RIL, Niko to expand D-6 gas block
Reliance Industries Ltd and Niko Resources Ltd are expanding the development plan for a huge natural gas field off India's coast.india Updated: Jun 13, 2006 12:06 IST
Reliance Industries Ltd and Niko Resources Ltd are expanding the development plan for a huge natural gas field off India's coast after wells pumped at rates well above expectations, Niko's chief executive said on Monday.
The D-6 block off India's east coast, site of one of the world's largest recent discoveries, could also harbor more gas than today's estimated reserves of 11.9 trillion cubic feet, Canadian-based Niko's Edward Sampson said.
The current plan calls for more than $3 billion in spending, an amount expected to jump with the new data, Sampson said.
"The new plan just basically ups those numbers," he said after giving a presentation to an oil conference.
"What we've seen through the coring of a lot of the development wells that we've drilled this past year is just a much thicker hydrocarbon column. It's allowed us to increase production through any individual well."
One year ago, the wells on D-6 were slated to produce 100 million cubic feet a day each. Now they are expected to pump up to 350 million cubic feet a day.
The partners have drilled 18 wells on the block, where they discovered the gas in 2002. Niko has a 10 percent stake in D-6 and India's Reliance has the remainder.
"We're hoping to see an increase in reserve numbers," Sampson said. An engineering report due at the end of this month will show if that is the case.
It is not known how much more expensive the new plan will be. Drilling costs have surged over the past year amid a worldwide boom in activity, he said.
Under the plan the partners submitted to the government, peak production after start-up in 2008 was expected to climb to 1.4 billion cubic feet a day. Now, the partners are aiming for 2.8 billion cubic feet a day, about equal to India's current overall gas output, he said.
Some of Niko's other operations include India's NEC-25 block, which could have 8.2 trillion cubic feet of reserves, and gas fields in neighboring Bangladesh, where the company suffered a blowout 1- years ago, triggering a lawsuit.
Last December, Indian Oil Corp said it was interested in acquiring Niko, but it has not gone public with an offer.
Sampson said there has been no change in his company's plans to keep developing prospects on its own, but agreed the big finds likely attract the attention of larger firms.
"We're certainly getting on the radar screen. We've been in India for the past 12 years and with India's movement into the world economy and recognition in the world economy, Niko's certainly been taken along with that as well," he said.
Niko shares were off C$1.45 at C$59.55 on the Toronto Stock Exchange. That represents a 6 per cent increase since the start of the year.