MUMBAI: Gas production from Reliance Industries’ Krishna-Godavari D6 exploration blocks off the Andhra Pradesh coast hit an all-time low of about 28 million standard cubic metres a day during the week ended March 4 as it shut six wells due to water and sand ingress.
India’s most valuable company, which invested roughly $5.6 billion in the field, had started pumping out 30 mmscmd of gas from Dhirubhai-1 and Dhirubhai-3 gas fields from April 2009, but output declined over the years to 28.16 mmscmd, news agencies quoting RIL’s status report to the oil ministry said.
On Monday, RIL shares fell sharply by 2.21% to R754.90 a piece after trading at the day’s high of R782 on the Bombay Stock Exchange as the benchmark 30-share Sensex fell 1.1% to 17273.37 points. Investors lost R5,597 crore as the company’s market cap fell to around R2.74 lakh crore.
“Our partner British Petroleum, an expert in deep-water drilling technology, is conducting a technical study,” a company official said. “The study will be completed in a couple of quarters.”
“Production had been falling steadily for the last one year,” an analyst from a foreign brokerage said. “The incremental investment will not make money at the existing gas price of $4.2 per million metric British thermal units (mmbtu).
Together with 6.46 mmscmd of gas production from the MA oilfield in the same area, the KG-D6 block output in the February 27 to March 4 period averaged 34.62 mmscmd. The KG-D6 production is lower than the 61.5 mmscmd rate achieved in March 2010, as a drop in pressure in the wells and increased water ingress has led to a lower per-well gas output.
The report said that of the 18 wells drilled, completed and put on production in the D1 and D3 fields, six wells had to be shut or closed due to high water cut/sanding issues.
The output from KG-D6 is short of the 70.39 mmscmd level (61.88 mmscmd from D1 and D3 and 8.5 mmscmd from the MA field) envisaged by now as per the field development plan approved in 2006.
While Reliance holds a 60% interest in KG-D6, the UK’s BP holds 30% and Niko Resources of Canada the remaining 10%.
The MA oilfield currently produces about 11,335 barrels of crude oil per day. In addition, 1,680 barrels of condensate are produced from the field every day.
The report said 14.80 mmscmd of the gas output is being sold to fertiliser plants and 16.62 mmscmd to power plants.
The remaining 3.20 mmscmd is consumed by other sectors, including those fed by the east-west pipeline that transports gas from the east coast to consumption centres in the west. RIL projected an output of 34.5 mmscmd of gas during March.