Operators discover more gas in Bay of Bengal off India

July 18, 2005
Reliance Industries Ltd., Mumbai, and Niko Resources Ltd.

Reliance Industries Ltd., Mumbai, and Niko Resources Ltd., Calgary, are adding more natural gas discoveries and beefing up the drilling program on blocks in two widely spaced basins in the Bay of Bengal off eastern India.

The pair has discovered more gas on the 1.9 million acre D6 Block off Kakinada in the Krishna-Godavari basin, where they found several trillion cubic feet of recoverable gas during 2002-03.

The companies are drilling the P-1A well, the first in an area of 3,165 sq km of 3D seismic data acquired in the northeastern part of the block in 2004. P-1A, to be drilled to TD 3,600 m, has already identified gas pay in shallow formations, Niko said.

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Meanwhile, the E-1 well near the edge of the new seismic area was completed since the end of Niko’s fiscal 2005 ended Mar. 31 and encountered thick gas pay in channel sands. This is in addition to the G-1 discovery well completed earlier as the block’s 13th successful well (OGJ Online, Mar. 14, 2005).

The results “confirm the potential of discovering large reserves on the new 3D seismic area,” Niko said.

After completing P-1A, the firms will spud the F-2 well south of the F-1 discovery and on the new 3D seismic area using a second rig expected to be available for 120-150 days starting in August or September.

A third rig, capable of drilling in deeper water in the new 3D seismic area, is to arrive in September 2006, Niko said.

Also in the quarter ended Mar. 31, the companies completed the sixth exploratory well as the sixth gas discovery on the 3.5 million acre NEC-25 Block in the Mahanadi basin. The block, 500 miles northeast of D6, lies off India’s northeast coast and southwest of Calcutta.

That discovery is on an 1,800 sq km 3D seismic survey in the east-central part of the block, and the companies are acquiring 1,700 sq km of 3D data south of that survey and plan to drill there in late 2005.

Consulting engineers are preparing reserve estimates for the six discoveries on NEC-25.

Interests in the D6 and NEC-25 blocks are Reliance 90% and Niko 10%.

Niko said it has spent $44.4 million to date on D6, including $13.3 million in fiscal 2005. Five more exploration wells and two development wells are to be drilled in fiscal 2006 at a net cost of $20-25 million. India issued a mining lease for 20 years from Mar. 2, 2005, and approved a development plan for the production of 1.4 bcfd of gas initially from the Dhirubhai-1 and 3 wells.

Niko’s capital outlay on NEC-25 to Mar. 31 was $20.5 million, including $9.7 million in fiscal 2005. Fiscal 2006 spending is budgeted at a net $8-10 million for 3D seismic data acquisition, drilling of four exploration wells, front-end engineering, and preparation of development plans.