Cairn to begin drilling across 4 blocks in Assam next month: Deputy CEO

Despite a lack of good quality rigs in the market, Cairn has enough options, he says

Cairn Oil & Gas is set to embark on a new venture in Assam next month. 

The initial phase will see the company drill 10 wells across four hydrocarbon blocks, located along the Assam-Arunachal and Assam-Nagaland borders, Stephen Moore, deputy chief executive officer (CEO), revealed in an interview with Business Standard, on the sidelines of the 2024 India Energy Week.

With an average expected success rate of 40 per cent, the company plans to have two rigs in operation in Assam, for drilling and appraisal, Moore said. 

Moore explained the company’s strategy in case of a discovery. “When there's no uncertainty, you can develop it. But then you need development rigs. We're going to drill 20 wells in that field. If there's uncertainty, we're going to dig 2-3 appraisal wells. As we go through this rig sequence, we will mobilise a second rig,” he said. This approach, he added, would expedite the project's financial realisation.

Cairn holds 7650 km² of acreage with 12 open acreage licensing policy (OALP) blocks and three discovered small fields (DSF) blocks in the Arakan basin in Assam. The acreage has a significant resource potential of up to 1 billion barrels of oil equivalent. It became the first company to commence gas flow from a DSF block in Assam last year when the Hazarigaon field became active.

Enough rigs available

The project, which was expected to commence in February, has faced delays due to lack of high-quality land rigs. Moore pointed out that the issue isn't a shortage of land rigs in India, but rather their quality. "We preferably need local companies to invest in world-class rigs," he said.

Land rigs are used to identify geologic reservoirs and efficiently extract oil or natural gas from them.

Despite lack of availability of land rigs globally, with Saudi Arabia and Abu Dhabi snapping up large numbers, Moore assured that Cairn has sufficient options for the Assam project, having received seven offers for rigs after approaching the market.

New technology used

Cairn plans to deploy modern seismic analysis and processing technology to navigate the Northeast's complex geology. Most of Cairn's blocks are in the folded thrust belt, like that in Kurdistan (Iraq), Italy, and Albania, Moore said.

The company has large-scale full-tensor gradiometry (FTG) aerial surveys that measure the rate of change of gravity in all directions of the field, caused by subsurface geology. “This is better than pure magnetic gravity surveys and gives a much clearer picture of what the structural trends are at the basement level,” he said.

Fracking will not be required in Assam as the wells are deep. Instead, the company will use long horizontal and multilateral drilling, along with coiled tubing drilling, a technique popular in West Asia, Moore said.

Despite these challenges, Hitesh Vaid, chief financial officer at Cairn Oil & Gas, assured that the per-unit extraction cost in the Northeast is not higher compared to other areas like Rajasthan. Cairn aims to leverage technology to improve efficiency, contrasting with public sector national oil companies, such as ONGC and Oil India, which often use outdated rigs.

In other developments, Cairn is not planning an expansion in processing capacity in Rajasthan’s Barmer. Instead, the company will leverage existing facilities to produce more. “Of course, we keep on drilling more wells to ensure the production doesn't go down,” Vaid added.