Cairn India has won crucial nods to raise output from its largest oilfield in Rajasthan block by 25,000 barrels per day to 150,000 bpd later this month.
The Rajasthan block oversight panel,called Operating Committee (OC),on March 30 approved raising Mangala oilfield production from 125,000 bpd to 150,000 bpd after independent studies confirmed 1.29 billion barrels of oil equivalent reservoir’s ability to produce at higher rates on a sustained basis,sources in know of the development said.
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The upstream regulator Directorate General of Hydrocarbons (DGH) had asked for an OC resolution on output hike before giving a formal nod for production increase,they said.
The issue would now be taken up at the Rajasthan block Management Committee which is headed by DGH and also includes representative of the oil ministry besides Cairn and its parter ONGC,they added.
The final nod was only days away,sources said.
Oil and Natural Gas Corp’s (ONGC) Reserve Estimation Committee too has approved in-place reserves in Mangala and signed on the OC resolution for raising output,they said.
DGH had asked for an independent third party study of the reservoir and a separate report on the adequacy of surface facilities to handle higher output before approving an output increase that has been pending for over six months now.
Houston-based Knowledge Reservoir certified 1.29 billion barrels of oil equivalent in the Mangala reservoir,the second such certification after renowned Gaffney,Cline & Associates (GCA) gave a similar assessment.
Technip in a separate study approved adequacy of surface facilities to handle 175,000 bpd of production (150,000 bpd from Mangala and another 25,000 bpd from Bhagyam oilfield,the second largest of the 25 oil and gas finds Cairn has made in the Barmer basin block in Thar desserts of Rajasthan).
Cairn currently produces over 150,000 bpd of oil from Rajasthan block – 125,000 bpd from Mangala and over 25,000 bpd from from Bhagyam.
After the OC resolution,the company had on March 30 written to the Oil Secretary G C Chaturvedi saying it had commissioned Train-3 or third plant at the Mangala oil processing facility to raise capacity to handle over 175,000 bpd of crude oil.
“Production from the Mangala field can be enhanced by 25,000 bpd with immediate effect by hooking up the spare capacity wells which are lying idle. This does not involve any additional capital expenditure,” it wrote.
Also,the pipeline which transports Rajasthan crude to refiners like Reliance Industries can “safely transport the additional volume of crude oil,” it said.
Cairn informed the Oil Secretary that Mangala offtake rate can be enhanced by 25,000 bpd with immediate effect.
“We are,however,constrained to highlight that delay in approving the increase of production by 25,000 bpd is likely to accrue a loss of revenue of approx. Rs 5 crore per day to the government of India.
“In addition,the Government of Rajasthan would lose the royalty income of approx. Rs 2.5 crore per day. Further,the Government of India will continue to incur foreign exchange expenditure of approx. Rs 12.5 crore per day,due to continuous requirement to import corresponding volume of oil,” it wrote.
Cairn asked the Oil Secretary that it be allowed to immediately enhance Mangala production by 25,000 bpd in “the national interest”,while the process of formal approval continues.
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