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RIL denies allegation of hoarding gas

November 26, 2012 10:20 IST

Reliance Industries has denied allegation that it is hoarding gas by keeping KG-D6 output low saying it was technically impossible to store gas in the KG basin fields, and sought appointment of independent international experts to verify its claims.

"Hoarding gas in the case of D1-D3 reservoir (in KG-D6 block) is a technical impossibility. Oil and gas reservoirs are dynamic system and not inert cold storage facilities. They are both subject to and respond to production rates and flows," RIL wrote to the Oil Secretary.

In the letter to the Oil Secretary G C Chaturvedi, RIL executive director P M S Prasad sought appointment of a team of international experts of repute to independently verify its estimates as well as the action that have been taken.

Gas production from D1-D3 started declining from a plateau level of about 55 million standard cubic meters per day in August 2010. It is currently less than 20 mmscmd.

Six out of the 18 wells on the field have been shut due to high water and sand ingress. KG-D6 is currently producing around 25 mmscmd after including output from the MA field.

"World over, oil and gas fields are known to be unpredictable... Buried deep in geological frontiers, miles below the surface, surprises are a common occurrence. Deep water basins (like KG-D6) add to the complexity as technologies

to assess sub surface conditions several kilometres are even less perfect," he wrote.

Referring to gas reserve estimates of being lowered from 10.03 trillion cubic feet to 3.4 Tcf, RIL cited state-owned ONGC encountering similar geological surprises in Neelam gas field off west coast and in Imperial Energy assets in Russia.

RIL has at all times kept the government informed that the D1-D3 reservoir has thrown up unanticipated surprises and has shared all the relevant information and data," he wrote, adding the company had on several occasions sought appointment of international experts to verify its claims so that "misinformation" could be averted.

Prasad said while, on the one hand, RIL has been accused of escalating costs and, on the other, it is being targeted for expending capital in drilling wells to increase production.

"Four wells drilled after commencement of production in D1-D3 have conclusively proved that drilling additional wells would be infructuous. If the contractor (RIL) were really to benefit from escalating costs, we would have gone ahead and drilled all the wells demanded by DGH at an additional expense of nearly $2 billion," he wrote.

Instead, RIL has cut back on all infructuous expenditure and scaled down cost estimates by nearly $3 billion as all technical information now available showed that adding new wells in D1-D3 field would not add to production, he added.

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Tags: RIL, D1-D3, KG-D6, ONGC, DGH