RIL-BP set to produce gas at MJ field in 2 weeks

Mukesh Ambani-controlled Reliance Industries Ltd (RIL) is set to commence natural gas production from the MJ field in KG-D6 block in a couple of weeks. It will significantly boost gas output from the prized east coast asset. The testing is at final stage now and the production team will take over the project shortly, say people in the know.

MJ field will have a peak output of 12 MMSCMD. It will help RIL increase gas output to 30 million standard cubic meters per day (MMSCMD) by end of the financial year. An email sent to RIL did not elicit any response.

The commissioning has been delayed by six months according to the first plan. RIL, which is the operator of the block, along with its joint venture partner BP Plc earlier planned to start production in the December quarter and later changed the commencement date to March end. After the Q1 result announcement, the company said, “KGD6 MJ field is expected to commence production in 1Q FY24.”

The production from KG D6 assets is now at 19 MMSCMD. At peak production of 30 MMSCMD, KGD6 gas will contribute around 30% of domestic gas production. The gas from RIL-BP blocks is being supplied to key sectors like city gas distribution, power, fertiliser, refiners, steel, glass and ceramic.

The government has recently revised gas prices, accepting many key recommendations by the Kirit Parikh Committee. The rate for gas from difficult fields (High-pressure and high-temperature or HPHT wells) such as the one operated by RIL was cut marginally to $12.12 per million British thermal unit (mmBtu) from $12.46.

RIL’s oil and gas revenue more than doubled to ₹16,508 crore in FY23 from ₹7,492 crore, while EBITDA jumped to ₹13,589 crore from ₹5,457 crore. The spike is primarily because of increasing gas price. Average price realisation for the gas from KGD6 was $10.6 MMBTU, compared to $4.92 a year back.

RIL and BP plc, which hold a 33% stake in the KG Basin assets, will be using a floating production system at high-sea in the Bay of Bengal to bring to production the deepest gas discovery in the KG D6 block. The field also has oil deposits which will be produced using a floating system, called FPSO. The gas and oil will flow from wells drilled below the sea-bed to the FPSO, where they will be stripped of impurities. Oil will be loaded on tankers for sale to refineries while gas will travel to onshore through an under-sea pipeline.

The MJ gas find is located about 2,000 meters below Dhirubhai-1 and 3 (D1 and D3) fields, the largest fields in KG-D6. MJ is estimated to hold a minimum of 0.988 Trillion cubic feet (Tcf) of contingent resources.

RIL and BP are developing three deep-water gas discoveries at KG-D6 --- R Cluster, Satellite Cluster and MJ, spending about $5 billion. R-Cluster started production in December 2020 and the Satellite Cluster came onstream in April.

The Indian petroleum giant has so far made 19 gas discoveries in the KG-D6. D-1 and D-3, India's first deepwater gas field, were brought into production in April 2009, but it stopped production in February 2020. The only oilfield in the block, MA also stopped production in 2019.