Cairn to spend $150 million on 10 exploratory wells in Andhra Pradesh

The company will start drilling three wells at Palar, starting early next year

Cairn India will be taking up exploratory and appraisal drilling of ten wells in Palar block at the coast in Nellore district Andhra Pradesh with an investment outlay of $150 million.

An Expert Appraisal Committee (EAC) under the Ministry of Environment, Forests and Climate Change examined and gave its nod to the proposal under Coastal Regulatory Zone (CRZ) perspective for drilling to Cairn India. The project was granted environmental clearance in 2011.

The PR-OSN-2004/1 block has been awarded by the government during NELP-VI licensing round in 2007 for hydrocarbon exploration. Exploration activities will be carried out according to the Production Sharing Contract (PSC) signed between CIL and the Centre, the minutes of the meeting of EAC held last month said.

"Estimated project cost: $15 million per well...The EAC, after deliberations and verifying the facts regarding location of the exploratory/appraisal drilling wells, plotted by the project proponent (Cairn India), approved the project from CRZ perspective, subject to the terms and conditions stipulated by the APCZMA (Andhra Pradesh State Coastal Zone Management Authority).

The Committee further desired that the Ministry may forward their recommendations to the sectoral IA Division for revising the environment clearance accordingly," the EAC said.

When contacted, a Cairn India official said it will be taking up three wells in the first phase.

"To begin with, we plan to drill three wells at Palar, starting early next year," the official told PTI.

PR-OSN-2004/1 block is part of the Palar basin. It is located in the Bay of Bengal in the continental shelf area along the coast of Andhra Pradesh and Tamil Nadu.

Total area of the block is 9,416.54 sq km, out of which approx 4,000 sq km has been declared as no-go area as restriction on drilling activity has been imposed by the Department of Space, due to presence of Shri Harikota Satellite Launch Centre along the western block boundary.

Based on results of 2D and 3D seismic survey done in 2008-2009, eight hydrocarbon leads are considered prospective in the block, the EAC said.

"The employment potential for the exploration and appraisal phase is very limited as highly skilled manpower will be involved in drilling operations. If production operations start after successful exploration and appraisal, local employment is possible," the EAC minutes added.