the FY 2011-12. However, it has indicated to complete and put on stream these five wells in mid-2014 only.