RIL set to turn on D-34 taps as approval nears

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SummaryThe company has chalked out a capex plan of around $4 billion in the D-34 field.

Reliance Industries (RIL) is all set to start gas production from its Dhirubhai-34 or D-34 field at the KG-D6 block starting 2016-17, with the regulatory approval expected later this month.

The company has chalked out a capex plan of around $4 billion in the D-34 field, in what could give a boost to the company’s sagging fortunes in the once-promising KG-D6 block, which has seen gas production plummet.

A Directorate General of Hydrocarbons (DGH) official said that the field development plan (FDP) of D-34 is expected to be approved later this month when the management committee (MC) that comprises RIL officials, oil ministry and DGH meets.

The D-34 field has in-place gas reserves of around 2 trillion cubic feet (TCF) with recoverable reserves of about 1.2 tcf. The FDP entails a capex of around $4 bn which includes the drilling of eight development wells to extract these resources. The peak production from the block at 13 million metric standard cubic metre per day (mmscmd) is comparable to the output from the flagship KG-D6 fields — D1 and D3. RIL has set up infrastructure to produce 80 mmscmd of gas at D1 and D3, but current production levels have dipped to around 14 mmscmd.

The company will benefit from the revised gas prices as per the Rangarajan committee formula that is linked to global hub prices and will come into effect from April 2014. Currently, companies get gas from the NELP fields and KG-D6 gas fields at a base price of $4.2 per million British thermal units (mmBtu). ONGC C-series gas is sold at a base price of $5.25 per mmBtu, while gas from the Panna-Mukta-Tapti fields is priced higher at $5.6-5.7 per mmBtu.

RIL is the operator of KG-D6 block with 60% interest, along with partners BP and Niko Resources that hold 30% and 10% stakes, respectively, in the block. RIL had on January 30 submitted the FDP for D-34 field to DGH. The D-34 gas discovery in the southern part of KG-D6 block in the Krishna Godavari basin was notified in May 2007. The find was declared commercially viable by the MC in November 2011.

RIL has so far made 19 gas discoveries and one oil find in the KG-D6 block. Of these, D1 and D3 gas fields were brought to production in April 2009, while the MA oilfield began pumping oil in September 2008. In May this year, it also

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