Cairn Lanka to Start 2nd Phase of Oil Exploration in Sri Lanka's Mannar Basin. Oil Wells to be Drilled in 2013

08th March 2012, www.island.lk

Cairn Lanka has commenced the second phase of oil exploration in the Mannar Basin and oil wells are likely to be drilled in 2013 after another round of seismic studies.

Cairn Lanka, the wholly owned subsidiary of Cairn India Limited successfully completed the first phase of the exploration campaign on Sri Lanka’s side of the Mannar Basin on Block SL-2007-01-001 and has delivered two back to back discoveries.

According to our sources here, the seismic study has already commenced in the Mannar block, and the seismic vessel Pacific Explorer has begun its seismic activity. The 3D seismic contract has been awarded to Petroleum Geo-Services (PGS). The seismic survey will be followed by a technical evaluation of the data, data interpretation and then with another drilling campaign. An international tender for this seismic programme was floated by the company last year during the first phase of drilling campaign.

Cairn Lanka had spent over US$ 150 million in the first phase of the drilling campaign that resulted in two gas discoveries. The initial estimate for the programme was around US$ 110 million.

The drilling campaign in the second phase will be undertaken during the fair weather window and it is learnt that Cairn Lanka has already initiated its legwork for this second phase with a plan for a deepwater drilling campaign. According to the scope of the international tender, the work programme will involve one firm well and have provisions for three optional wells too, in the Gulf of Mannar. It is likely to commence in 2013, post completion of data interpretation and other pre-drilling tests and studies.

Cairn Lanka has also floated an international tender inviting experienced services contractors to provide services for this deepwater drilling campaign.

The company has invited an international tender bid for the drilling operation. A series of stringent guidelines have been laid out for the contractors who need to comply with, and should have a successful track record to be considered. Special emphasis is also being laid on the contractor’s ability to adhere to the "stringent" health, safety and environmental management requirements.

According to industry sources, the company is looking for a Drillship or Semisubmersible Rig – that is capable of operating in water depths between 800 to 1700 metres. The rig should have a capability to drill a maximum depth of 5500 m.

The first phase of the exploration programme involved the acquisition, processing and interpretation of 1,753 sq km of 3D seismic data and a three well deep water drilling programme. The seismic programme exceeded the phase I commitment by 20% and the drilling programme exceeded the drilling depth commitment by 50%. The first phase of the programme resulted in two successive gas and condensate discoveries: the CLPL-Dorado-91H/1z well and, the CLPL-Barracuda-1G/1 well.

Related Info :
• One Billion Barrels of Oil in Sri Lanka Mannar Basin - Director General of Sri Lanka's Petroleum Resources

• Cairn India Calls for Oil Spill Response Proposals as It Drills First Well off Sri Lanka in August
 
• Sri Lanka's Commercial Production of Oil Could Start by 2017 - Professor Stuart Burley of Cairn India

Cairn India Calls for Oil Spill Response Proposals as It Drills First Well off Sri Lanka in August

11th July 2011, www.lankabusinessonline.com

Cairn India which is exploring for petroleum resources off Sri Lanka has called for proposals for oil spill response equipment and services as it prepares to drill its first well in August this year.

The company announcement said delivery of equipment could be either at Colombo or Chennai in south India indicating its support operation for offshore wells in the Gulf of Mannar might be based in India.

Sri Lankan companies interested in the oil industry business had been hoping to win support contracts for the exploration and subsequent production phase.

Cairn India (CIL) and its subsidiary Cairn Lanka (CLPL) are seeking Expressions of Interest from experienced offshore oil spill response equipment manufacturers and service providers to sell offshore oil spill response equipment to support exploratory offshore drilling.

"CIL and CLPL are exploring an option to buy offshore oil spill equipment which includes protective booms, containment booms, skimmers along with power packs, inflatable storage tanks and beach cleaning kits.

"CIL is looking for delivery of the equipment either at Colombo, Sri Lanka or Chennai, India and storing it in the company warehouse," the announcement said.

"However, CIL/CLPL reserves the right to decide the location of delivery."

The contractor would be required to provide support services to include maintenance and training on use of the equipment for Cairn's oil spill response crew.

Cairn is set to starting drilling three test wells off the island's north-west coast in August.

