More oil/gas production

The Hindu

Reliance Industries, the country's most valuable company, will pay over $600 million for hiring deep-sea drilling rigs for developing the gas fields in the prolific KG-D6 block off the east coast.

Reliance has hired US firm Tranocean's Deepwater Frontier rig at a day rate of $3,20,000 for two years beginning August 2006. Deepwater Frontier is currently drilling in Bay of Bengal, industry sources said.

The company will again bring Transocean's Discoverer 534, the rig that made the discovery in KG-D6 block, to India in August 2007 on a 30-month contract at a day rate of $2,50,000 while a third rig, Deepwater Expedition, has been hired at $3,75,000 a day for two years from March 2008.

Reliance is paying 2-3 times the rates it had originally paid for Transocean rigs in 2002.

The company will spend $5.2 billion in bringing to production Dhirubhai-1 and Dhirubhai-3 fields in block KG-D6 in Krishna Godavari basin by June 2008. It will invest another $4 billion in laying a 1,386-km pipeline from Kakinada in Andhra Pradesh to Bharuch in Gujarat to transport the fuel.

Sources said, it will begin producing about 40 million standard cubic meters of gas per day in June 2008 and raise it to peak output of 80 mmscmd in the next five months.

KG-D6, the world's second largest deepwater find last decade, is being brought to production in less than six years of discovery at a cost of $2.8 per barrel of oil equivalent (boe), they said.

Once the fields comes on production, almost all of the country's natural gas deficit will be wiped out.




Reliance will drill 22 development wells to produce gas from the two fields and then pipe it to a gas processing facility at Kakinada. From Kakinada, a pipeline to Gujarat would be built by April 2008.

Another pipeline to Chennai and Bangalore will be built by the end of 2009. RIL also plans to lay a line from Kakinada to Haldia in West Bengal to transport the fuel. Costs of these routes have not been included in the $9 billion investment planned currently.

Reliance has so far drilled 22 exploratory wells in block KG-D6 (KG-DWN-98/3), of which 17 have resulted in discoveries, sources said, adding oil has been found in two wells in the block.

Crude oil production will begin in the first quarter of 2008 calender year, earlier than the gas project. Oil output will range between 30,000 to 50,000 barrels per day, sources said.

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