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Cairn India Cites Acreage Awards, Increased Reserves Estimate

Cairn India
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Cairn India has provided an operational review in its third quarter report for the period ending September 30, 2008.

OPERATIONAL REVIEW
 
Gross operated production in India for the third quarter of 2008 was 65,566 boepd  (17,111 working interest boepd).
 
RAJASTHAN BASIN - North West India
 
Block RJ-ON-90/1
 
Development - Upstream (Cairn India 70% (Operator); ONGC 30%) 

Oil field development work at Cairn India's world class discovery in Rajasthan is in full flow. The integrated upstream and midstream development is on course to produce first oil from Mangala in H2 2009.
 
Two custom made highly mobile super single 1,000 HP, Alternate Current drive drilling rigs from Weatherford and built by NOV, Houston, Texas, have arrived in India to drill more than 300 development wells in the Rajasthan block.
 
The rigs are the first of their kind with the wheels attached on the base structure. Unlike conventional rigs, these purpose built rigs can move easily without rigging down, which in turn cuts well construction time in order to deliver greater productivity and a reduction in costs.
 
A revision to the approved Mangala FDP has been submitted to the Operating Committee. Included in the revised FDP is the comprehensive data available from the appraisal programme, the latest techniques and workflows in geosciences and reservoir engineering, the export option to transport the oil from Barmer to the Gujarat coast and technical inputs from geoscientists and engineers from Director General Hydrocarbons (DGH) and ONGC.
 
The addendum includes the following:
  • The 2P (P50) stock tank oil initially in place (STOIIP) re-assessed to 1,293 million barrels (MMbbls), an increase of more than 20% over the original FDP STOIIP of 1,071 MMbbls.
  • The base development plan remaining a hot waterflood, with expected ultimate recovery of ~478 MMbbls (~37% 2P STOIIP) through to 2041. This is an increase of ~30% over the initial FDP life of field waterflood recovery of 368 MMbbls.
  • Considering the potential increase in the ultimate recoverable oil from the Mangala Field, a proposal to produce the field at a plateau rate of 125,000 bopd, which is considered to be a technically and economically prudent oil plateau rate.
  • A focus on realising the full potential through conventional and enhanced oil recovery (EOR) techniques.
Laboratory and simulation work to date suggest an incremental recovery of reserves via the field-wide application of chemical EOR methods (either polymer or alkaline-surfactant-polymer (ASP) flooding). Included in the revised Mangala FDP is the pilot project, which will begin in H2 2009, simultaneously with the start up of the field.
 
The latest Field Development Plans for the three main fields assume a sustainable peak plateau production of 175,000 bopd: Mangala 125,000 bopd, Bhagyam 40,000 bopd and Aishwariya 10,000 bopd.
 
As part of its preparation to meet the production commitment from Rajasthan in H2 2009, Cairn India had embarked upon an intensive recruitment campaign during Q3 2008. A variety of posts were available targeting several key operational areas at Cairn India's Rajasthan project -- one of the biggest in the country. The recruitment campaign received 6,000 applications for the 300 positions advertised to assist with the operations and the maintenance of mechanical plant and equipment associated with the Rajasthan wells, production, utilities and pipeline facilities.
 
Development - Midstream (Cairn India 70% (Operator); ONGC 30%)
 
Cairn India is confident that it will be able to deliver first oil from Mangala in H2 2009 with the bulk of major contracts works awarded, and long lead time items either ordered or procured.
 
Construction has commenced on the 24" Insulated Crude Oil Pipeline, 8" Gas Pipeline and Above Ground Installations (AGI). Larsen and Toubro are well advanced with the detailed engineering and procurement for the pipeline construction activity.
 
32 MW of electrical power is required for the heating system along the pipeline in the form of single 1MW gas engine units and GE Jenbacher in Austria have been awarded the full supply contract. The first units have been dispatched from Austria and are expected to arrive in Q4 2008.
 
Obtaining access to the land on which the pipeline will be built is well advanced under the Rights of Use process in Gujarat and Rajasthan. The land for all the AGIs has been acquired through direct negotiation with land owners and construction at these locations has started.
 
The GoI communication of April 30, 2008 accorded their consent to shift the delivery point from the outlet flange of the crude oil processing facility in Barmer to the Gujarat Coast. Consequently the pipeline project infrastructure is included in the revision to the Mangala FDP for cost recovery purposes.
 
Subsequently the Management Committee of RJ-ON-90/1 on Sept. 30, 2008 has also approved the shifting of the delivery point from Barmer to the Gujarat Coast.
 
The proposed routing of the pipeline will allow access to an extensive existing pipeline infrastructure and refinery network, with a final coastal delivery point that also affords access to the majority of India’s refining capacity.
 