Related Info :

• Sri Lanka's Commercial Production of Oil Could Start by 2017 - Professor Stuart Burley of Cairn India

• Cairn to Start Drilling for Oil & Gas off Sri Lanka’s Northwestern Coast in July

• One Billion Barrels of Oil in Sri Lanka Mannar Basin - Director General of Sri Lanka's Petroleum Resources

Sri Lanka's Commercial Production of Oil Could Start by 2017 - Professor Stuart Burley of Cairn India

28th June 2011, www.news360.lk

Professor Stuart Burley, Head of Geo sciences of Cairn India says commercial production of oil in Sri Lanka will start by the year 2017.

He said this is taking into consideration that the country succeeds in finding oil in the Gulf of Mannar basin.

Burley who was speaking at a workshop held in Colombo this morning reiterated Cairn’s plans to start oil drilling work in the Gulf of Mannar during this August.

He said, 3 wells have been identified in the Mannar basin to start drilling activities and added that the explorers will drill one well at a time,

Burley says, drilling a well takes over 01 year while the Appraisal and the Development part will take another 4 years, leading up to starting of commercial production.

Cairn is planning to drill a well up to a depth of 3.5 kilometers.

“We believe there is oil and gas at that level” added Burley.

Already Cairn has hired “Chikyu deep-water drill-ship” from Japan to start drilling activities, which Burley says is a world class facility.

He says the cost for hiring a drill-ship per day runs up to US$ 500,000.

According to Burley finding of a “source rock” in Pesale, an area which was tested for possible existence of oil in the seventies is an indication of having oil and gas in the area.

Gulf of Mannar basin and Pesale is located in the same area.

Related Info :

• Cairn to Start Drilling for Oil & Gas off Sri Lanka’s Northwestern Coast in July

• Sri Lanka Oil Exploration in Mannar Basin on Schedule. Tenders for more Blocks by End January

• One Billion Barrels of Oil in Sri Lanka Mannar Basin - Director General of Sri Lanka's Petroleum Resources

One Billion Barrels of Oil in Sri Lanka Mannar Basin - Director General of Sri Lanka's Petroleum Resources

14th March 2011, www.dailymirror.lk

The Director General of Petroleum Resources, Dr. Neil De Silva has said that the Mannar Basin could hold over 1 billion barrels of oil equivalent (boe).

Cairn Lanka which is expected to commence oil drilling in the Mannar Basin by July this year, believes there is more work to be done in the frontier basin to assess the magnitude of resources.

“If Sri Lanka’s drilling program is successful, commercial oil production can be expected by 2014 with a billion barrels,” a recent report on Cairn India’s Oil drilling future quoted Dr. Neil De Silva as saying.

The report said that Cairn India has contracted a deepwater rig from Japan Drilling to embark on a three-well exploration drilling campaign in its frontier deepwater block in Sri Lanka’s Mannar basin (SL-2007-01-001) in June 2011. The exploration area is 3000 sq km with water depths ranging from 400 metres to 1900 metres.

Cairn Lanka, a subsidiary of Cairn India had signed the Petroleum Resource Agreement (PRA) with the Sri Lankan government in July 2008 to explore oil and natural gas in the Mannar Basin with an investment of US $110 million, spread over three years.

According to the Agreement, Cairn will start exploration activities in one of the 8 blocks in the Mannar Basin and the company will conducted a full Environmental Impact Assessment (EIA) as required by the Sri Lanka Central Environmental Authority and Marine Pollution Prevention Authority. Earlier in 2010, the company had also acquired 3D seismic data on 1,750 km2 area of the Mannar basin.

Mannar basin’s two oil blocks have been granted to China and India. Russia’s largest oil company, Gazprom also has indicated plans to join the exploration of offshore oil in Sri Lanka’s Mannar basin.

Related Info :

• Petroleum Resources Development Secretariat (PRDS) - Petroleum Potential Offshore Sri Lanka

• Petroleum Resources Development Secretariat (PRDS) - Exploration History

• Cairn to Start Drilling for Oil & Gas off Sri Lanka’s Northwestern Coast in July

• Sri Lanka Oil Exploration in Mannar Basin on Schedule. Tenders for more Blocks by End January

Cairn to Start Drilling for Oil & Gas off Sri Lanka’s Northwestern Coast in July

13th March 2011, www.island.lk

Cairn India, a unit of British exploration firm Cairn Energy plc, said Friday it plans to drill for oil and natural gas deposits off Sri Lanka’s northwestern coast in July.

