Continued disappointment for Cairn at KG-OS-6

Vol 7, PW 23 (11 Feb 04) Exploration & Production

Exploration block KG-OS-6 offshore Andhra Pradesh is living up to its reputation as the most disappointing block in Cairn Energys portfolio of Indian assets.

Cairns latest attempt to re-drill an abandoned well on this block has failed. PETROWATCH learns Cairn spudded well KG-6-2 on 4th December using the semi-submersible Atwood Southern Cross.

Target depth was set at around 2,500 metres in water depths of between 600 to 800 feet. Unfortunately for Cairn, geological problems surfaced very soon into drilling.

The rig could not proceed to target depth, says a source. Cairn encountered strong sub surface shallow water flows the same problem it had on earlier occasions.

A source connected with the project adds: We thought we had a technical solution but mother nature was not kind to us. The sub surface shallow water flows, were more aggressive than expected.

Atwood Southern Cross made a final unsuccessful attempt to re-drill the well but on 8th January, Cairn decided it made no sense to continue and abandoned the well. Atwood Southern Cross left its drilling location for Chennai port from where it sailed out on 11th February.

The failure this time was a big disappointment, we are told. We thought we knew how to fix the problem but we did not.

Cairn is still confident the block holds promise. Some of the prospects are very attractive, says a source.

It is difficult to just walk away. Cairn estimates a shallow prospect on the block holds 161m barrels oil equivalent reserves while a deeper prospect holds 3-tcf or 500m barrels oil equivalent.

Cairn can either drop the block or do more technical homework before attempting another re-drill. Both options were placed before the 4th February operating and management committee meeting of the block.

Dont expect a decision soon. Both partners will have to ultimately take a business view on how much more money should be invested.

Cairn and Petrocon (formerly Videocon Petroleum) each hold 50% stake.