RIL, BP spend Rs 4,500 crore to maintain gas output at KG-D6

New Delhi: Reliance Industries and its partner BP plc of UK have invested over Rs 4,500 crore in the flagging eastern offshore KG-D6 block to maintain gas output at current level despite the steep natural decline that has set in in the seven-year old fields.

RIL-BP are currently producing from Dhirubhai-1 and 3 gas field and MA oil and gas field, three of the over one-and-half dozen discoveries made in the Bay of Bengal Block KG-DWN-98/3 or KG-D6.

The fields, which began gas production in April 2009, hit a peak output of 69.43 million standard cubic meters per day in March 2010 before water and sand ingress shut down well after well.

The fields are on steep natural decline and RIL-BP have have spent over Rs 4,500 crore arrest the decline and continue to increase the ultimate recovery of gas, sources said.

The block is currently producing 8.7 mmscmd.

Currently, RIL-BP are in the process of sidetracking (drilling) two of their existing wells and drilling away from the water to increase recovery of gas.

Side-track campaign has also been initiated in MA field.

Sources said the existing and enhanced production from these fields only get the price as per the formula that was approved in November 2014.

Price according to this formula currently is USD 3.06 per million British thermal unit and is expected to be revised lower in October 2016.

At these prices, leave alone new investment, even the base business will struggle to yield any profits, they said.

Sources said RIL-BP have started working developing R- Series and satellite discoveries.

A field development plan (FDP) approved in 2013 envisages USD 3.18 billion investment in R-Series or D-34 gas field to produce 13-15 mmscmd of gas for 13 years.

RIL-BP recently submitted FDP for two other discoveries D-29 and 30, which formed part of R-Culster.

Besides, another FDP of USD 1.529 billion for four satellite gas discoveries - D-2, 6, 19 and 22, was approved in 2012. The four fields can produce 10.36 mmscmd.

The two partners are also working on a FDP of MJ find.

Sources said it will take 36-42 months to build and install new facilities on these fields and to drill new wells and hook them up.