Cairn brings forward drilling of fourth exploration well to next month

Cairn India is to start drilling of the fourth exploration well in the Mannar basin next month, the Company disclosed yesterday.

The landmark development comes ahead of the previously scheduled time.

Cairn said post acquisition and interpretation of 600 sq km 3D seismic data during phase 2 exploration period in Block SL 2007-01-001, exploration drilling was planned by mid 2013.

“However, due to early rig availability and excellent logistical preparations, the spud date is now advanced by a quarter. The preparation for drilling activity is now complete with a rig being secured from Transocean. Drilling of an exploration well is planned in February 2013,” Cairn said in its commentary accompanying third quarter results for FY13 financial year.

The Indian firm has concluded its first oil exploration phase in Sri Lanka’s offshore Mannar basin, discovering gas and condensate in two out of three wells drilled, CLPL-Dorado-91H/1z and CLPL-Barracuda-1G/1, although their commercial viability has yet to be determined

The third well, CLPL-Dorado North 1-82K/1, was plugged and abandoned as a dry hole in December 2011.

In September last year,  Cairn India said it will start a second round of drilling and surveys as part of its Sri Lankan oil exploration program in the first quarter of 2013, before deciding on its commercial viability by mid-year.



A senior official of the company told Reuters that the company would drill a fourth well in a second phase of exploration in the first quarter of 2013.

“That will play a very decisive role in the overall commercial study as well as evaluating whether the discoveries are commercial,” the official told Reuters in an interview.

“Both these discoveries we have made at Barracuda and Dorado, they are not commercial in the sense of on a stand-alone basis. But when you combine them with several discoveries, then this project becomes commercial.”

He said the company was in the process of assessing the volume of the hydrocarbon presence in the first two wells.

The first phase of the exploration program involved the purchase, processing and interpretation of 1,753 square kilometres of 3D seismic data and a three-well, deepwater drilling program.

In the second phase, Cairn will buy, process and interpret 3D seismic data for 600 square kilometres before it begins to drill the fourth well.

Cairn has rights to drill in one of eight blocks in the Mannar Basin. China and India have been offered one each, which they have yet to accept, while the remaining five are expected to be tendered after Cairn’s exploration campaign is completed.

“We have already expressed our interest to do more work within this block and in a new block. Whenever an appropriate opportunity comes, we will be happy to consider,” Bharati said.

Sri Lanka produces no oil and is dependent on imports, which cost it $ 4.6 billion in 2011. Since the end of a 25-year war with Tamil separatists three years ago, the Government has tried to reinvigorate oil and gas exploration.

Seismic work done earlier by Norway’s TGS Nopec Geophysical Co ASA showed some potential in the northern Cauvery Basin, which on the Indian side has producing wells, and in a basin off the island’s southern coast.

Sri Lanka’s Government has said the seismic data shows the potential for more than one billion barrels of oil under the sea in a 30,000 sq km area of the basin.

Russia’s natural gas monopoly Gazprom and Malaysian State oil company Petronas have held talks with Sri Lanka on potential exploration, and Vietnam and Sri Lanka signed a deal on oil and gas cooperation in October.

In its third quarter results, Cairn India said October-December 2012 saw the Company operating a gross production of over 200,000 barrels of oil equivalent per day. This has helped to reduce India’s crude oil import dependence by almost US$ 1.7 billion and has contributed almost US$ 0.9 billion to the national exchequer.

Cairn India Interim CEO Elango P said in third quarter, revenue grew by 38% to $ 791 million and profit after tax excluding foreign gains grew by 49% to $ 540 million.