A government-controlled panel has approved Reliance Industries' (RIL) Revised Field Development Plan for MA oilfield in the predominately gas-rich KG-D6 block that will help the firm boost gas production.
As part of the revised field development plan (FDP), RIL will drill one gas well and convert two six oil wells into gas wells on the MA oilfield to raise production, the company's minority partner Niko Resources said.
Niko, which holds 10% stake in the KG-D6 block, said a revised FDP for the currently producing Dhirubhai-1 & 3 (D1&D3) gas fields was submitted to the block oversight panel called the Management Committee in August.
"This revised FDP updates the estimates of production levels and development activities based on the current understanding of the reservoir and reflects the installation of increased water handling capacity and additional booster compression over the next two to three years to address the decline in reservoir pressure," Niko said in its operational review.
RIL is the operator of the KG-D6 block with 60% stake. UK's BP Plc holds the remaining 30%.
Niko did not provide details of the revised FDP of D1&D3 fields where water and sand ingress has led to production drop by 60% to about 22 million standard cubic meters per day over the past two years.
Together with about 5.5 mmsmcd of output from MA field, gas production from KG-D6 is around 27.5 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 about 5.5 mmscmd this month.
To address the problem, RIL and its partners submitted a Revised FDP for MA oilfield in February this year.
"In August 2012, the Management Committee for the D6 Block, comprised of two representatives of the Government and one representative from each of the joint venture partners - RIL, BP Exploration (Alpha) Ltd, and ourselves (collectively, the Contractor), agreed on the revised FDP for the MA oil and gas field," Niko said.
"This revised FDP updates the estimates of production forecasts and development activities based on the current understanding of the reservoir and reflects the requirement of an additional gas producing well and the conversion via work over of two suspended oil wells into gas producers to accelerate the production of the reservoir gas cap," it said.
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, the only oil find in KG-D6 block in Krishna Godavari basin off the east coast.
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.
The lower capex includes allocation of $111 million for drilling of seventh well on the field and work-overs or maintenance of two existing ones, including the ones currently shut, at the cost of $164 million.
RIL had in the original field development plan for D1&D3 proposed a capital expenditure of $8.836 billion. Of this about 60% has been spent so far.