Cairn India has struck fresh oil in the Barmer Block in Rajasthan.

The company has made its 26th discovery in the RJ-ON-90/1 block, following a recent policy clarification by the Centre allowing exploration in development blocks, said P. Elango, CEO Cairn India and Member of the Board, said.

“This discovery reaffirms our belief that an aggressive exploration drilling programme will help harness the full potential of the Barmer Basin in Rajasthan.

“However, it is too early to assess the volumes of oil in place. The potential resource base associated with this discovery is under evaluation,” he said.

The Cairn India stock, after hitting a day’s high of Rs 296.15 on the BSE, closed at Rs 290.65

The Management Committee approved exploration work at the RJ-ON-90/1 block on February 14, after which Cairn India, the operator of the block, commenced the drilling of its first exploration well, Raageshwari-South-1, located in the southern part of the block, on February 25.

Technical evaluations indicate approximately 10 m of gross oil column within Dharvi Dungar Formation. Oil has been discovered and tested for the first time in Dharvi Dungar sands in Raageshwari-Tukaram area, where previous discoveries were in the shallower Thumbli sands, Elango said. Cairn is keen to explore the surrendered area of the block, as it finds the Barmer region capable of more output.

The company is in dialogue with the Petroleum Ministry on the matter.

Govt approval

This assessment of Cairn is based on the comprehensive review of the block’s resource potential undertaken by the joint venture — Cairn India and ONGC. Cairn holds 70 per cent in the block and ONGC remaining 30 per cent.

However, Government approval is required to tap more oil as it would mean exploring that area of the block, which the joint venture has relinquished, according to the exploration norms.

The logic behind seeking approval for re-exploration is that at the time of surrendering it, no one knew its potential.

Almost two-third the area of the Rajasthan block — RJ-ONN 90/1 — has been relinquished.

Today, the joint venture has 3,111 sq. km area of the block.

More crude oil would mean reducing dependence on imports. Following a comprehensive review, the Rajasthan block’s resource potential was estimated at 7.3 billion barrels equivalent (oil and gas) gross in-place from the current area, up from 3.1 billion barrels of oil equivalent.

The first estimate of the area had showed a resource potential of 2.5 billion barrels of oil equivalent gross in-place.

Currently, the joint venture produces over 175,000 barrels a day from the Rajasthan block and wants to end the fiscal 2013-14 at a production rate of 2,00,000-2,15,000 barrels a day.

Given the new evaluations of the existing area, the total resource base now provides a basin potential to produce 300,000 barrels a day.

This is equivalent to approximately 40 per cent of the country’s current crude oil production.

(This article was published on April 9, 2013)
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