The prized KG-D6 fields of Reliance Industries produced 31% less than previously projected natural gas output in the April-June quarter, Oil Ministry said today.
"The average gas production during April-June 2011 from KG-DWN-98/3 (KG-D6) block is 48.60 million standard cubic meters per day which is less than the approved Field Development Plan (FDP) rate of 70.39 mmscmd," Minister of State for Petroleum and Natural Gas R P N Singh said in a written reply in Rajya Sabha.
The present output is made up of about 8 mmscmd from the MA oil field in the predominately gas-rich KG-D6 block off the Andhra coast. The rest comes from the Dhirubhai-1 and 3 (D1 and D3) gas fields, the largest of the 18 natural gas finds Reliance has made in the block.
"The contractor (Reliance) was adviced by (oil regulator) DGH to expeditiously drill more development wells in D1 and D3 field as per FDP in order to enhance gas production in KG-DWN-98/3 block," he added.
Singh however did not mention if Reliance has complied with the direction of drilling more wells. He also did not say what action the government could take in case of default.
Reliance has so far drilled only 20 out of the committed 22 wells on D1 and D3 as reservoir has not performed on expected lines. Pressure in the wells has dropped sharply and there is an increased water ingress, resulting in lower per-well gas output.
Of the 20 wells drilled, only 18 wells are under production. Further in the FDP approved in 2006, Reliance had committed to drill 31 wells by end of current fiscal.
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Reliance currently holds 90% interest in KG-D6 while the rest is with Niko Resources of Canada. It is selling 30% in the block and 22 others to UK's BP Plc for over $7 billion.
To a separate question, Singh said an Empowered Group of Ministers (EGoM) had in September 2007, after considering the price proposal submitted by Reliance-Niko, approved a price formula for gas produced from KG-D6 for five years from date of commencement of supply.
"The price obtained from the basis/formula (approved by EGoM) comes to $4.2 per million British thermal unit for crude oil price (if it is) equal or greater than $60 per barrel," he said.
Reliance started natural gas production from KG-D6 fields from April 1, 2009.