The Hindu Business Line : Cairn to invest Rs 11,000 cr more in Rajasthan project

New Delhi, Oct. 15 To begin extracting its Rajasthan crude from the second half of 2009, Cairn India Ltd plans to further invest Rs 11,000 crore between 2008 and 2009 in the project.

A senior Cairn official said, “The company has already invested nearly Rs 4,000 crore in the project and is in the process of finalising the funding for the further investments.”

The official told Business Line that the development project includes a modern processing terminal at Mangala along with a 600-km evacuation pipeline in the West Coast. “The total capex at the end of 2009 is estimated to be at $ 1.8 billion,” he said. Cairn has already completed the exploratory drilling and plans to drill over 100 development wells through the length of the project. The company plans to drill 20 such wells initially.

Cairn has recently procured two customs made mobile drilling rigs to start flowing the oil from its Mangala, Bhagyam and Aishwariya (MBA) fields in Barmer Basin. The rigs movement from the port – Mundra and Haldia – has been initiated. The developmental drilling will begin later next month, he said.

Production will first start at the Mangala field. At peak production the Rajasthan fields are expected to produce 175,000 barrels a day of oil (bopd).

QUALITY PARAMETERS

Dispelling concerns on the quality of crude, he said, there are 94 varieties of crude that are heavier than Mangala crude, and 31 that are more viscous. Crude oils have a vast array of properties, and there are various definitions for ‘light’ and ‘heavy’ oil. The most common oilfield parameter used to define oil density is the API gravity. “The Mangala crude from Rajasthan is a 27 degree API good quality sweat crude with low sulphur content. It is comparable to many of the crude currently imported by the domestic refineries,” he said.

Regarding the measures taken by Cairn that would not only cut cost but also yield higher revenues both for the State Government and the company while aiding faster production, he said, “the oil handling capacity of Mangala Processing Terminal (MPT) has been increased to 175 kbopd from 100 kbopd to handle MBA plateau production rate.”

The MPT fluid handling capacity of 400 kbfpd was originally envisaged to be handled through four processing trains (channels through which crude is separated from other products), now this is planned to be achieved through three trains thereby substantially reducing the expenditure through innovative process and engineering solution. Effective reduction in the cost is to a tune of $135 million (at 2008 cost). The well pads are designed in a way to drill cluster of wells from each pad as against well individual pads which has optimised the company’s capex towards land, infrastructure and infield pipelines.