Cairn India continues to deliver across all aspects of its business with a focussed strategy that is helping the company grow and create value for shareholders.
The size and scope of the Rajasthan project has substantially increased since the original Mangala discovery in 2004 when peak production was originally forecast at 100,000 bopd. Today the facilities at the MPT will include the phased construction of four processing trains with a production capacity of 205,000 bopd with scope for expansion.
The Mangala, Bhagyam and Aishwariya (MBA) fields have proven plus probable (2P) gross reserves and resources of 685 million barrels of oil equivalent (mmboe) with a further 300 mmboe of Enhanced Oil Recovery (EOR) potential presently classified as contingent resource. The first production from Rajasthan is scheduled to commence by mid year 2009 and will be evacuated by trucking. The pipeline and significant related terminal facilities are currently being targeted to be ready by Q4 2009. Plateau production from Mangala is planned to reach 125,000 bopd in 2010 with an overall plateau production of 175,000 bopd expected to commence in 2011 from the MBA fields (including Bhagyam, 40,000 bopd, Aishwariya 10,000 bopd). We continue to identify additional growth opportunities in the Barmer basin that provide the potential for further value creation for all stakeholders.
The Bhagyam field development plan (FDP) was submitted to the Joint Venture (JV) and the Government of India (GoI) in May 2007 and was approved by the GoI in March 2008. Consequently, Bhagyam and Aishwariya reserves were booked in mid 2008. The production potential of Aishwariya has been upgraded from 10,000 bopd to 20,000 bopd subject to regulatory approvals.
The GoI has confirmed multiple nominees for the Rajasthan crude. The pipeline routing to a nodal point within the existing IOC infrastructure and to a coastal destination gives Cairn India and its JV partner ONGC, access to a wider refining capacity. In order to facilitate the trucking and sale of oil ahead of the pipeline completion, trial runs have been carried out on the route from Mangala to the Gujarat coast.
The producing assets at Ravva and in the Cambay Basin, which are now off peak plateau production, continue to underpin the company and perform better than expected with higher than forecast production and low operating costs. The development wells at Ravva were successfully put on production while in CB/OS-2 the drilling and workover campaign carried out during 2007-08 has transformed the block from a predominately gas to an oil producing asset. The CB/OS-2 fields generated its highest revenues during 2008 since production started.
Across all assets in India the total reserves and contingent resources (2P + 2C) including Enhanced Oil Recovery (EOR) net to Cairn India is more than 800 million barrels of oil equivalent (mmboe).
Cairn India has continued to grow and establish itself in its second year of listing on the Bombay and National Stock Exchanges with the company one of the key oil and gas exploration and production companies in India.
Rajasthan (Block RJ-ON-90/1) (Cairn India 70% (Operator); ONGC 30%)
Cairn India and its JV partner ONGC now have 3,111 km2 under long term contract on the Rajasthan license. The main field development area covers 1,859 km2. The Bhagyam and Kameshwari development areas cover 430 km2 and 822 km2 respectively.
The phased, integrated development plan for the block, which includes gas, water and pipeline operations, is focused on the Mangala field with MPT the hub through which all facilities will be connected.
Good progress has been made on the integrated upstream and midstream development activities at one of the largest onshore oil and gas developments in India. To date the project has achieved more than twenty million lost time injury free hours.
The facilities to handle a capacity of 30,000 bopd of crude through the first train have been completed at both the MPT in Rajasthan and at the port of Kandla in Gujarat.
The 2P gross reserves and resources from the three main MBA fields have increased 9% to 685 mmbbls (479 mmbbls net). The other 22 Rajasthan fields including the low permeability Barmer Hill fields provide further scope for continued resource growth.
The Mangala Stock Tank Oil Initially in Place (STOIIP), reserves and resources have been significantly upgraded since the original FDP was approved by the GoI in 2006. The increase in the 2P STOIIP and 2P Reserves and Resources is 21% and 29% respectively over the original Field Development Plan (FDP). The revised FDP was submitted following further drilling in the development area, along with extensive subsurface and detailed design and engineering studies and awaits GoI approval.
During the year the front end engineering design for Bhagyam was completed. The Aishwariya STOIIP has increased to 293 mmbbls. The estimated increased 2P reserves are 64 mmboe supporting a plateau production of 20,000 bopd compared to the 10,000 bopd plan approved in 2006. These estimates are subject to regulatory approvals.
Development -- Upstream
The Mangala upstream activities are progressing and are at various stages of completion. Train one with a capacity to handle 30,000 barrels of oil per day (bopd) at the MPT is complete and ready to start production.
The well pads to enable first production have been finished and development drilling and completion is well underway with two multi purpose mobile drilling rigs and one completion rig at the Mangala site. The wells drilled to date have met pre drill expectations and support the planned ramp up production profile for the Mangala field.
