02 April 2009

Natural gas flows from RIL's KG basin


Source: reuters,economic times etc
Natural gas flows from RIL's KG basin



NEW DELHI: Reliance Industries created history when natural gas from its deep-sea Krishna Godavari basin fields flowed to surface today, a fleet

achieved in flat seven years that will transform India's energy landscape.

"Natural gas production from wells started at 1700 hrs yesterday and it reached the onland receiving facility at Gadimoga in Kakinada district of Andhra Pradesh this morning," a source, in know of the development, said.

It took 13-14 hours for the gas to travel from the sea-bed to the onshore facility. "The flare (at Gadimoga) lit up at 0920 hours," the source said.

A company spokesperson confirmed start of gas production, but did not give details. "We will be issuing a statement shortly," he said.

Reliance took just seven years from the date of discovery to begin gas production from the deep-sea KG-D6 block as against the global practice of a minimum nine years.

The gas would boost power supply from idle electricity generators starved of fuel and produce cheaper urea for agriculture.

"It is a landmark in the history of oil and gas production. World-over, this has created a new benchmark for deep-sea developers," said Director-General of Directorate General of Hydrocarbons V K Sibal.

The USD 8.835-billion (Rs 44,175 crore) project will double domestic natural gas production when the field hits its peak output of 80 million cubic meters per day in 2010.

It will wipe out fuel deficit at urea-making fertiliser plants and meet half of the 36-mmcmd gas shortfall in power plants. Reliance will produce enough gas to meet about a third of the UK demand.

"Whenever I have interacted with officials from global oil majors like Chevron and BP, they have been highly appreciative of the project management skills of Reliance," Sibal said.

The gas output will start at 10 mmcmd and rise by the same volume every month to reach 40 mmcmd by July-end.

"Each well is capable of producing 5-6 mmcmd gas," Sibal said.

"Our endeavour is to quickly ramp it up to peak 80 mmcmd. We are targeting the peak-out by year-end (2009 calendar year)," company's head of oil and gas business P M S Prasad had stated last week.

If achieved by 2009-end, the peak output will come a year earlier than previously planned. Of the 18 wells drilled in the Phase-I of the project, six would be put on production initially and the remaining would be hooked up one by one.

Besides doubling the nation's domestic gas production, KG-D6 gas would displace costly naphtha or imported LNG as fuel at power and fertiliser plants.

At USD 4.2 per million British thermal unit, KG-D6 gas is 25 per cent cheaper than the fuel produced by UK's BG-operated Panna/Mukta and Tapti fields in western offshore and 20 per cent cheaper than liquefied natural gas (LNG) imported on long-term contracts.

"KG-D6 gas will replace about seven per cent of India's oil consumption in 2009-10, rising to 14 per cent in the following three years," Goldman Sachs said recently in a report.

Besides, it would also reduce the Asia's third-largest oil consuming nation's current account and fiscal deficits and support economic growth.

"All else being equal, the current account deficit could improve by 0.2 per cent of GDP in 2009-10, and progressively go higher to an average improvement of 0.6 per cent of GDP in 2010-11 to 2013-14," the report said.

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RIL's KG-D6 block gas project goes on steam

NEW DELHI: Reliance Industries is believed to have started natural gas production on Wednesday from its deep-sea Krishna-Godavari basin fields, a

move that has the potential to transform India's energy landscape.

The company, however, did not officially make any announcement today, with a spokesperson saying Reliance will make a formal statement in this regard tomorrow morning.

Gas from the prolific KG-D6 block will not just help boost power supply from idle electricity generators starved of fuel and produce cheaper urea for agriculture, it will also fetch the government USD 28 billion (Rs 1,40,000 crore) by way of profit share and royalty over the life of the field.

Reliance took just seven years from the date of discovery to begin gas production from the deep-sea KG-D6 block.

"It is a landmark in the history of oil and gas production. World-over, this has created a new benchmark for deep-sea developers," said Director-General of Directorate General of Hydrocarbons V K Sibal.