In 2008, Cain invested $100 million, spread over three years, to conduct detailed seismic studies and drilling three wells off the coast of Mannar. "Frontier exploration drilling in Sri Lanka is planned to commence in July," a company statement said.

"Logistical preparations and detailed studies are ongoing ahead of drilling later this year." Sri Lanka, which imports all of its oil needs, offered three blocks to investors after surveys showed deposits along the Gulf of Mannar, close to neighbouring India.

Block two, an area that covers around 3,400 square kilometres (1,300 square miles) off Mannar, was offered to Cairn in June 2008.

Sri Lanka allocated the two other blocks to the governments of India and China.

The island spent $3.0 billion in 2010 importing oil, which was 40 percent more than 2009, according to central bank figures.

Decades ago, overseas companies explored areas off Sri Lanka’s northwest coast, but failed to find any oil and gas reserves worth exploiting commercially.

Related Info :

• Sri Lanka Oil Exploration in Mannar Basin on Schedule. Tenders for more Blocks by End January

• Sri Lanka's Mannar Basin Oil Drilling to Continue as Planned by Cairn

• Cairn India Drills 3 Oil Wells in Mannar Basin, Sri Lanka

Sri Lanka's Mannar Basin Oil Drilling to Continue as Planned by Cairn

15th November 2010, www.dailynews.lk, By Sanjeevi Jayasuriya

The work related to oil exploration in the Mannar basin is progressing as per the terms of the agreement entered between Cairns Lanka Limited and the Government, Petroleum Resources Development Secretariat Director General Dr Neil de Silva told Daily News Business.

Cairns Lanka Limited is in the process of finding sub contractors to continue the necessary drillings. The Government called for tenders to offer more blocks and is in the process of searching for a consultant to market these exploration blocks with the Petroleum Resources Development Secretariat, he said.

Cairns Lanka undertook to drill three wells. The drilling process is scheduled to be completed before October 15, 2011. The company is at present looking for contractors to supply goods and services for drilling purposes.

The drilling process to explore oil in the Mannar basin commenced after the detailed study conducted by Cairns. The oil exploration is based on past studies and also fresh studies conducted by Cairns.

Cairns Lanka (Pvt) Limited entered into an agreement in September 2008 committing an initial investment of more than US $ 110 million towards the exploration of hydrocarbons.

Related Info:
Cairn to Drill Sri Lanka's 1st Oil Wells in Mannar Basin in January. International Oil Exploration Tenders to be Called on more Blocks

Cairn India Drills 3 Oil Wells in Mannar Basin, Sri Lanka

Cairn to Drill Sri Lanka's 1st Oil Wells in Mannar Basin in January. International Oil Exploration Tenders to be Called on more Blocks

30th July 2010, www.dailymirror.lk, By Sandun A. Jayasekera

Cairn Sri Lanka (Pvt) Ltd a subsidiary of Cairn India (Pvt. Ltd) will begin drilling the first three oil wells in the Mannar Basin in January, the Petroleum Ministry said today.

Petroleum Resources Minister Susil Premajayantha said Cairn Sri Lanka was calling for bidders globally to undertake sub contracts for the eight-year three-stage oil exploration project, which is estimated to cost of US$172 million or Rs.18 billion.

The Minister said Cairn (India) had conducted three-dimensional seismic surveys and based on the results were now able to begin the drilling in the Mannar Basin. Cairn Sri Lanka will use its parent company know how, machinery and manpower for the excavation of test wells off Jaffna.

Minister Premajayantha said the Petroleum Resources Development Committee (PRDC) on behalf of Sri Lanka had signed six contractual agreements with Cairn Sri Lanka. The Indian company had paid a signature bonus of US$ One million for each contract which deals with current movements, seismic survey, data processing and structural evolution.

“The government has been successful in its tender procedure whereas the Indian company has consented to go for oil exploration in block SL 2007-01-001 in the Mannar Basin on very generous terms. Under the tender agreement Cairn Sri Lanka will pay US$50 million when the oil production resumes at the end of successful oil exploration. The royalty payable by the Indian company to Sri Lanka on the total production is 15 per cent in addition to the local taxes on their income. The Indians must also purchase 15 per cent of the shares of the National Oil Company that will be formed after the last phase of the project.

The agreement that runs for eight years has been planned in such a way that Sri Lanka will gradually enhance its royalty until the full ownership of the oil production is reached,” Minister Premajayantha said.

