Cairn India tries high-end recovery in Rajasthan block

Cairn India Ltd, petroleum exploration arm of London-listed Vedanta, is focusing on employing high-end enhanced oil recovery techniques, apart from horizontal fracturing or fracking, a technique used to push out oil stuck between rocky layers, to ramp up output from key fields in its flagship Barmer block in Rajasthan.

The company, India's largest private sector crude oil producer, has interests in seven blocks in the country, including three producing assets - Rajasthan, Ravva and Cambay. The onland Rajasthan block with three producing fields - Mangala, Bhagyam and Aishwarya accounts - for 83 per cent of the company's total production of 211,671 barrels of oil equivalent per day.

The Rajasthan block has been operational for more than six years, having produced 300 million barrels so far, and contributes 27 per cent of India's total crude production. However, output has now started declining from the ageing fields. "So, we are doing enhanced oil recovery using a very sophisticated technology. A polymer is injected in the ground, mixed with water, which pushes the oil out faster," Managing Director and Chief Executive Officer Mayank Ashar told Business Standard.

BLACK GOLD

• The Rajasthan block has been operational for six years
• It contributes 27% of India’s total crude production
• However, output has now started declining from the ageing fields

The Rajasthan block's production dipped 3.5 per cent in 2014-15. Production from the Development Area-1, which includes the Mangala, Aishwarya and Raageshwari fields, declined marginally to 147,558 barrels of oil equivalent per day. "We are investing heavily in enhanced oil recovery, so that production can remain constant, which is an accomplishment," Ashar said. He added the company had also discovered huge resources of tight oil, another fuel, for which horizontal drilling and fracking were on. Cairn India is seeking approval from its 30 per cent joint venture partner state-owned Oil and Natural Gas Corporation (ONGC), for implementing the proposal under the Aishwarya Barmer Hill project. "At this point, we have gone ahead with only one project but others will follow," Ashar said. Another major initiative planned to revive the Rajasthan block's production is in the Raageshwari deep gas field, where it will exploit and develop tight gas reserves. Average gas production from the Raageshwari field is expected to increase 56 per cent to 25 million standard cubic feet per day in 2015-16.

Cairn's gross capital expenditure in 2014-15 was Rs 8,256 crore ($1.4 billion). Around 85 per cent of this was invested in the Rajasthan block. For 2015-16, the firm has lowered its planned investment from $1.2 billion to $500 million. Around 45 per cent of this is allocated to the core fields and 40 per cent for growth projects, including Barmer Hill, satellite fields and the Raageshwari field development.