Cairn plans $33m spend to boost Bhagyam output

Vol 15, PW 26 (12 Jul 12) Exploration & Production

Drastic measures are planned to boost oil production at the Bhagyam oilfield, operated by Anil Agarwal-controlled Cairn India.

Bhagyam is the second largest oilfield at RJ-ON-90/1 in Rajasthan after Mangala but production is hovering at only 21,000 b/d from 37 wells; it also has 13 water injectors. Cairn, we hear, is worried Bhagyam might not achieve its Field Development Plan (FDP) target of 40,000 b/d, even after it drills all 51 oil producers committed in the FDP.

The company has drafted a proposal to spend $33m on drilling 14 oil producers and nine water injectors in 2012-13, dramatically revising upwards the original plan to add only three oil producers and two water injectors. “Bhagyam gave unpleasant surprises after production began on January 19,” recalls an industry source.

“Many wells weren’t meeting expectations.” Cairn realised each well’s ‘drainage area’ was smaller than its initial estimate of 500 metres.

This meant each well tapped less oil, which led to the obvious conclusion it should drill more wells to extract more oil. Cairn expects it might take up to 10 days to drill each new well to 1000 metres TD, using a John Energy rig, stationed at the block for the last two months.

Bhagyam production is expected to rise to a peak of around 35,000 b/d next year, after the proposed wells are drilled and completed. “Bhagyam will remain at this level for at least a year,” we are told.

Cairn’s FDP targets 51 oil producers in total and 30 water injectors. However, the block Management Committee (MC) has yet to approve its plan to increase expenditure at Bhagyam this fiscal.

“Cairn has asked the DGH to hold an MC meeting over this and other issues,” we hear.