Cairn upgrades reserve estimates of Rajasthan oil fields

Cairn India CEO Rahul Dhir said the company has raised estimates of oil and gas in place in Barmer fields to 4 billion barrels of oil equivalent from 3.7 billion boe previously. Further,there could be another 2.5 billion boe yet to be discovered.

“We estimate that the fields have a potential to produce 240,000 barrels of oil per day (12 million tonnes per annum),” he told reporters. The company had earlier projected a peak output of 175,000 bpd.

Petroleum Minister Murli Deora congratulated Cairn for the achievement and said the increase in reserves augurs well for energy security of the country.

“I am told that peak output from Rajasthan is now estimated at 240,000 bpd and this increased output will help reduce nation’s reliance on imported crude oil to meet its energy needs,” he said.

India currently imports 75 per cent of its crude needs. Cairn India,a unit of UK explorer Cairn Energy Plc,in December 2004,discovered the Mangala field in the Rajasthan block – the largest onland oil discovery in the world that year.

Mangala,the largest onland oil field in India,was estimated to produce a peak output of 125,000 bpd which has now been revised to 150,000 bpd following more than anticipate oil from some 50 development wells drilled on the field so far.

Dhir said Cairn will commission a pipeline to transport the crude to refineries on the west coast in the second quarter. Currently oil is being transported by road tankers for sale to Reliance Industries and Mangalore Refinery and Petrochemicals Ltd (MRPL)

The main pipeline,which heats the waxy crude to maintain its fluidity,is finished and work on spurs to refinery customers are nearing completion.

Besides Reliance and MRPL,Essar Oil has been added to the list of buyers for Cairn’s oil.

Cairn said the oil potential from this field had been revised upwards to 6.5 billion barrels of oil equivalent from an earlier estimate of 4 billion barrels.

“We have done a comprehensive internal review of the block. We had also asked a US firm DeGolyer and MacNaughton to conduct an independent estimate and it was in line with our own estimates,” Dhir said. “We understand that there is 6.5 billion barrels of oil equivalent to be found and extracted (in Barmer block,Rajasthan).”

Cairn holds 70 per cent stake in the field,while state-owned ONGC holds the remaining 30 per cent. So far Cairn India has invested about USD 4 billion. It will invest another USD 2 billion by 2011.

The company currently produces about 25,000 barrels of oil per day and expects this to increase to 125,000 barrels in the second half of 2010.

Besides Mangala,Bhagyam and Aishwariya are other major fields in the Rajasthan block. The three fields hold 2.1 billion boe in place of which the proved and probable recoverable resource base is over 1 billion barrels. 22 other fields are estimated to hold about 1.9 billion boe in place of which the gross recoverable resource is estimated to be 140 million boe.

“The current estimate of the resource base in Rajasthan provides a basis for our vision to produce 240,000 bpd from the block,subject to regulatory approvals and additional investments,” Dhir said.

The current Mangala production is being processed through Train One. Trains or process plants Two and Three with a combined capacity of 100,000 bpd are targeted for completion in Q2 2010.

He said sales for 143,000 bpd of oil with MRPL,Hindustan Petroleum Corp,Reliance and Essar have been tied up.

“The increase in the Rajasthan resource base supports our vision of greater production potential in the Barmer basin. We remain committed to working with the Government of India,Government of Rajasthan and ONGC to further explore and develop this resource in the most optimal manner to secure the energy needs for our nation,” he said.