Krishna Godavari Basin

Discoveries

The first gas discovery in the basin was in 1983, in Razole Well No 1, when ONGC had a small office in Rajahmundry and Narsapur. Since that discovery Reliance and others have joined the exploration effort.

• 14 trillion cubic feet (0.4 trillion cubic metre) of gas by Reliance Industries in KG-DWN-98/l (KG-D6) in 2006. 1,800 metre (6,000 feet) below the sea floor.
• 20 Tcuft of gas by Gujarat State Petroleum Corporation in June 2005. The initial reserves estimate was reduced by 90% in a field development plan commissioned by GSPC in 2009.
• Potentially 20 Tcuft of gas in place at D-3 and D-9 blocks, as estimated in May 2011. According to Reliance Industries: "This includes identified prospects and leads and a number of postulated prospects based on the play area and field size distribution."
• A gas discovery by ONGC in June 2009, which an anonymous company official said could have an estimated 10 Tcuft.

Tight oil and gas reserves

KG inland and offshore basins have good prospects of unconventional tight oil and tight gas reserves from the conducted field studies. Most of the conventional wells drilled and operated have a shorter lifespan than envisaged life and with erratic production. This may be due to drilling of conventional wells in tight oil and gas fields without horizontal drilling in the shale rock formations and hydraulic fracturing.

Ecology

The basin is home to olive ridley sea turtle, a vulnerable species.

Projects

KG-DWN-98/1 (KG-D6) - 8100 km2. The total project is expected to cost $100 billion. 50 km off the coast of Kakinada.

CAG audit

The Reliance Industries Limited (RIL) was supposed to relinquish 25% of the total area outside the discoveries in 2004 and 2005, as per the Production Sharing Contract (PSC). However, the entire block was declared as a discovery area and RIL was allowed to retain it. In 2011, the Comptroller and Auditor General of India (CAG) criticised the Oil Ministry for this decision. The CAG also faulted RIL for limiting the competition in contracts, stating that RIL awarded a $1.1 billion contract to Aker on a single-bid basis.

In May 2014, ONGC alleged that Reliance was illegally extracting gas from blocks owned by ONGC in Krishna Godavari Basin.

Gas pricing

The Indian government fixed the natural gas price at producer end (on shore point) as US5.61 $/MMBtu on net calorific value (NCV) basis compared to earlier price of 4.2 $/MMBtu on gross calorific value basis. However the enhanced price would be applicable only after compensating the shortfall gas in the previous years for the KG basin fields which are under exploration and production contract by Reliance Industries Ltd. The earlier price of 4.2 $/MMBtu on gross calorific value (GCV) basis is calculated already at maximum price cap of Brent crude at 60 $/oilbbl under the applicable formula linking the price of gas per million Btu (GP) to the price of oil:

GP = 2.5 + (OP – 25) ^0.15

where OP is the annual average Brent crude price for the previous FY, with a floor of 25 $/oilbbl and a cap of 60 $/oilbbl. As the annual Brent price has always been above the cap price since 2007, the revised gas price at 5.61 $/MMBtu during the year 2014 is in excess of the applicable price by nearly 20%.

References

References

1. Mortishead, Carl. (28 June 2005). "Record gas discovery in India could hit projects". Times Newspapers Ltd.
2. Ramesh, Jairam. "The new KG scam". The Hindu.
3. (27 May 2009). "RIL strikes 2 more gas reserves in KG basin". Rediff.com Business.
4. Banerjee, Rajeev Jayaswal & Soma. (23 June 2009). "ONGC scores hat-trick on gas discoveries".
5. "Tight Reservoirs: An overview in Indian context".
6. Delhi, Jyoti Mukul in New. "Oil cos stumble on Olive Ridley ground".
7. "Specifications: KG-DWN-98/1 (KG-D6), Bay of Bengal". Offshore Technology.
8. (2010-04-02). "Reliance completes one year of gas production in KG Basin". Chillx.info.
9. (8 September 2011). "CAG flays Oil Min for allowing RIL to retain D6 area".
10. (9 September 2011). "Reliance violated contract terms in KG Basin, finds CAG report".
11. "Independent panel to probe discrepancies in Krishna-Godavari Basin". news.biharprabha.com.
12. (18 October 2014). "Govt raises natural gas price to $5.61 per unit". The Hindu.
13. "Page 27, Natural Gas in India".
14. SUBRAMANIAN, T.S.. (18–31 January 2003). "A unique and lucrative basin". frontline.in.
15. Balse, Hemangi. (31 October 2002). "Reliance gas-find 40 times bigger than Bombay High". rediff.com.
16. "KG-DWN-98/1 (KG-D6), Bay of Bengal". Offshore Technology.