The U.K. supermajor BP plc (BP) along with its partners Reliance Industries Limited (“RIL”) and Niko Resources Ltd. has hit upon a significant gas and condensate deposit in the KG D6 block, off the eastern coast of India.
The probe – KG D6-MJ1 well – was spud at 1,024 meters water depth to reach a total depth of 4,509 meters. The well, which lies more than 2,000 meters beneath the already producing reservoirs in the D1-D3 gas fields, will facilitate in examining the Mesozoic Synrift Clastic reservoir. The discovery is projected to augment the hydrocarbon resources in the KG D6 block.
The formation appraisal points towards a gross gas and condensate column in the well at about 155 meters in the Mesozoic reservoir. During the drill tests, the well flow rates are restricted by the rig and well test equipment configuration. However, the well flowed 30.6 million standard cubic feet per day (mmscf/d) and at a liquid rate of 2,121 barrels a day, indicating a good flow potential.
A notification has been given to the Government of India (GoI) and the Management Committee of the block regarding the new discovery – D-55. The partners expect to begin the appraisal work within the next few months to assess the options for field development, depending on its scale and quality.
RIL, the operator of KG D6, holds equity of 60%. The other partners, BP and Niko, have a share of 30% and 10%, respectively. Earlier, in Feb 2013, BP and RIL had proposed to boost KG D6 block’s reserves to four trillion cubic feet (Tcf).
BP believes India has immense potential given its rich resources. The country, however, requires policy and regulatory backing to attract investments, right technology and ability to procure and develop the resources.
BP holds a Zacks Rank #3 (Hold). However, there are other stocks in the sector – Dawson Geophysical Company (DWSN), InterOil Corporation (IOC) and Exterran Holdings, Inc. (EXH) – which are expected to outperform over the next few months and carry a Zacks Rank #1 (Strong Buy).
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