RIL in multi-prong plan to prop up production

Reliance Industries (RIL) is preparing an integrated development plan to arrest the fall in production from its Krishna-Godavari (KG-D6) assets.

The focus will be on revival of production in the D1 and D3 fields, development of D26, R-Series and its satellites, and discovery and development of other fields, the company said during a recent analyst meet.

“RIL is conceptualising an integrated and capital-efficient plan for block development for submission in the second half of FY13,” it said.

The fields are at different stages of development and approval.

Of these, D1 and D3 are two producing fields which have witnessed a rapid decline after reaching a peak in the second quarter of FY11 of 55.6 million metric standard cubic metres per day (mmscmd) of gas production.

For D26, the company has submitted a revised field development plan (FDP) in February 2012 and is awaiting approvals.

The R-series, or the D34 field located in the south west of the D6 block, has also got a green signal from the Directorate General of Hydrocarbons for commerciality and can now be developed.

To the eastern end of the D6 block are the company’s nine satellite discoveries for which approvals from the DGH have already been received but commerciality is still to be declared.

Apart from these, there are other satellite discoveries in different stages. “The company is planning to connect some of the infrastructure employed in dried wells to connect producing or prospective wells and then connect them to the offshore and onshore processing terminals,” said an analyst from an international brokerage.

RIL did not disclose how much it would be investing in development, assuming the integrated plan is approved.
The analyst, however, said it is reluctant to spend a single penny in further gas production from other fields unless the government revises the price beyond $4.2 per million metric British thermal unit, or mmBtu.

Analysts Amit Shah and Sriram Ramesh from international brokerage BNP Paribas said in an April 23 report that unless immediate steps are taken, production from the KG-D6 block will fall below 20 mmscmd at the current rate of decline.

“If RIL were to maintain 22 mmscmd as FY14 average gas production, it implies a complete stop in the decline rate by end-FY13. This necessitates a rapid work programme to stop water ingress in current wells,” the duo wrote.

Gas production from KG-D6 averaged 43 mmscmd for the year ended March, and 36.2 mmscmd for the last quarter.