Reliance Industries Shuts Down Oil Field in KG-D6 Block

Reliance Industries permanently shuts down failing oil field in KG-D6 block.

Representational image of an oil field. 

(Photo: iStock)

Reliance Industries Limited (RIL) on Friday announced that it had permanently shut down its only oil field in the KG-D6 block after production declined to nil.

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 that began production in September 2008. Dhirubhai-1 and 3 (D1 and D3) fields went on-stream in April 2009.

“This is to inform that MA field in Block KG-DWN-98/3, 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, said the company.

For the April-June period in this fiscal year, the MA field contributed less than 0.1 percent in terms of revenue at RIL consolidated level. Output has been declining since then it produced 0.14 million barrels (1,960 tonnes) in April-June quarter this year.

RIL said the Dhirubhai-26 oil, gas and condensate deep-water discovery was made in 2006. The discovery was developed and put on production in September 2008.

"Relevant governmental agencies have already been informed," it said. 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.

MA also started producing gas from April 2009, just when D1 and D6 went live. It peaked to 8.4 million standard cubic metre 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.

However, the output has only dipped since then.

KG-D6 output in April-June averaged at 4.7 mmscmd. This consisted 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.