KG-D6 wells' output could touch zero by 2021-22

Once touted as one of the biggest gas discoveries in India, Reliance Industries Ltd’s D1 and D3 gas fields in the KG-D6 basin may well be history by 2021-22.

According to RIL’s estimates, production from these fields would go down 55 per cent from 14.01 million standard cubic metres per day (mscmd) now to 6.26 mscmd by 2020-21 and would drain out by 2021-22.

This bleak prognosis comes at a time when the government is planning to move a Cabinet note to deny RIL higher price for gas produced from its D1 and D3 discoveries, if it is established the company artificially suppressed output in these fields.

Confirming the development, a company official said, “We started production in 2009 and the production sharing contract was for 25 years.

"According to the new estimates, we have only 1.28 trillion cubic feet (tcf) of balance reserves left, which would be over by 2021-22.”

The contract period ends in 2029.

According to the revised field development plan (RFDP) of D1 and D3, production would go down to 11.18 mscmd by 2014-15, 11.79 mscmd by 2015-15, 10.84 mscmd by 2016-17 and 9.4 mscmd by 2017-18.

“While their initial estimates were 3.81 tcf in 2004, it was increased to 10.03 tcf.

"The contract of RIL should be terminated if it willfully defaulted the production-sharing contract for more than three years,” said Communist Party of India leader

Gurudas Dasgupta.

The Left leader also demanded an immediate decision by the government on imposing a $2.4 billion penalty on RIL for “hoarding gas production from KG-D6 block”.

The total shortfall in production against approved targets over the past four years has been 154 mscmd -- five mscmd in 2010-11, 28 mscmd in 2011-12, 55 mscmd in 2012-13 and 66 mscmd in 2013-14.

In its last management committee meeting, RIL had named four international companies -- Ryder Scott; DeGolyer and MacNaughton (D&M); Gaffney, Cline & Associates; and Netherland Sewell & Associates -- to look into whether it was hoarding gas at KG-D6 or it had encountered geological problems.

However, the committee rejected the proposal stating: “There is no need according to the PSC for the management committee to consider appointment of an international consultant.

"If the contractor feels the need to appoint a consultant, then it is for him to take a call.”

It also pointed out the government had already agreed to arbitration under article 33 of the PSC on 'disallowance of cost recovery' owing to decline in production and, hence, another body is redundant and will compromise the arbitration process.

While RIL holds 60 per cent in the fields, BP holds 30 per cent and Niko Resources owns 10 per cent.

The company had scaled down its two-phased capital expenditure plan for the D1 & D3 fields from $8.836 billion proposed in 2006 to $5.928 billion.