Reliance Industries gets nod from oil regulator DGH to drill a well in KG-D6 field
The decision is a shot in the arm for RIL that has waited for 3 years to develop new fields in D6 block, where D1 and D3 fields output has plummeted.
NEW DELHI: The government has approved Reliance Industries' plan to start drilling for developing a new area in KG-D6, the first major decision after Veerappa Moily took charge at the oil ministry late last month.
The decision is seen as a shot in the arm for exploration companies, particularly Reliance Industries that has waited for three years to develop new fields in the D6 block, where output from the existing D1 and D3 fields has fallen drastically.
The fall in output and adverse comments from CAG on the way the field was administered prompted the government to penalise RIL, souring the relationship between the company and the ministry and leading to long delays in approvals.
The permission to drill in the proven D19 gas field was taken this month by the technical arm of the oil ministry, the Directorate General of Hydrocarbons (DGH), and immediately communicated to the company. The satellite fields of the block can produce 10 million standard cubic metres per day of gas. The block's output has fallen to 25 mmscmd from a peak of 60 mmscmd.
"The contractor can start work immediately after the management committee of the D6 block approves the proposal to drill the development well," a government official said, requesting anonymity.
Drilling to Start Immediately
Reliance has informed the oil ministry that it would start drilling immediately, the official said. The oil ministry, DGH and RIL did not respond to ET's email queries.
Drilling the development well in D-19 is part of the $1.5-billion optimum field development plan (FDP) for four satellite fields that was approved in January this year. After the FDP is approved, the company needs permission again to drill each well at a specified location. The other three fields are D2, D6 and D22. According to the plan, RIL has to drill a total of eight development wells in these satellite fields. Gas from the new fields is expected to flow in the middle of 2016.
In view of the sharp decline in output from the block compared with what was envisaged, the DGH has cautioned RIL to keep a close watch on the new field. It has asked the company to monitor water and gas ratio closely and adopt suitable measures in case the reservoir behaves unexpectedly. The DGH has also directed RIL to convene a meeting of the block's Management Committee (MC), the apex decision-making body that approved budget and work plans of oil or gas fields auctioned to private energy firms under the New Exploration Licensing Policy (Nelp), officials said.
Officials say after the DGH nod, MC approval is merely a formality as members have independently endorsed the proposal. MC is chaired by Director-General of Hydrocarbons RajivNayanChoubey while Joint Secretary-Exploration GiridharArmane is its deputy chairman. RIL, which operates the block, is its secretary and partners BP and Niko are the other members. The operating committee comprising consortium partners RIL, BP and Niko have already passed the proposal.Initially, RIL had proposed an integrated development plan for nine satellite gas fields, which was rejected in 2009 because some of the discoveries could not be economically developed. The company again put up a proposal to develop four satellite fields in December 2009, which was cleared by the oil ministry-led MC on January 3, 2012. Now, the company has to obtain MC approval for every individual well it would drill to produce gas.