D-42 discovery discussion
he petroleum ministry recently sought to know specific details about the Directorate General of Hydrocarbons' (DGH) proposal for permitting Reliance Industries Ltd (RIL) to carry out an independent 36-month appraisal programme for its new D-42 discovery -- which was notified only in July, 2008 -- in the D-6 deepwater block of the Krishna-Godavari Basin, even though the entire block was termed a "discovery area" in July 11, 2006. The DGH's views on the issue were in sharp contrast to the observations of a committee headed by Petroleum Additional Secretary S. Sundareshan, which had recommended that the timeline for appraisal of the D-6 discoveries should be reckoned from this date, given that the DGH seemed to have acted unilaterally in permitting the private sector E&P major to neglect its Production Sharing Contract (PSC) obligation to surrender 25% of the block area at the end of each exploration phase, as the entire area had ostensibly been covered by exploratory activities.
8The DGH has explained that when the proposal for considering the whole block area as a discovery area was accepted by the management committee, D-42 had not been discovered, even though it lay within the block area. The discovery notification for D-42 was only submitted on July 7, 2008, and the DGH has noted that it is a separate discovery in the Pleistocene Formation which is younger than many other discoveries in the block, though it lies in the same area. Therefore, appraisal of the other discoveries in deeper intervals would not be adequate for D-42, which falls in other shallow depth horizons. It has accordingly asserted that the contractor is entitled to a separate 29-month, 22-day appraisal programme in the block from July 15, 2008, to January 6, 2011, whereas the appraisal period in the rest of the D-6 block -- also known as KG-DWN-98/3 -- will expire earlier. This is as per the articles of the Production Sharing Contract (PSC).
8The DGH said that the management committee of Reliance Industries Ltd`s KG-DWN-98/3 block -- which is also known as D-6 -- has approved an appraisal budget of $55.3 million for the D-42 discovery. RIL plans to carry out a 21-month firm appraisal programme on the discovery with effect from July 7, 2008, to April 6, 2010, and then carry out "to mature" activities for the next nine months under the appraisal programme from April 7, 2010, to January 6, 2011. The Declaration of Commerciality for finds made in the 1,042 sq km appraisal area will have to take place by July 6, 2011, which is 36 months from the date of discovery notification.
8Under the firm appraisal programme, RIL will carry out pre-stack depth migration of 1,130 LKM of data, as well as structural and stratigraphic reinterpretation, CSEM surveys, data processing, inversion and interpretation, AVO analysis, reinterpretation of 3D PSDM data, volume interpretation and attribute analysis, structural modeling, seismic inversion, basin modeling, depositional system analysis and pressure prediction and well prognosis studies. Subsequently, if the firm opts to carry out a "to mature" programme, it will drill three wells, carry out petrophysical, petrographic, geochemical and biostratigraphic analysis, as well as a post-drill review and commercial analysis. Accordingly, the DGH informed the petroleum ministry that separate appraisal activities and a separate 36-month appraisal period would be required to assess the potential and productivity of the D-42 discovery.