NEW DELHI: The oil ministry has called a crucial meeting of administrators of the KG-D6 block to deliberate upon Reliance Industries’ plan to survey the entire deep-sea region, instead of a piecemeal approach, to accelerate joint development of 16 untapped discoveries and reverse the steep fall in gas production.
Reliance and its partner BP want to immediately conduct a comprehensive survey for the entire block, but the director general of hydrocarbons has so far stoutly opposed this and asked them to restrict the survey to the four satellite fields for which the government approved the $1.5-billion development plan in January.
Oil ministry officials said the government is now favourably inclined towards the proposal as it saves on development costs and speeds up production of more natural gas, but it wants to make sure that Reliance and BP conduct the survey at their own risk.
“The meeting of D6 management committee is expected this week. Committee members agree in principle with the proposal for the integrated survey, which will help in optimising cost and time,” a government official said, requesting anonymity. The management committee is chaired by the director general of hydrocarbons and includes oil ministry officials and senior company executives.
Officials said RIL has addressed government concerns about the survey’s cost.
Major step towards increasing output
“It (RIL) has given an undertaking that its expenditure would be reimbursed only if development plans are approved,” another official said.
This is a major step towards the integrated development of the entire block to reverse the alarming decline in gas output, officials said. The company plans to submit the integrated development plan for the entire block by October.
“Our assessment is that the development of existing discoveries in KG-D6 block by using an integrated concept that optimises utilisation of all the facilities and infrastructure will minimise their development and production costs,” Reliance Executive Director PMS Prasad said in a letter to Petroleum Secretary GC Chaturvedi.
Reliance and BP have argued that geophysical and geotechnical surveys, currently allowed only for the satellite fields, should be extended to the entire D6 block to save on cost and time. Reliance and BP have deployed super-specialised vessels at the satellite fields, and if these vessels have to be called in again at a later date to survey other parts of the block it would cost at least $5 million for each deployment, industry officials said.
Prasad also said in his letter that “declining production from KG-D6 block remains the uppermost concern for both us as well as the government”.
RIL, the director general of hydrocarbons and the oil ministry did not respond to ET’s emailed queries.
Gas output from D6 has dropped to about 34 million standard cubic meters per day at the end of March, slipping gradually from a peak of 61.5 mmscmd in March 2010.
It was expected to rise to 70.4 mmscmd by now, but Reliance said output has fallen because of geological complexities. Apart from the fields under production, Reliance Industries has made 16 gas discoveries across the 7,645 sq km block.