RIL-BP wins nod for drilling well in KG-D6

Reliance Industries and its partner BP plc have won approval to drill a well on the MA oil field in the flagging KG-D6 block to augment natural gas production.

An oversight panel, headed by upstream regulator the Directorate General of Hydrocarbons, on March 26 approved RIL-BP drilling MA-8 well on the oil field, sources privy to the development said.

RIL had in February last year submitted a revised field development plan for the MA oilfield, which has been producing crude oil since September 2008.

The plan envisaged drilling of one gas well (MA-8) to augment gas production from the field and side tracking of two ceased wells (MA-6H and MA-7H).

The Management Committee, which had in August last year approved the revised field development plan for MA, on March 26 approved drilling of MA-8 well, sources said.

RIL is the operator of the KG-D6 block with 60 per cent stake. UK's BP plc holds the 30 per cent and the remaining 10 per cent is with Niko Resources of Canada.

The company had also in August last year submitted a revised FDP for the currently producing Dhirubhai-1 & 3 gas fields where water and sand ingress has pulled down production of around 12 million standard cubic meters per day from peak of about 54 mmscmd achieved in March 2010.

Together with less than 5 mmsmcd of output from MA field, gas production from KG-D6 is around 16.5

mmsmcd.

RIL has so far drilled six wells on the MA oilfield, the only oil discovery among the 19 oil and gas finds the company had made in the eastern offshore KG-DWN-98/3 or KG-D6 block.

Besides producing oil, the field also produces natural gas. But the closure of two out of the six wells due to high water and sand ingress has led to drop in output from over 8 mmscmd three years ago to less than 5 mmscmd this month.

To address the problem, RIL and its partners submitted a Revised FDP for MA oilfield in February last year.

Sources said in the revised FDP, RIL has scaled down the investment required for developing the MA oilfield by $276 million to $1.96 billion.

RIL had in 2006 proposed to invest $2.234 billion in developing the Dhirubhai-26 or MA discovery.

Besides gas, the field has also lagged behind targets in oil production. The field, which started production in September 2008, is producing less than half of the estimated peak output of 20,000 barrels of oil per day due to water and sand ingress in wells.

Sources said that in the revised plan, capital expenditure at MA field has been estimated at $1.96 billion as against a capex of $2.234 billion approved in 2006.

It is based on reduction in volumes -- oil goes down from 159 million barrels to 122 million barrel and gas from 941 billion cubic feet to 924 bcf.