RIL's KG-D6 may see a further dip in output

Reliance Industries' eastern offshore KG-D6 gas fields may see a further decline in output until new wells are brought to production, the company's minority partner Niko Resources has said.

Niko, which holds 10 per cent stake in the RIL-operated KG-DWN-98/3 or KG-D6 block off the Andhra coast, said its share of gas production in the October-December quarter from the D6 block "averaged 143 million cubic feet per day compared to 195 mmcfd in the prior year's quarter".

The figures put out by Niko in its third quarter earning statement this week, represent 10 per cent of the total output from KG-D6. KG-D6 output in October-December, according to Niko's statement, should be 40.49 million cubic meters per day as compared to 55.21 mmcmd in the same period a year earlier.

D6 gas production in December averaged approximately 137 mmcfd (38.79 mmcmd for the entire block), Niko said.

"Declines are expected to continue until workovers are completed and/or additional wells are tied in," it added.

The current output is less than half of the peak 80 mmcmd that RIL had projected as fewer wells were drilled than planned and six wells ceased to produce due to the entry of sand or water.

RIL has so far drilled 22 wells on Dhirubhai-1 and 3, two of the 18 gas finds in the KG-D6 block that have been brought to production, but only 18 were put-on production. Of these 18, five have ceased due to water/sand ingress.

The company is to do workovers or maintenance of these well, which may raise the output, Niko said.

MA oilfield in the same block had seen one out of the five wells cease due to the same reasons.

"Oil production from the D6 Block decreased as five wells were producing in the periods compared to six wells for the majority of the prior year's periods and a decrease in production from the remaining wells," Niko said.

The Canadian firm said plans were approved for the development of the first four satellite discoveries around the currently producing D1&D3. "In addition, further development is expected at D6 when the "R complex" and three additional satellite discoveries are added."

These fields can add up to 30 mmcmd to the output.

RIL holds 60 per cent interest in the 7,645-sq-km D6 block after farming-out 30 per cent stake in BP Plc of UK.

Production of oil from the MA discovery began in September 2008 and production of gas from the Dhirubhai 1 and 3 (D1&D3) discoveries in April 2009.

The Company has been granted petroleum mining licences for the discoveries expiring in 2028 and 2025, respectively.