“In the first part of the bidding in 2007, Sri Lanka offered three blocks -- M2, M3 and M4 in the Mannar Basin when it called for international tenders after an international road show. Cairns (India) won a bid as the only Indian company able to meet the conditions of the tender and asked for block M2,” the minister said.

He said five blocks in the Mannar Basin -- M1, M2, M3, M4 and M5 situated off the North West coast have been lined up for this year’s international tenders.

“The decision on conducting an international road show will be taken at the next ‘Petroleum Resources Development Committee’ meeting.

Sri Lanka has identified and demarcated 12 blocks -- three in the Cauvery Basin (off North East coasts of Sri Lanka), eight in the Mannar Basin (off Western and North Western Coasts) and one in the Southern Basin (off Hambanthota) for oil exploration and will call for international tenders for all blocks except M2.

Related Info:
Petroleum Resources Development Secretariat (PRDS) - Sri Lanka

The Current Status of Oil Exploration of Sri Lanka and Future Opportunities (PRDS - July 2008)

Cairn India Drills 3 Oil Wells in Mannar Basin, Sri Lanka

26th May 2010, www.dailymirror.lk, By Sandun A. Jayasekera

Cairn (India) will drill three wells in block M2 in the Mannar Basin between January – March next year, while Sri Lanka will call international tenders for the rest five blocks within this year, Petroleum Minister Susil Premjayantha said.

“In the first bidding in the first part of 2007, Sri Lanka offered three blocks, C1, C2 and C3 in the Cauvery Basin and five M1,M2,M3,M4 and M5 in the Mannar Basin when it called international tenders after an international road show and Cairn (India) won a bid as only the Indian company was able to meet the conditions of the tender and was offered block M2 for oil exploration,” Minister Premjayantha said.

Cairn (India), the Indian arm of the British energy company, has already conducted Three Dimensional Seismic Tests in the last couple of years and on the results of data collected from these tests, is now in a position to drill oil wells in M2 block, he added.

Cairns (India) will use its know-how and machinery and manpower to drill test wells off Jaffna, he said.

Five blocks in the Mannar Basin, M1, M2, M3, M4 and M5 situated off North West coast have been lined up for this year’s international tenders, Minister Premjayantha added.

“The decision on conducting an international road show for these blocks will be taken at the next ‘Petroleum Resources Development Committee’ meeting scheduled to be held on June 3rd, he said.

Those who are bidding, would have to collaborate a minimum 10% of oil exploration with Sri Lanka National Oil Company, s fully government owned venture. In addition, all contractors are required to pay 35% income tax on petroleum profits and another 10% in divided remittance tax according to the provisions of the Inland Revenue Act.

Sri Lanka has identified and demarcated 12 blocks vis-à-vis three in the Cauvery Basin (off North East coasts of Sri Lanka), eight in the Mannar Basin (off Western and North Western Coasts) and one in the Southern Basin (off Hambantota) for oil exploration and will call international tenders for all blocks except M2.

Sri Lanka Hemas and Dockyard with Singapore's Toll Bid for Oilfield Services of Cairn India

14th May 2010, www.lankabusinessonline.com

Sri Lanka's Hemas group and Colombo Dockyard have teamed up with Singapore's Toll Offshore Petroleum Services to bid for Cairn India's contract for offshore oil field support services, officials said.

"Hemas Holdings, Colombo Dockyard and Toll Offshore Petroleum Services have jointly placed a bid for the offshore supply base for Cairn," Irshad Mushin, director - maritime transportation of Hemas group told LBO.

"We have proposed viable sites in Sri Lanka."

Cairn Lanka, a unit of Cairn India, which is part of Britain's Cairn Energy, has called for expressions of interest and pre-qualification for provision of services to support its exploration effort.

Cairn has called for support for drilling, testing and completion of exploratory wells in a deep-water block in the Mannar Basin off north-west Sri Lanka.

Cairn plans to start drilling test wells by January 2011 to May 2011.

Colombo Dockyard managing director Mangala Yapa said offshore oil explorations in Sri Lankan waters gives good opportunities for both engineering and shipping companies.

"Colombo Dockyard is confident we can be involved in some of the engineering and other logistics requirements, especially because we have a fully-fledged engineering facility within Colombo port," he told LBO.

"Even at present we are repairing many offshore vessels from India's offshore industry."

The yard also builds offshore support vessels and is therefore aware of the requirements, Yapa said.

"Our role would be to provide all possible engineering and other logistical assistance for Cairn along with other partners."

