Niko Resources Updates Operations Offshore India

In the D6 Block, the MA-2 well has encountered the thickest hydrocarbon column discovered to date in D6. MA-2 reached a total depth of 3,581 meters and penetrated a gross hydrocarbon column of 194 meters consisting of 170 meters of gas/condensate (53 degrees API) and 24 meters of oil (42-43 degrees API) in the Cretaceous section. MA-2 is located approximately 2 kilometers from the MA-1 discovery well. Application has been made for the commerciality of the MA field and approval has been granted by the Government of India with production approved to start by March 2008. The full field development plan will be submitted in the near future and the oil development is expected to be fast-tracked with initial production targeted in the second quarter of 2008.

The Deepwater Frontier has completed drilling operations on three development wells for the Dhirubhai natural gas development project, with better than expected results, and the wells are awaiting final completion. The Deepwater Frontier drilling rig has now completed drilling of an exploratory well, AA-1, which has resulted in a new high potential natural gas zone in the Pliocene interval. The AA-1 well is located in the new 3D seismic area and demonstrates the continued high prospectivity of the block as drilling progresses into the southern areas of the block. The drilling rig commenced drilling of the Q1 exploratory well. The Q1 well is approximately 15 kilometers southwest of AA-1 and 8 kilometers northwest of the P1 natural gas discovery.

Essentially all of D6 is now covered with 3D seismic. Processing and integration of the surveys are expected to be completed by year-end.

An addendum to the field development plan for the Dhirubhai 1 and 3 gas fields has been approved and provides for the gas production rate to be increased to 2.8 billion cubic feet per day (Bcf/d) with corresponding phase-1 field development costs estimated at US$5.2 billion (US$520 million net). Commencement of production is scheduled for mid-2008. The approved field development plan of Dhirubhai 1 and 3 provides flexibility in the critical portions of the facilities to facilitate gas production of up to 4.2 billion cubic feet per day.

Since the approval of the initial development plan of Dhirubhai 1 and 3 in November 2004, substantial additional work has been done to assess the overall hydrocarbon potential of the D6 block in general, and in the development area for the Dhirubhai 1 and 3 discoveries in particular. This work included the acquisition of an additional 7,600 square kilometers of 3D seismic, drilling and testing of additional exploratory wells, drilling and extensive coring of two development wells in the development area, and various detailed technical studies by international consultants. As a result, the hydrocarbon potential has increased significantly.

The design and installation of the production facilities is well underway. Major tender packages have been issued and the civil construction of the natural gas plant site is substantially complete. Development drilling commenced in December 2006 and will continue in 2007. The Company remains on schedule for a July 2008 start-up.

D6: Expenditures of $19.3 million (net) in the quarter for the D6 Block were for construction of the natural gas plant site and drilling three development wells and one exploration well, MA-2. Year-to-date expenditures of $29.3 million (net) also included drilling of the MG-1 development well and additional construction of the natural gas plant site. The drilling program has continued with the completion of drilling of the AA-1 exploratory well and will be followed by the Q1 well, another planned exploratory well. The remaining estimated capital expenditures for fiscal 2007 are planned to be spent on additional drilling and facility construction.

An addendum to the field development plan for the Dhirubhai 1 and 3 natural gas fields has been approved and provides for the production rate to be increased to 2.8 Bcf per day, with corresponding phase-1 field development costs estimated at US$5.2 billion (US$520 million net). Commencement of production is scheduled for mid-2008.

The design and installation of the production facilities is well underway. Major tender packages have been issued and the civil construction of the natural gas plant site is substantially complete. Development drilling commenced in December 2006 and will continue in calendar 2007. The Company remains on schedule for a July 2008 start-up.

Drilling to evaluate deeper-water prospects identified by the 2004 and 2005 3D seismic will be conducted in conjunction with development drilling utilizing the Deepwater Frontier, which is already in the region, as well as the Transocean D-534 and the Deepwater Expedition rigs, which are expected to arrive in July 2007 and March 2008, respectively.

Application has been made for the commerciality of the MA field and approval has been granted by the Government of India with production approved to start by March 2008.

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