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Cairn India wants to exploit the maximum returns from its prolific Barmer oilfields in Rajasthan. The company is undertaking a $580- million (about Rs 3,000 crore) Enhanced Oil Recovery (EOR) programme, simultaneously with its ongoing exploration activities.
EOR is a generic term for techniques to increase the amount of crude oil that can be extracted from an oilfield. Many explorers do it toward the later life of the field, but Cairn is doing this in the initial period of production.
Basically, it (EOR) extends the plateau of the field, and because Barmer is an onshore block, it is economical, said P. Elango, CEO, adding that “Our view is simple. If something would work out in the secondary phase, nothing stops you from doing it from day one. There is another objective, which is that we know there is an end period. Therefore, the need is to see how you can expedite the search.”
Ultimately, EOR is done when it gives ensured end recovery, he told Business Line . “In Barmer, it is being done in the Mangala field and we are looking at how we can extend it to other areas. We are looking at Bhagyam, Aishwariya in the future as well. Rajasthan is a classic reservoir for effective deployment of EOR,” Elango said,
The Barmer field has a potential of 300,000 barrels a day of oil and gas. At present, it has clearance to produce up to 200,000 barrels of oil equivalent (both oil and gas). Cairn completed four years of production on August 29 in Barmer and is now producing 180,000 barrels of oil and some gas.
The EOR programme in the preliminary phase has shown 7-8 per cent additional recovery. “Approvals of Cairn India and our partner ONGC boards for the programme are there. Now, we will go to the Directorate General of Hydrocarbons. Once we get the clearance, we are looking at fully implementing it next year,” Elango said.
On the regulatory hurdles that contractors in India face, Elango said: “Currently, the focus is on protecting profit petroleum rather than promotion domestic oil production. It is an issue that needs to be addressed.”
For instance, take Rajasthan fields, where the cost of production is $3 a barrel and over 80 per cent of what is generated goes back to the Centre, he said. Asked whether Cairn also faces issues with block management committees, he said these should function like a board of a company, as it has representatives of all stakeholders. The focus should be on what is good for the asset, Elango added.
During the time of acquisition of majority stake from Cairn Energy, the Vedanta Group had given up all arbitrations and also rights to do so in the future. Asked if this has had negative impact on Cairn’s operations today, Elango said: “Essentially in the context of Rajasthan, the scope for differences has narrowed down. There is complete commercial alignment between Cairn and ONGC.”
Rajasthan is the only field in the country which can provide incremental production. “Having sorted out earlier arbitration issues on cess and royalty, we do not see any scope for conflict on other issues,” he said.
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