RIL to hike KG-D6 gas output

Days after the union cabinet allowed Reliance Industries and other domestic gas producers to double the sale price of natural gas they produce, RIL today said it will add about 1-3 million standard cubic meters per day to gas production at its eastern offshore KG-D6 fields this month, reversing the trend of falling output.

RIL and its partners BP plc of UK and Canada's Niko Resources will raise natural gas output from a new well in the prolific KG-D6 field, which could help the company to reverse months of declining output.

The company has spud the seventh well on the MA oil and gas field in the KG-DWN-98/3 or KG-D6 block in Krishna Godavari basin.

The well, MA-8, is likely to be put on production this month, sources with direct knowledge of the development said.

RIL expects to add between 1.5 and 2 million standard cubic metres a day (mmscmd) by this month from its current output level of around 12 mmscmd.

Production at KG-D6 has dropped to just about 12 mmscmd and MA-8 will help reverse the falling trend of last three years.

Of the total current output of nearly 12 mmscmd of gas, about 8.5 mmscmd comes from Dhirubhai-1 and 3 (D1&D3) gas field and about 3.3 mmscmd from the MA field in the same block.

Sources said RIL is also repairing a third of the wells shut at its main D1&D3 gas field to boost output by March.

RIL blames geological complexities for the decline in natural gas output from the east coast block.

RIL and its partners BP Plc and Nicco Resources plan to invest $8 billion to $10 billion to quadruple natural gas output from the KG-D6 field by 2020.

Reliance had sold a 30-per cent stake in 21 oil and gas blocks across the country to BP Plc for $7.2 billion in 2011, for securing deep-drilling technology.

RIL had to shut 10 out of the 18 producing wells on D1&D3 due to sand and water flooding.

It had also shut two of the six wells at the MA field due to high water and sand ingress. MA-8 will be the seventh well on the field.

The KG-D6 fields, which began gas production in April 2009, hit a peak output of 69.43 mmscmd in March 2010 before water and sand ingress shut down well after well.

(Aloso see: RIL, BP to double gas price on a $1.2 bn bank guarantee)