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Cairn puts EOR plans on table for Rajasthan block

Hopes Indian government will soon grant approval for campaign at onshore acreage

Vedanta-owned Cairn Oil & Gas is set to embark on a $1.1 billion enhanced oil recovery campaign at its Block RJ-ON-90/1 onshore Rajasthan, which is likely to lead to 100,000 barrels per day of incremental oil production in 18 months.

Cairn has submitted to the Indian government an EOR field development plan covering the use of Alkaline Surfactant Polymer (ASP) and is hoping to soon secure approval.

“We are in the final stages of approval for the development plan,” chief executive Ajay Kumar Dixit told Upstream.

The full-field ASP EOR plan is expected to significantly improve recovery from the block's Mangala, Bhagyam and Aishwariya (MBA) oilfields.

“With the implementation of ASP EOR we aim to increase the (crude) recovery factor from 36% to over 50%,” Dixit explained, although the extra production will be more expensive.

The current production cost for the Rajasthan asset is about $8 per barrel. However, Dixit said this could increase to almost $15 for the ASP EOR project.

Cairn has already implemented waterflood and a full-field polymer flood EOR programme at the Mangala field that has led to much higher oil recovery from the onshore asset.

The Indian government last year approved a new policy aimed at boosting enhanced recovery for oil and gas projects in an effort to help unlock billions of dollars-worth of hydrocarbon resources over the next two decades.

Under the new policy, the government will charge half of the existing 4500 rupees ($62.6) per tonne cess (tax) on fields for EOR and improved oil recovery schemes.

For gas output through enhanced recovery projects, the government aims to provide a 75% royalty discount to operators.

The Vedanta group is already producing close to 150,000 barrels of oil equivalent per day from its Rajasthan asset and is executing several developments and EOR plans, which are together expected to significantly ramp up hydrocarbon production in six months' time.

Dixit said that with the ongoing projects in Rajasthan, Cairn could achieve production of 250,000 boepd from the onshore block by March 2020.

The company is poised to spend $3.2 billion on its Rajasthan asset over the next two years, out of which several projects are already in their execution phase, he said.

Some of the incremental projects being executed by Cairn in Rajasthan include expansion of its Mangala processing terminal, tight oil and satellite field developments, the Raageshwari deep gas (RDG) development and polymer flood EOR at the remaining fields.

The Rajasthan onshore asset is producing about 80 million cubic feet per day, which is expected to rise to 240 MMcfd by March next year, Dixit added.

In addition, implementation of the full field ASP enhanced oil recovery project is likely to further boost output.

Cairn’s production sharing contract for the Rajasthan asset is valid until 2030 but Dixit said that commercial production is expected to continue beyond then.

“Our seismic and exploration data suggest that the economic life of the field could be more (beyond 2030)” he claimed.

Cairn sees a strong potential for exploring and producing unconventional reserves from the Rajasthan asset but believes that a conducive policy environment will be required from the Indian government to make its production commercially viable.

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