Toll Offshore Petroleum Services is a subsidiary of Toll Asia, which is part of Toll Holdings, a big transport and logistics group headquartered in Australia.

It owns and operates offshore supply bases in Azerbaijan, Cambodia, China and Thailand.

Sri Lankan companies are keen to get Cairn's offshore support contract as it means new business in the new field of oil exploration.

It will also position them to offer similar services when exploration and drilling gets under way in other blocks in the Gulf of Mannar as well as in waters off the northern and southern coasts.

Sri Lankan firms would have to compete with firms in India which has an established offshore oil industry.

Oil explorations firms are expected to source some of their requirements from local industry in order to ensure the benefits of oil are shared in the domestic economy and also provide employment for locals.

Among the services requested by Cairn are anchor handling tugs, supply vessels and offshore supply barges.

Cairn Lanka has also called for rig positioning and site survey services, supply of fuel and water, provision of local logistic support such as cranes, port clearances, boat calls, and offshore supply base services.

Another service requested is air logistics which will provide opportunities for helicopter services offered by local aviation firms, officials said.

Cairn's exploration licence to explore for oil and natural gas in the Mannar Basin covers about 3,000 square kilometres in water depths of 200-1,800 metres.

Sri Lanka Offers More Blocks for Offshore Oil Exploration in North and South

06th April 2010, www.news.lk

Sri Lanka is to broaden its search for offshore oil and offer more exploration blocks in the Cauvery Basin in the island's north as well as the south, the Central Bank said.

These will be in addition to blocks in the Mannar Basin off the north-west coast where Cairn India is searching for oil. The Ministry of Petroleum and Petroleum Resources Development plans to conduct the second licensing round for oil exploration in the near future, the Central Bank said in its annual report.

"A few blocks from the Mannar Basin as well as some blocks from the more prospective Cauvery Basin and the southern offshore basin, would be available for competitive bidding."

Prospects for finding oil and gas deposits are considered good because India has found oil on her side of the Mannar and Cauvery basins.

Cairn India has completed three dimensional seismic surveys of its block in the Mannar Basin and is interpreting the data to find the best sites for test wells.

Cairn India was awarded the contract for oil exploration in block No.2 of the Mannar Basin and has signed a petroleum resources agreement with the government of Sri Lanka.

The company's Sri Lankan subsidiary Cairn Lanka has also called for bids to hire drilling rigs and logistic services to start exploratory drilling in early 2011.

Sri Lanka to Offer More Blocks for Oil Exploration in the Island's North-East and South

11th December 2009, www.lankabusinessonline.com

Sri Lanka is ready to calls for bids for oil exploration in more blocks in the island's north-west as well as the south, Petroleum Resources Minister A H M Fowzie said.

He said he expects more interest this time now that the ethnic war is over and Cairn India has begun seismic surveys in preparation for drilling test wells in the Gulf of Mannar off the island's north-west.

The petroleum ministry has submitted a proposal to the Cabinet of ministers seeking approval to call for oil exploration bids in three more blocks, he told a news conference held to announce Cairn's launch of seismic surveys.

"Very soon we'll call for tenders for more blocks in the Mannar Basin," he said.

"The last time the war was on and the LTTE (Liberation Tigers of Tamil Eelam separatists) were operating in the area. So it was very risky. But now we expect more interest."

Sri Lanka's invitation for bids to explore for oil in the Mannar Basin last year drew only a limited response.

But government forces defeated the Tamil Tigers in May this year, ending a 30-year ethnic war, and raising expectations of a revival in foreign investment.

Cairn India which won exploration rights to one block in the Mannar Basin in the first bid round has said it plans to invest 100 million dollars in the effort.

Fowzie said oil and gas discoveries on the Indian side of the Mannar Basin meant there was a better chance of finding similar deposits on the Sri Lankan side.

Fowzie said he was disappointed that neither India nor China which had been offered a block each in the Gulf of Mannar free of charge had shown interest in exploration.

The Indian government was offered block number one and China block number eight in the Gulf of Mannar.

"India wanted block number two which was given on tender to Cairn which we refused. Now there's a possibility of Cairn India talking to the Indian government and starting exploration in block number one as well.

Fowzie also said his ministry has sought Cabinet approval to call for oil exploration bids in the island's south where he said studies had shown hydrocarbon potential.

"Studies done in the southern province have shown indications of deposits of hydro carbon. I have submitted a Cabinet paper for approval to call for bids."