Reliance KG-D6 gas output down in Q3

Reliance Industries has said the natural gas output at its Krishna Godavari basin KG-D6 fields averaged 54.5 million cubic meters a day in the quarter ended December 31, 2010, down from 60 mmscmd achieved in April.

In a presentation to the analysts after declaring Q3 earnings on January 21, Reliance said: "During (first) nine months of 2010-11 fiscal, production from KG-D6 averaged at 57.23 mmscmd (and) 54.5 (mmscmd) for the (October-December) quarter."

The output, according to Reliance's previous presentations, was lower than 60 mmscmd average production in April-June quarter of current financial year and 58 mmscmd in Q2.

The current production is made up of natural gas output from Dhirubhai-1 and 3 fields, known as D1 and D3, in the KG basin block KG-DWN-98/3 or KG-D6, and D-26 or MA oifield. D1 and D3 have seen output fall from 53-54 mmscmd achieved in mid-2010 to 42-44 mmscmd in the week ending December 26.

D-26 or MA oilfield in the same block, is producing about 8 mmscmd as associated gas. Together, the output from KG-D6 at present stands at 50-52 mmscmd.

"Regarding the discussion and studies on D6 production, the company (Reliance) did not provide any specific guidance (in the Q3 results)," StanChart Equity said in a research note.

"Since the discussions are on multiple issues viz production levels, additional wells, reservoir performance and ongoing audit, it could take some time for clarity to emerge," it said.

"Total investment in D6 to date is $7.8 billion." Oil regulator DGH had on January 11 stated that Reliance will regain 60 mmscmd of natural gas output from KG-D6 by April. "They (Reliance) are producing natural gas from 18 wells currently. Two more wells have been drilled (but not put on production) and another two are expected to be done by March.

"Once all 22 wells come onstream sometime in April 2011, gas output will again touch 60 mmsmcd," Directorate General of Hydrocarbons (DGH) Director General S K Srivastava said then. Srivastava had said that there was nothing alarming about the fall in output as "wells behave differently at different times", producing different volumes of gas at different times.

D1 and D3 are the largest among the 20 oil and gas finds that Reliance and its Canadian partner Niko Resources have made in the Krishna Godavari basin KG-DWN-98/3 or KG-D6 block off the Andhra coast.

Reliance has been forced to restrict production from the MA field to 18,200 barrels per day due to high water and gas output, sources said, adding the field was yielding more water than oil and that even 8 mmscmd of gas in comparison to oil output was considered quite high.