The management committee (MC) of Reliance Industries' (RIL) D-34 field in the KG-D6 block will meet on Thursday to take a call on its field development plan (FDP).
The D-34 FDP it holds about 2 trillion cubic feet (tcf) of gas reserves, of which about 1 tcf is recoverable.
The FDP entails a capex of around $4 billion, which includes the drilling of eight development wells. DGH officials said the FDP is expected to be approved by the MC and production will start 2015-16.
However, RIL sources told FE that production would be commercially viable only with reserves of 5 tcf and a gas price of at least $10/million metric British
thermal unit (mmBtu).
If D-34, which is located in the KG-D6 block, starts production on the scheduled date, it will get the new gas price derived from the Rangarajan committee formula that is linked to global hub prices.
The revised gas prices will come into effect from April, 2014. The gas price based on average of April-June 2013 rates stood at around $6.775 per mmBtu, less than $ 8.4 mmBtu previously expected.
Currently, companies get gas from the NELP fields and KG-D6 gas fields at a base price of $4.2 per mmBtu.
According to RIL officials, the company will have to find additional reserves from adjoining areas to make D-34 viable. D-34 is part of what is known as R-cluster of discoveries, which includes four discoveries — D-29, 30, 31 and 34.
The adjoining D-29, 30 and 31 gas finds could be jointly developed with D-34, but DGH has refused to recognise these discoveries as it did not conduct drill stem test (DST) before the deadline for submission of DOC.
The peak production from the D-34 block, at 13 mmscmd, is comparable to the output from the flagship KG-D6 fields — D1 and D3.