Exploration Overview
 
The 2008 exploration program is ongoing and new acreage has been awarded in Sri Lanka.  Our forward exploration drilling program consists of four exploration wells in near future with three of these in Rajasthan. The rigs and services been used for the Rajasthan development drilling have been brought in early to drill the exploration wells thereby saving costs by leveraging long term contracts.
 
Seismic acquisition which commenced at the beginning of the year continues to make good progress and will lead to drilling opportunities.

The Government of Sri Lanka has awarded an exploration license to explore for oil and natural gas in the Mannar Basin, to Cairn India. The block covers approximately 3,000 Km2 in water depths of 200 meters to 1800 meters.
 
Cambay Basin - Western India
 
Block CB/OS-2: (Cairn India 40% (Operator))
 
The average gross production for Q3 2008 was 13,478 boepd (comprising average gas production of 38.7 mmscfd and average oil/condensate production of 7,020 bopd).

In the CB/OS-2 block, oil production has been increased from the new wells that were added during the recent infill/development drilling campaign that concluded in Q1 2008.
 
A field development plan for the Ambe field has been submitted.
 
CB-ONN-2002/1 (Cairn India 30% (ONGC Operator))
 
A three well drilling program started in the last quarter with the first well being completed with the rig being released on August 28, 2008. A small quantity of oil with a flow rate of 100 bopd on July 13, 2008 was recovered from a 2483-2479m zone. Two further wells are expected to be drilled during Q4 2008.
 
Krishna-Godavari Basin - Eastern India
 
Ravva (Cairn India 22.5% (Operator))
 
Average gross production from the Ravva field for Q3 2008 was 52,088 boepd (comprising average oil production of 40,111 bopd and average gas production of 71.8 mmscfd). Earlier this year, the JV partners reached the milestone of producing 200 million barrels of oil from the Ravva block.
 
Three new infield sub sea pipelines have been installed in the last quarter. Commissioning is planned for later in the year to help sustain production in the field.
 
Production has now commenced from four new infill wells and two work over wells. In addition, one water injection well has been put into service to enhance the reservoir water-flood scheme, while one more is planned to start injection after testing the upper zone (LM6) in Q3 2008.
 
A further two exploration wells were drilled during the last drilling campaign. Four small sized oil and gas discoveries were made from four stratigraphic intervals. Currently one of the intervals is under extended test and producing approximately 500 bopd through a 24" choke. Further technical evaluation together with the extended well test is ongoing to convert the discoveries into commercially producible fields.
 
KG-ONN-2003/1 (Cairn India 49% (Operator – exploration phase))
 
Two seismic programs have been undertaken in this block. The acquisition of a 500 km 2D seismic program commenced in January 2008 followed by the acquisition of a 255km2 3D program.
 
KG-DWN-98/2 (Cairn India 10% (ONGC Operator))
 
The JV has approved a three well appraisal programme for 2008, together with additional 3D seismic acquisition. Approval of an appraisal period up to July 2010 under the PSC for appraisal of the discoveries made in the block to date has been given by the GoI.
 
PR-OSN-2004/1 (Cairn India 35%, (Operator))
 
The acquisition of an offshore 3,100 km 2D seismic program has been successfully completed and processing of the data is complete.
 
Ganga Basin- Northern India
 
GV-ONN-2002/1 (Cairn India 50% (Operator) Capricorn 50%)
 
An exploration well is expected to spud during Q4, 2008 in order to meet the remaining work program commitment in the first exploration phase of the PSC.
 
GV-ONN-2003/1 (Cairn India 49% (Operator – exploration phase) Capricorn 25%)
 
The acquisition of a 550 km 2D seismic program is expected to commence in Q4 2008.
Rest of India
 
VN-ONN-2003/1 (Cairn India 49% (Operator – exploration phase))
 
The acquisition of a 500 km 2D seismic program commenced in August and is expected to be complete by mid Q4 2008.
 
KK-DWN-2004/1 (Cairn India 40% (ONGC, Operator))
 
A 3,500 km 2D seismic program has started and is expected to be completed in Q4 2008.
 
Mannar Basin -- Sri Lanka
 
SL 2007-01-001 (Cairn Lanka 100% (Wholly owned subsidiary of Cairn India))
 
A Petroleum Resource Agreement (PRA) for Block SL 2007-01-001 was signed in July 2008. The block was awarded to Cairn India in the recent Sri Lanka bid round early in 2008 and the work program includes the acquisition of 5,000 km of 2D, 1,000 km2 of 3D seismic and the drilling of three wells in the initial three years of the eight year exploration period. The Petroleum Exploration Licence has been signed with an effective date of October 16, 2008.

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