Krishna Godavari Basin is a peri-cratonic passive margin basin in India. It is spread across more than 50,000 square kilometres [1] in the Krishna River and Godavari River basins in Andhra Pradesh. The site is known for the D-6 block where Reliance Industries discovered the biggest natural gas reserves in India in 2003.
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.
KG inland and offshore basins have good prospects of unconventional tight oil and tight gas reserves from the conducted field studies. [8] 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.
The basin is home to olive ridley sea turtle, a vulnerable species. [9]
KG-DWN-98/1 (KG-D6) - 8100 km2. The total project is expected to cost $100 billion. [10] 50 km off the coast of Kakinada. [11]
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. [12] [13]
In May 2014, ONGC alleged that Reliance was illegally extracting gas from blocks owned by ONGC in Krishna Godavari Basin. [14]
The Indian government fixed the natural gas price at producer end (on shore point) as US$5.61 per million British thermal units ($19.1/ MWh ) on net calorific value (NCV) basis compared to earlier price of $4.2 per million British thermal units ($14/ MWh ) on gross calorific value basis. [15] 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 per million British thermal units ($14/MWh) on gross calorific value (GCV) basis is calculated already at maximum price cap of Brent crude at $60 per barrel ($380/ m3 ) 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 per barrel ($160/m3) and a cap of $60 per barrel ($380/m3). [16] As the annual Brent price has always[ when? ] been above the cap price since 2007, the revised gas price at $5.61 per million British thermal units ($19.1/MWh) during the year 2014 is in excess of the applicable price by nearly 20%.[ citation needed ]
Reliance Industries Limited is an Indian multinational conglomerate, headquartered in Mumbai. Its businesses include energy, petrochemicals, natural gas, retail, telecommunications, mass media, and textiles. Reliance is the largest public company in India by market capitalisation and revenue, and the 100th largest company worldwide. It is India's largest private tax payer and largest exporter, accounting for 7% of India's total merchandise exports. The company has relatively little free cash flow and high corporate debt.
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The Oil and Natural Gas Corporation Limited (ONGC) is an Indian central public sector undertaking under the ownership of Ministry of Petroleum and Natural Gas, Government of India. The company is headquartered in New Delhi. ONGC was founded on 14 August 1956 by the Government of India. It is the largest government-owned-oil and gas explorer and producer in the country and produces around 70 percent of India's domestic production of crude oil and around 84 percent of natural gas. In November 2010, the Government of India conferred the Maharatna status to ONGC.
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The K.G. basin extends over 28,000 sq km onland, 24,000 sq km in "shallow" (by current definition, a depth of up to 400 metres) waters offshore and 18,000 sq km in deep waters (a depth of up to 2,000 metres). ONGC began prospecting for oil and gas in the basin in April 1977. It drilled its first well near Narasapur in 1978 and discovered gas there. Since then it has made many such finds in the basin. It now prospects for hydrocarbons both in shallow and deep waters, besides for oil and gas, both onland and offshore. It has set up a mini-refinery at Tatipaka, which can distil about 1,500 to 2,000 barrels of crude oil a day into naphtha, high-speed diesel, SKO (superior kerosene oil) and LSHS (low sulphur high stock). It is a skid-mounted, relocatable refinery. According to C. Lal, Additional Executive Director - Asset Manager, K.G. basin, the basin is one of the 'high-performing assets' of ONGC. In the last five years, oil production went up four-fold and gas sales doubled. Crude oil production was 2,000 tonnes a year and gas production 14 million cubic metres a year when production began in 1986-87. "Today, we produce 850 tonnes of oil a day and sell 5.5 million cubic metres of gas a day," Lal said. In 2001-02 alone, the K.G. basin accounted for 2.82 lakh tonnes of oil and sold 1.769 billion cubic metres of gas. The cumulative royalty that ONGC has so far paid to the Andhra Pradesh government adds up to Rs.550 crores, including Rs.300 crores paid in the last three to four years. According to Lal, there are 30 onland and 30 offshore wells. There are 112 onland wells and 11 offshore wells which produce gas. A major find was Ravva offshore, in 1987, where crude oil is now produced in a joint venture. So far 460 wells have been drilled; these include 354 onland and 106 offshore. The offshore wells include 30 wells drilled in the Ravva offshore structure. Eight rigs are now prospecting for oil/gas onland, and one rig each in shallow and deep waters. Oil production in the basin has gone up by an order of 10 in the last 10 years - from 0.03 million tonnes to 0.29 million tonnes a year. So far ONGC has produced one million tonnes of oil and about 11 billion cubic metres of gas here. This is apart from the production of hydrocarbons from Ravva.
{{cite web}}: CS1 maint: unfit URL (link)The field is operated by Reliance Industries (90%) on behalf of Niko Resources (10%). Block reserves have been put at 14,000bn cubic feet of gas and 140m barrels of oil. The first three discoveries (Dhirubhai-1, Dhirubhai-2 and Dhirubhai-3) have estimated gas reserves of approximately eight trillion cubic feet. In March 2003 the deepwater rig Discover 534 discovered Dhirubhai-4, which has in-place gas volumes of 1,700 billion standard cubic feet (bcf). In February 2006 Reliance announced that it had encountered the thickest hydrocarbon column to date, the MA-2 well (2km from the MA-1 discovery well) reaching a depth of about 3.6km and penetrating a gross hydrocarbon column of 194m, which consisted of 170m of gas / condensate (53°API) and 24m of oil (42°API).
Reliance Industries' gas discovery in the Krishna-Godavari basin is expected to change the energy supply economics in the country with the reserves estimated to be around 40 times bigger than that of the Bombay High field, and double the total gas production of Oil and Natural Gas Corporation. Reliance's gas reserves in its exploratory block KGDN-6, off Vishakapatnam, are to the tune of 40-50 million cubic metres per day and are expected to go up to 100 cubic metres of gas over a 10-year period. Reliance's gas reserves are expected to feed the gas-starved country for almost a century. The firm will have to invest more than Rs 7,000 crore (Rs 70 billion) in extracting gas from the Krishna-Godavari basin. Reliance is the first private Indian company to have struck gas in a deep water exploratory block in the country. It drilled a record 6,000 feet below the sea floor in the Krishna-Godavari basin.
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