Reliance permanently shuts down oil field in KG-D6 block after production declines to nil

New Delhi: Reliance Industries Friday said it has permanently shut down its oil field in the flagging KG-D6 block after production declined to nil. Reliance Industries (RIL) had till date made 19 oil and gas discoveries in the Krishna Godavari basin. Of these, D26 or MA – the only oil discovery in the block – was the first field to began production in September 2008. Dhirubhai-1 and 3 (D1 and D3) fields went onstream in April 2009. “This is to inform that MA (D26) field in Block KG-DWN-98/3 (KGD6), which is being operated by RIL as an operator of the joint venture consisting of RIL (60 percent), BP (30 percent) and NIKO (10 percent), has ceased production on 17 September 2018,” the company said in a regulatory filing. Post-cessation, activities related to the safe shutdown of the field are underway. “Production from the field had been under natural decline and facing continuous challenges due to high water production and sand ingress. The field has cumulatively produced about 0.53 trillion cubic feet of gas and 31.4 million barrel of oil and condensate and had no remaining reserves,” the company said. [caption id=“attachment_4818281” align=“alignleft” width=“380”]  Logo. Reuters[/caption] For Q1 FY19, MA field contributed less than 0.1 per cent in terms of revenue at RIL consolidated level. RIL said the Dhirubhai-26 (D26) oil, gas and condensate deep-water discovery was made in 2006. The discovery was developed and put on production in September 2008. This was India’s first deepwater development (water depth up to 1,250 metres), with seven wells tied back through a sub-sea production system to a purpose-built, state of the art dis-connectable turret moored Floating Production Storage and Offloading (FPSO) production facility. “Relevant governmental agencies have already been informed,” it added. The field had in the first month produced 39,976 tonnes of crude oil and peaked to 1,08,418 tonnes in May 2010, according to data available from the upstream regulator, the Directorate General of Hydrocarbons (DGH). Output has been declining since then it produced 0.14 million barrels (1960 tonnes) in April-June quarter this year. MA also started producing gas from April 2009, just when D1 and D6 went live. It peaked to 8.4 million standard cubic meter per day in August 2010 before sand and water ingress forced shutting down of well after well. D1 and D3 field too had a peak that year in March when it touched an output of 61.4 mmscmd. Output, thereafter, has only declined. KG-D6 output in April-June averaged at 4.7 mmscmd. This was made up of production from both D1 and D3 and MA fields. The shutdown of the MA field coincides with the expiry of the current lease of a FPSO unit, which processes output from the field. Reliance is the operator of the KG-D6 block with 60 percent interest, while BP plc of UK holds 30 percent stake. Niko Resources of Canada has the remaining 10 percent. RIL had in the field development plan for D1 and D3 proposed a capital expenditure of $8.836 billion. For developing Dhirubhai-26 or MA oilfield, it had in 2006 proposed to invest $2.234 billion, which was scaled down to $1.96 billion in 2012. The fields were in the investment plans supposed to last a minimum 15 years but have extinguished in exactly a decade’s time. RIL is now developing three sets of discoveries – R-Cluster, Satellite Cluster and MJ fields in the KG-D6 block at a cost of Rs 40,000 crore. These fields together would bring 30-35 mmscmd of peak output. Initial gas will start flowing from 2020. (Disclaimer: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.)