The Directorate General of Hydrocarbons or DGH has questioned Reliance Industries Limited (RIL) regarding the drastic cut in natural gas reserves in the KG-D6 block. The regulator said the downgrade was unprecedented and unconvincing.
RIL had in late-August filed a Revised Field Development Plan (RFDP) for discoveries in wells including Dhirubhai-1 and 3 (D1 and D3) in KG-DWN-98 3, cutting gas reserves to 3.10 trillion cubic feet (TFC) from 10.03 TFC approved in 2006.
The company based its reserve downgrade based on data of over three years of production. The fields hit a peak of 55 million standard cubic metres per day (mmscmd) in August 2010 before the decline set in and are now producing less than 20 mmscmd.
According to sources, DGH is of the view that such drastic reduction of reserves is unprecedented and unconvincing.
DGH wants RIL and its partners BP Plc to support the reserve downgrade with sufficient technical and geological data, sources said.
Originally, RIL had in 2004 estimated 3.81 TFC of reserves in D1, D3 two of the 18 gas finds the company had made in the Eastern offshore KG-D6 block. It had proposed an investment of $ 2.39 billion to produce 40 mmscmd.
The company revised the reserves to 10.03 TFC primarily on the basis of its assessment of potential resources in area outside the main channel holding D1, D3 reserves. No wells had been drilled on the area outside the main channel to support the reserve assessment when RIL put an investment requirement of $8.8 billion to produce 80 mmscmd of gas.
Sources said RIL has in the RFDP — besides downgrading reserves — brought down the capital expenditure to around $ 6.2 billion, saying it does not envisage drilling any wells on D1, D3 field.
DGH says RIL has drilled 22 wells out of the approved 31 wells. Of the 22 wells drilled so far 20 are in the main channel area and only two wells are drilled in periphery of the main channel.
As per the decision of 2006 RIL was to assess the upside potential of the gas reserves after at least one year of production from the field. D1 D3 started output in April 2009.