Cairn to sell Gauri gas at $3.42-$3.25 per mmbtu

Vol 6, PW 17 (23 Oct 02) Exploration & Production

THIS WILL INTEREST anyone negotiating with Cairn Energy to buy gas from its Gauri gasfield, on the southeastern edge of offshore Gujarat block CB-OS/2.

Expect to pay a price of between $3.42 and $3.25 per mmbtu, adjusted downward for calorific value. PETROWATCH learns Cairn conducted a market survey to reach this price.

Once production begins, Cairn hopes to sell 40m cm/d. At this rate, the Gauri gasfield should last 10 years, with a 67% recovery factor and a plateau period of four years.

Cairn estimates Gauri contains 120bn cf 'proven' reserves but the CB-OS/2 management committee declared commerciality for the field on a lower estimate of 99bn cf gas in place. "Higher estimates were not considered due to uncertainties likely from the possible presence of internal barriers in the uppermost Babaguru sands," a source tells us.

Sadly, it will be a while before Gauri gas comes to market: Cairns development plan is before the DGH, which wants 'unitised development' of Gauri and the adjacent Hazira gasfield operated by GSPC-Niko. "Gas migration across the boundary to Hazira is envisaged in at least three pays." All the same, Cairn has submitted a $67m draft development plan for Gauri to the oil ministry.

Cairn proposes to put up one six-slot platform and drill four development wells: one vertical, two inclined and one near horizontal well and link them to the Lakshmi LA platform via a 4-km long, 10-inch pipeline. Gas will be received onshore at the Suvali facilities set up to receive gas from the Lakshmi gasfield, also within CB-OS/2.

Cairn has provided for an abandonment cost of about $12m in the Gauri draft development plan.