Cairn plans 'in-fill' wells at depleting CB-OS/2

Vol 14, PW 22 (05 May 11) Exploration & Production

Cairn India wants to reverse declining oil production from the Lakshmi and Gauri fields with a two ‘infill well’ drilling programme at its shallow water block CB-OS/2.

PETROWATCH learns Cairn is currently evaluating EoIs from drillers offering jack-ups for this assignment at the offshore Gujarat block, where it wants to begin drilling in November this year. “Cairn plans to begin drilling the two wells after the monsoon season ends in September,” we hear.

Oil production at pre-NELP block CB-OS/2 has declined rapidly from a peak of 9000 b/d in 2009-10 to around 6000 b/d today. CB-OS/2 is also producing approximately 600,000 cm/d of gas, supplied mostly to BG-owned gas retailer Gujarat Gas.

Cairn wants to drill two infill wells in water depths of up to 40 metres to prevent oil production at the block dropping further to 4000 b/d. Cairn believes the first infill well, once completed, could begin flowing 1000 b/d of oil as early as December this year, while the second could add another 1000 b/d to CB-OS/2 production by January 2012.

Cairn has drawn up a ‘firm’ budget of $78.98m and a ‘contingent’ budget of $25.77m at CB-OS/2 for 2011-12, including the $45.39m cost of drilling the two proposed infill wells, plus $17.65m to cover rig mobilisation and demobilisation. Drilling sources believe Cairn could be forced to spend as much as $150,000/day to hire a rig for its two-well drilling programme and suggests it would be better advised to sub-contract a rig from partner ONGC, which has several jack-ups working at rates under $100,000.

Operator Cairn (40%) shares CB/OS-2 with ONGC (50%) and Tata Petrodyne (10%).