Niko Resources Ltd NKRSF

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Hazira field: DGH puts breaks on additional cost recovery of $2.74 million, also disallows drilling of two wells

Oct 14: The DGH has rejected the GSPC-Niko consortium's -- which owns the Hazira PSC -- request to allow additional cost recovery to the tune of $2.74 million for one well (dubbed Hazira-24) in the block saying that the solicitation was unjustified. Along with this, the regulator has also denied approval for drilling of two more wells (dubbed Hazira-15 and Hazira-23) in the block. 
8The regulator has turned down the request for approval of drilling two locations -- H-15 and H-23 -- on the ground that the same was not approved by the Management Committee (MC) of the block. Though the other well H-24 was approved by the MC for drilling as a slant well, the operator drilled the well and incurred an expenditure of $4.76 million against the MC approved budget estimate of $2.02 million, thereby leading to a cost overrun of $2.74 million.
8The operator, since then, has been requesting the MC to approve the drilling of two wells H-15 and H-23 and also allow cost recovery of the overrun amount of $2.74 million for the slant well H-24.
8On the suggestion of the MC, the DGH reviewed the issue and arrived at the conclusion that the reservoir development was poor in well areas H-15 and H-23, as a result of which it did not make any sense to approve the drilling plan for the two wells.
8Then again, for the well H-24, the DGH pointed out that as the operator had incurred a cost overrun of $2.74 million -- 136% of the MC approved budget for the slant well -- because of a change in the drilling and completion strategy which was not approved by the MC, the cost recovery could not be justified.

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