Oil exploration program:

CAIRN Lanka to launch second phase

by L. S. Ananda WEDAARACHCHI

CAIRN Lanka (Pvt.) Ltd. will launch its second phase of the oil exploration program after the successful completion of the first phase in the Mannar basin, block SL 2007-01-001.

It includes the acquisition processing and interpretation of 1753 sq. Km 3D seismic data and a three deep water drilling program.

The seismic program exceeded the phase 1 commitment by 20 percent while drilling program exceeded the drilling depth commitment by 50 percent, a spokesman CAIRN Lanka said.

This program led to the discovery of gas with liquid hydrocarbon in the CLPL Dorado-91H/IZ well and CLPL-Barracuda IG/1 well. The third well CLPL-Dorado North 1-82K/1 was plugged and abandoned as a dry hole.

The operations were conducted in keeping with the highest global standards. The successful drilling program.

The first in Sri Lanka in 30 years had established a working petroleum system in the frontier Mannar basin, he said.

CAIRN Lanka has advertised for international providers to supply 3D marine seismic data in the Mannar basin. CAIRN has been given the licence to explore oil and gas in block SL 2007-07-001. According to the agreement between CAIRN Lanka and the Government which is valid for eight years, three oil wells will be drilled during phase one and the fourth and fifth in phase two and three.

Oil exploration is highly capital-intensive and one well alone may cost between US$ 30-50 million and CAIRN invested over US$ 150 million in exploration activities at the end of their first phase, a spokesman for the Petroleum Resources Development Secretariat (PRDS) said

He said that international exploration and production companies (E&P Companies) have shown a keen interest in the exploration work due to the discovery of gas with liquid hydrocarbon.

He said that international oil exploration companies such as ONGC, Gazprom, Chevron and total have shown varying degrees of interest in Sri Lanka petroleum activity. Sri Lanka has held discussions with Russia, Vietnam and the Ukranian governments on oil exploration in the Mannar basin, he said.

Since Sri Lanka does not produces oil, it depends on imports which had cost Rs. 3 billion in 2010 alone which was 40 percent more than in 2009, according to the Central Bank. Since the end of terrorism, the government has launched offshore oil and gas exploration.

Although American and Russian companies explored the Cauvery basin off the Northern shore for oil from 1960's to 1980's only traces were found. However, terrorist violence dampened exploration activities.

There are nearly 30 wells operating on the India side of the Cauvery Basin in the Northern Coast.

The Calgary based Bengal Energy Ltd. has exploration rights for 1362 sq. km. there. Sri Lanka is however optimistic about the prospects of her own oil potential.

In 2001, the CPC and TGSNOPEC signed an agreement to collect 1100 km of 2D seismic data in the Mannar Basin.

The data was acquired in June - July 2001 and a detailed interpretation report was produced by New South Global in 2002 under contract to TGSNOPEC. The report highlighted the petroleum potential of the Mannar Basin and encouraged TGSNOPEC to collect additional 4000 km seismic data in the basin in 2005. These two TGSNOPEC data acquisitions caused exploration companies to show at interest in oil exploration in Sri Lanka.