Construction on the second and third trains with a combined capacity of 100,000 bopd is ongoing.
All of the key elements including facilities and related infrastructure to enable production from the MPT via the pipeline are well underway. This includes key features such as well pads, in-field infrastructure, processing facilities, export facilities, power generation and utilities.
The construction of the ~600 km insulated and heated pipeline has nine construction spreads working in Gujarat and Rajasthan.
The pipeline route through Rajasthan and Gujarat passes through eight districts and more than 250 villages. The final approvals to enable the pipeline construction to proceed and all land purchases for the pipeline above ground installations (AGI's) and main terminals have been completed. Another significant development during this period was the receiving of the Right of Use (RoU) for the Rajasthan leg of the pipeline at the beginning of 2009.
The major equipment packages were awarded at the beginning of 2008 and all long lead items and materials have been delivered to the site to ensure smooth completion of the final stages of construction.
The heating stations under construction along the length of the pipeline are well advanced while all the superstructures and main storage tanks at the intermediate pumping station at Viramgam have been built with the ability to distribute to refiners.
Pre-commissioning and testing activities have commenced on the pipeline with the project targeted for completion in Q4 2009
Kameshwari Development Area (Cairn India 100%)
The Government of India approved a further Declaration of Commerciality (DoC) and new Development Area of 822 km2 on the Rajasthan license RJ-ON-90/1 at the end of December 2008 for the Kameshwari West 2, 3 and 6 discoveries.
Resource base including EOR
Cairn India has made 25 discoveries in the RJ-ON-90/1 block to date and has established a significant growing resource base in the Barmer basin. The company continues its efforts to develop this resource base through the application of appropriate cost efficient technologies. The initial focus has been to develop the MBA fields which contain over two billion barrels in place in the Fatehgarh reservoirs, through primary and secondary recovery schemes.
Cairn India continues its efforts on the staged and early application of aqueous-based chemical flooding EOR techniques in the MBA fields. Early application of chemical flooding EOR in these fields would be designed to increase the overall recovery from the fields, extend their crude oil production plateau periods, reduce water production, mitigate future decline rates and potentially accelerate crude oil production. Cairn India is actively planning to conduct an EOR pilot trial in the Mangala field following very encouraging results obtained from the laboratory and simulation studies. The current assessment of the EOR resource base is more than 300 mmbbls of incremental recoverable oil from the MBA fields.
Cairn India will continue with its evaluation of the resources and the development options of the other discoveries, of which the Barmer Hill formation over the Mangala and Aishwariya fields contains around 400 mmbbls of oil in place in tighter reservoir rocks (lower permeabilities). This reservoir has tested oil at rates of up to 250 bopd after stimulation. Analogous fields in the world have been developed with expected ultimate recoveries of 7-20% under primary and secondary recovery schemes. Cairn India is planning to conduct pilot activities to evaluate this additional resource potential and associated development options.
Cairn India will also continue to consider low cost development options for the smaller fields through the use of cost effective technologies and by leveraging the existing infrastructure.
Ravva (Cairn India 22.5% (Operator))
Ravva Field averaged a production rate of 52,539 boepd in the year 2008-09 (comprising of 41,227 bopd and 68 MMscfd of gas).
An infill drilling campaign was successfully completed in March 2008 comprising of seven development and four exploration/appraisal wells. The development wells were successfully put on production. Information acquired during the drilling campaign along with the reservoir pressure data suggest that there is potential bypassed oil in the field and sub-surface studies are ongoing to identify any additional resources.
Three oil and gas discoveries were made during the drilling campaign and comprise 3.6 mmboe 2C contingent resources.
A 14 inch oil pipeline from the RD platform to the Ravva plant was commissioned during this period. The pipeline has facilitated an increase in total liquid production of 4,500 barrels per day. A produced water re-injection project has been successfully commissioned to reduce effluent discharge and enable Ravva to become more eco-friendly.
Block CB/OS-2: (Cairn India 40% (Operator))
In the CB/OS-2 block, the Lakshmi and Gauri offshore fields are currently producing oil and gas, whereas the onshore field, CB-X is only producing gas. The CB/OS-2 field has been on production since October 2002.
The average gross production from the CB/OS-2 block for 2008-09 was 13,607 boepd (7,376 bopd, 37.4 mmscfd of gas).
The drilling and workover campaign carried out during 2007-08 has transformed the CB/OS-2 block from a predominately gas to an oil producing asset. The onshore facilities were fully up-graded to handle and process 10,000 bopd and the field is currently producing ~ 10,000 bopd (gross).
The asset has generated its highest revenues, since production started, during 2008 aided by higher oil production from the new wells and the higher oil price realization.
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