ONGC to hire RIL's ununtilised production facilities

Oil and Natural Gas Corp is in talks to hire Reliance Industries' unutilised production facilities on the east to quickly bring to production its gas finds in the Krishna Godavari basin.

ONGC has made nine gas discoveries in its KG block KG-DWN-98/2, which sits next to RIL's flagging KG-DWN-98/3 or KG-D6 block. It plans to club these finds with discoveries in another neighbouring block to begin gas production from 2016-17.

And instead of putting separate gas processing and transportation facilities, ONGC is looking to hire RIL's under-utilised gas gathering station at KG-D6 fields along with pipelines that take the fuel to onland as also its processing plant at Kakinada in Andhra Pradesh, ONGC Chairman and Managing Director Sudhir Vasudeva said.

"We have started talking to them on that...they (RIL) are open to that," Vasudeva said. "It makes lot of economic sense to share the infrastructure."

RIL has pipeline and other offshore and onshore facilities capable of handling gas output of 80 million standard cubic meters per day. It is however producing just around 26 mmscmd from the KG-D6 lock which is way below the peak production of 61.5 mmscmd reached in March 2010.

"It makes sense to all of us. Their (RIL) facilities are lying redundant and we are in need of infrastructure to produce our gas," Vasudeva said.

RIL has indicated that KG-D6 production may not touch 80 mmsmcd due to unexpected geological complexities.

"Once we have a clear indication of what capacities RIL can offer, we will firm up our plans," he said. Globally oil companies share infrastructure to cut costs on transmission of gas and crude.

ONGC has found 4.85 trillion cubic feet of gas reserves in nine gas discoveries it has made in the Krishna-Godavari basin block KG-DWN-98/2.

"The block is targetted for production by 2016-17 and a peak production of 22 mmscmd is envisaged," Vasudeva said.

Gas from these is proposed to be produced by combining them with a gas discovery in the adjacent block, he said.

G-4 gas discovery in a neighbouring block is planned to be developed along with finds in the Northern Discovery Area of KG-DWN-98/2.

Once the government approves the commercial viability of the finds, ONGC will make a formal field development plan (FDP) outlining the specifics of producing gas from the find.

The Northern Discovery Area (NDA) consists of the Padmawati, Kanakadurga, Annapurna, D/KT, U, A, W and E gas finds in in water depths ranging from 594 metres to 1,283 m.

The Southern Discovery Area consisting of the UD-1 discovery falls in ultra-deepwater with a depth of 2,841 m.

He said ONGC has time till November 2013 to apprise the discoveries. The firm plans to drill eight wells to appraise or re-ascertain the commerciality of the finds - six in NDA and two in SDA. The appraisal has begun, he said.

"We are in the process of hiring a rig. We have already got the approval for extension of the exploratory drilling phase by one year," Vasudeva said.