The Hindu Business Line : Rig deployment delay at Reliance gas field; `back-up ready'

There is a significant delay in the deployment of drilling rigs at the D-6 deepwater gas field of Reliance Industries in the KG basin forcing the company to look for fallback options. Two of the latest generation deepwater drilling rigs that were scheduled to reach the site in April and December 2007 will now be delayed by three months each.

A Reliance spokesperson admitted to Business Line that there was considerable delay in rig deployment. He, however, said, "The company has a back-up plan and does not foresee any delay in commissioning of the project. Gas will start flowing from D-6 in the second half of 2008-09 as was proposed in the amended development plan."

Field development costs are also set to rise steeply following the increased hire charges for the rigs chartered from Transocean Inc, a leading global offshore drilling company.

Niko Resources, which is a 10 per cent co-owner of the D-6 deepwater block, had said in its quarterly results filing in November that two rigs, Discoverer 534 and Deepwater Expedition, would be available for drilling in April and December 2007 respectively.

However, the latest Fleet Update Report of Transocean says that the contracts for the two rigs begin only in June 2007 and February 2008 respectively.

Transocean's Deepwater Frontier, the first of three rigs contracted by Reliance, is already operating in the D-6 field since August.Demand for drilling rigs, especially of the deepwater variety, has shot up following increased exploration activity across the world. Reliance will be paying substantially higher rates for the three rigs that it has contracted compared to those who had hired them before it.

For example, Deepwater Expedition — a fifth generation deepwater rig — will be available to Reliance in February 2008 at $375,000 per day, up from $147,000 per day in 2006. Reliance's revised development cost estimate for the field is $5.2 billion, which is double of what was estimated earlier.