<div>Reliance Industries (RIL) on Friday, 24 May announced a huge natural gas discovery, possibly the biggest find ever, in the flagging eastern offshore KG-D6 block that will be key to arresting falling output.</div><div> </div><div>Canadian oil and natural gas producer Niko Resources Ltd, which partners India's Reliance Industries Ltd and BP Plc, said the discovery is expected to add to the gas resources in the block, without revealing potential reserves. This sent Nico shares up 26 per cent. <br /><br />"It is a significant discovery in the sense that out of a half-inch choke you have got 2,000 barrels a day and over 30 million cubic feet a day of gas flowing ...," Niko Chief Executive Edward Sampson told Reuters. The discovery, named D-55, comes at a time when the companies had been grappling with declining output at the block.<br /><br />"We shall embark on the appraisal programme in the next few months in order to evaluate the options for developing this discovery," PMS Prasad, executive director at Reliance Industries, said in a statement. Reliance Industries is the operator of the block with a 60 per cent stake. BP holds 30 per cent and Niko the rest.<br /><br />RIL and its partner BP plc of UK encountered 155 metres of gas pay zone in the first exploration well drilled on the block in more than five years. The well was drilled two kilometres below the existing producing D1&D3 fields. "The KGD6-MJ1 well was drilled in a water depth of 1,024 metres - and to a total depth of 4,509 metres (4.5 kilometres below seabed)," RIL-BP said in a statement. The well was drilled to explore the prospectivity of a Mesozoic Synrift Clastic reservoir lying over 2,000 metres below the already producing reservoirs in the Dhirubhai-1 and 3 (D1&D3) gas fields.<br /><br />"Formation evaluation indicates a gross gas and condensate column in the well of about 155 metres in the Mesozoic reservoirs," the statement said adding the well flowed 30.6 million standard cubic feet per day of gas during testing.<br /><br />Though RIL-BP did not put any reserves to the discovery, the find may possibly be the largest single discovery in the country. The discovery, which was notified to the regulatory authorities, has been named D-55.<br /><br />Sources said the resource found may be significantly more than a pre-drill best case gross prospective resource of 819 billion cubic feet of gas and 56 million barrels of liquids for the well.<br /><br />RIL-BP had drilled MJ-1 well in early March after the government permitted companies to drill exploration wells in areas where exploration period had long expired. Dhirubhai-1 and 3 (D1&D3) gas fields, the largest among the 18 gas finds on KG-D6 block, have proved to be more difficult to produce than previously predicted. D1&D3 reservoir has seen sharper-than-expected drop in pressure and water and sand ingress in production wells, leading to a drop in output.<br /><br />Niko shares rose to a high of C$7.54 in early morning trade on the Toronto Stock Exchange on Friday. The stock has lost more than 40 per cent this year to Thursday close. Shares in Reliance Industries closed flat at Rs 786.45.<br /><br />(Agencies)</div>