The USD 8.835-billion (Rs 44,175 crore) project will double domestic natural gas production when the field hits its peak output of 80 million cubic meters per day in 2010.

It will wipe out fuel deficit at urea-making fertiliser plants and meet half of the 36-mmcmd gas shortfall in power plants. Reliance will produce enough gas to meet about a third of the UK demand.

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Reliance begins pumping gas from KG basin field


Photo

Reliance begins pumping gas from KG basin field 11:10am IST

NEW DELHI (Reuters) - Reliance Industries has started pumping natural gas from its massive deep-sea field in the Bay of Bengal, Petroleum Secretary R.S. Pandey told reporters on Thursday. Full Article

Source:ET,Reuters


UPDATE 1-Reliance begins pumping gas from KG basin field

Thu Apr 2, 2009 11:47am IST
Email | Print | | Single Page
[-] Text [+]

(Adds detail, company's comment, govt official's quote)

NEW DELHI, April 2 (Reuters) - India's Reliance Industries (RELI.BO: Quote, Profile, Research) has started pumping natural gas from its massive deep-sea field in the Bay of Bengal, which at full throttle will nearly double India's gas output, the company said on Thursday.

Petroleum Secretary R.S. Pandey told reporters the company was producing 2.5 million standard cubic metres a day (mmscmd) of natural gas on Wednesday, and output may double in a day.

The company last week signed a sales agreement with fertiliser firms, which have to be given the first priority in gas sales according to a government decision.

Pandey said the first customer in the fertiliser sector would start getting gas supplies from Reliance in four to five days, while the plant farthest from the field would get supplies in 15 days.

Reliance said last month the company would initially produce 10-12 mmscmd and raise it by about 10 mmscmd a month, reaching its peak production of 80 mmscmd by the end of this year.

"At peak level it would amount to 44 percent of current oil and gas production taken together," Pandey said.

Reliance has a 90 percent interest in the block, while Canada's Niko Resources (NKO.TO: Quote, Profile, Research) holds the rest.

Reliance said the exploration block it was awarded in first round of India's New Exploration Licensing Policy (NELP) had started production six and a half years after the gas was discovered.

Reliance Industries' shares were up 4.1 percent at 1,644 rupees at 0612 GMT, in a firm market .BSESN that was up 4.4 percent. (Reporting by Nidhi Verma and C.J. Kuncheria; Editing by Ranjit Gangadharan) (For our special online coverage of the impact of Reliance's gas field on India's energy sector please click: here)

http://in.reuters.com/news/globalcoverage/IndiaEnergy


KG basin D-6 field gas to lower India’s fiscal deficit: Goldman

“According to our estimates, the total import bill could fall by 1% in FY’10 and an average of 3% during FY 2011-14,” it added

PTI

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New Delhi: Global financial services firm Goldman Sachs on Tuesday said gas production from the Krishna Godavari basin D-6 gas field by end-March 2009, would help in reducing India’s fiscal deficit and is also likely to provide “some downside protection” to economic growth rate.
“We believe the increased gas supply will improve somewhat the current account and fiscal deficits and provide some downside protection to GDP growth,” Goldman Sachs said in a research report.
India’s fiscal deficit is projected to more than double to 6% of GDP this fiscal against the budgetary target of 2.5%.
For the next fiscal, the deficit is estimated to be 5.5% of GDP.
It added though the immediate benefits to the macro-economy are limited, it would provide positive news in an environment of negative external shocks and investment slowdown.
The report added that gas production would increase the power generation capacity and is likely to lead to investments in the gas transmission and distribution infrastructure of over $10 billion (about Rs50,000 crore) in the next five years.
Goldman further expects the gas production to substitute about 7% of oil consumption in 2009-10 and 10-11% over fiscal years 2011-1014.
“According to our estimates, the total import bill could fall by 1% in FY’10 and an average of 3% during FY 2011-14,” it added.
The gas production is likely to provide more revenue to the government that would increase over time as input cost is expected to come down.
“We estimate that the direct impact of this on revenues will be in the order of 0.1% of GDP in FY’10, but increase to nearly 0.2% over FY 2011-FY14,” it said.



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