Greater potential for natural gas: Cairn official

Sri Lanka’s Mannar Basin has a greater chance of being endowed with natural gas than oil, a top official of Cairn Lanka, which has established the country’s first working petroleum system in the Mannar Basin said.

“Logically speaking, there is a greater likelihood of gas. But that does not exclude the possibility of oil being there,” Cairn India and Cairn Lanka Director Dr. Sunil Bharati told Mirror Business in a brief interview yesterday.

In October, 2011, Cairn Lanka, a fullyowned subsidiary of Cairn India, announced it had discovered natural gas deposits in Dorado, an exploratory well located in SL 2007-01-001 block in Mannar Basin.

This was followed by a further announcement in November that the firm discovered gas deposits with hydrocarbon potential in the second exploratory well, Barracuda. A third well was also drilled and subsequently abandoned as a dry hole.

Sri Lanka has identified eight blocks for oil exploration in the Mannar Basin. Cairn Lanka has rights for one block while another two blocks have reportedly been offered to China and India, which they are yet to accept. Remaining five blocks are to be tendered shortly.

Cairn Lanka is currently bracing to drill its fourth exploratory well, three months before the original date set to kick off the second phase of drilling, as a result of early availability of a rig.

According to Bharati, the drill ship arrived in the Sri Lankan waters on January 23 and the drilling of the well, named Wellago, is expected to commence in the first week of February.

“It will take about 35 to 45 days to complete the drilling. There is only one commitment well (exploratory well) in the second phase,” he noted.

Talking about the possibilities lying beyond the second phase, Bharati noted that there are several paths that Cairn Lanka could tread along in going forward.

“Depending on the results of the second phase, there could be two or three different paths available to us, as envisaged in the PRA. Either we can choose to proceed to the third phase, which will again require drilling a commitment well and has a time period of one to two years, or not to enter the third phase but enter into an appraisal phase followed by a development phase.”

“If we opt to enter the development stage, we will have to do a detailed appraisal to establish the volume of oil or gas available in the block, which will take one to two years. Only then you will know whether the block is commercially viable,” Bharti noted.

He further added that both paths have timelines clearly defined in the Petroleum Resource Agreement (PRA) Cairn Lanka has entered into with the Sri Lankan government, with six months to one year extension periods.

Commercial production can only take place 3 to 5 years after the appraisal being carried out, as it generally takes 2 to 3 years to set up the required infrastructure.

“If it is gas, it will not be easy. As gas cannot be easily transported and contained. If it is oil, it’s a straight forward pipeline,” Bharati added.