Reliance shuts sixth well in D6 block: Source
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Reliance Industries has shut a sixth well at its gas fields in the D6 block, off the country's east coast, due to water ingress, and any clarity on the likely output from these fields will emerge by August, a source said on Thursday.
The sixth well was shut last week, the source with direct knowledge of the development, said. Reliance, the operator of the D6 block, had earlier shut five of 18 producing wells at D1 and D3 gas fields until December.
Declining gas output from the D6 block has impacted expansion plans of many power companies, and spurred demand for costly liquefied natural gas imports.
Gas output from D6 may average 22.6 million standard cubic meters a day (mmscmd) in the fiscal year starting April 2013 from the current 37-38 mmscmd, a government source said on Thursday.
Shares of Reliance closed 2.9 per cent lower in a week Mumbai market. The gas output may fall to 27.60 mmscmd in 2012/13, about 66 per cent lower than initial estimate.
Reliance has informed the upstream regulator, Directorate General of Hydrocarbons (DGH), that output from D1 and D3 gas fields may fall to 14 mmscmd and that from MA field would be 8.60 mmscmd in the year beginning April 2013, the source said.
Reliance last year brought in the offshore expertise of BP, which paid $7.2 billion to invest in 23 oil and gas blocks with the Indian firm, to help it arrest the decline.
Reliance and BP are jointly studying the reservoir profile of D1 and D3 fields. "The study should be completed by July-August. The output cannot be predicted now," said the first source.
Currently, the only hope to produce more gas is linked to the development of four satellite fields and R-1 gas discovery at the block. The satellite fields are estimated to hold about 0.6 trillion cubic feet (TCF) gas reserves.
Reliance, which earlier this year got approval to develop the four satellite fields, plans to produce gas from these facilities around 2015.
"Initial production will be less but in 2-3 years it will touch a peak rate of 10 mmscmd. The plateau production will last for 6 year," the source said.
Reliance's efforts to raise output of D6 block are restricted due to narrow window of fair weather in the east coast.
The DGH recently approved Reliance's R-1 gas discovery as commercially viable. Reliance has one year to submit field development plans of the discovery estimated to hold 1.6 TCF gas reserves.
Canadian oil and gas producer Niko Resources Ltd, which holds 10 per cent in the Reliance-operated D6 block and posted a quarterly loss due to the reduced production in the block, earlier this month warned that output decline could continue at the site.
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