Reliance Revises Reserve Estimate for KG Basin

Reliance Industries has upwardly revised the reserves of its recent gas find in Krishna Godavari Basin to 10.45 trillion cubic feet. Due to the recent discovery in in Block D6, 26 km off the Andhra coast, RIL told the government that its eighth exploration well (D6-D1) in the block encountered in excess of 100 meters of net gas pay. RIL has increased the estimate of initial in-place gas reserves for Block D6 (KG-DWN-98/3) to 10.45 tcf. This updated in-place gas figure does not include volumes attributed to the last two wells (D1 and A2) but only the first six wells drilled on the block. DeGoyler & MacNaughton will integrate results of the last two wells for the final reserves certification report.

RIL had earlier put the in-place reserves at 9.46 tcf based on its four discoveries in the block - Dhirubhai-1, Dhirubhai-2, Dhibrubhai-3 and Dhirubhai-4.

Reliances's current exploration program has evaluated less than 16 percent of the total D6 Block area. A 2,500 square km 3D seismic survey will be shot in October 2003, which will provide the basis for a second exploration drilling campaign.

The firm has declared gas find Dhirubhai-1 as commercial. It plans to recover at least 70 percent of the estimated 4.1 tcf in-place gas reserves from the well. Dhirubhai-1 can produce 40 million standard cubic meters per day of gas in two years time. Dhirubhai-2 is assessed to contain 0.16 tcf of reserves, Dhirubhai-3 3.5 tcf, while Dhirubhai-4, on a different structure 10 kilometers away from the previous three finds, is estimated to have 1.7 tcf reserves. Last month, the seventh well in Block D6 had tested at 33.8 million cubic feet of dry, sweet gas per day.

Reliance has indicated conservative recovery of 70 percent gas, mostly dry methane, from Dhirubhai-1 and there was a possibility of improved recovery through suction booster compression, sand control and well completion techniques and closer spacing of development wells.

The current projected recovery factor of 70 percent is quite conservative. Ultimate recovery factor in single phase, volumetric, dry gas reservoirs without water drive can be as high as 80-90 percent.

The Director General of Hydrocarbons had approved the discovery's commerciality on February 22 and advised Reliance to go ahead with a further program for putting the discovery on production as early as possible.

The DGH has estimated development expenditure of 1.5-2 billion dollars would be needed to put the discoveries in Block D6 to production. The first gas from the discovery may take as little as two years from the date of all clearances to reach shore.

RIL holds 90 percent interest in the Block D6 and Niko Resources holds the remaining 10%.