Vedanta-owned Cairn Oil & Gas is preparing to kick-start a key shale exploration campaign in its prolific Rajasthan asset, along with a sizeable enhanced oil recovery (EOR) programme as it aims to significantly ramp up output at the flagship Indian onshore block.

Cairn’s Rajasthan oilfields — Mangala, Bhagyam and Aishwariya (MBA) — jointly produce up to 20% of India’s entire crude output.

The MBA fields have been on stream for more than a decade and are maturing, so the operator is adopting a two-fold strategy to boost production.

Cairn deputy chief executive Prachur Sah says the company is preparing to exploit the unconventional potential of the onshore block while scaling up its investments in key EOR programmes at the MBA fields.

“We are looking into now exploring shale in India, especially in our Barmer basin, and we believe there's a true potential of shale in the Rajasthan block,” he tells Upstream.

India’s largest private-sector operator recently signed an agreement with international services giant Halliburton to initiate a shale exploration campaign in Rajasthan.

An exploration drive targeting the Lower Barmer Hill (LBH) formation in western Rajasthan is likely to start in March.

“Cairn and Halliburton will develop pilot drills to explore the potential of shale in the Barmer basin,” the company recently said.

The Barmer’s current shale potential stands at 3 billion barrels of oil equivalent and, through its partnership with Halliburton, Cairn wants to establish a reserve of 300 million boe, or 10% of the total, it added.

Cairn earlier said it had initiated tight oil production from the block’s nearby Aishwarya Barmer Hill (ABH) region, showcasing the asset’s unconventional potential.

Sah says the aim is to start drilling the first exploration well by the end of March, “and we’ll work with the partners to make it happen”.

Shale has the “potential to be a game-changer for India, similar to what happened in the US”, he adds.

But the execution of shale projects will be costly, Sah says, and will hinge on a supportive shale policy from the government.

The lack of a viable fiscal policy is one of several challenges that have prevented commercial production of shale oil and gas in India.

However, Sah remains hopeful that conditions are ripe for change.

“With crude oil imports above 85% in India, it is imperative for the government to introduce production-linked incentives as well other fiscal benefits to attract investment in shale,” he says.

Cairn is currently in talks with the Indian government to help make shale commercially viable, Sah says, but in the meantime the company has initiated technical work for fast-tracking exploration.

He believes that, given the right policy structure, the company would be able to beat the benchmark around shale production, bringing the breakeven to about $45 per barrel.

Rajasthan is key to Cairn’s plans to produce up to 500,000 barrels of oil equivalent per day from its Indian operations, with likely investments of up to $5 billion over the next few years.

Along with its shale plans, Cairn is expected to devote much of the spending to its MBA oilfields, primarily led by EOR programmes on producing fields.

The operator plans to embark on an almost $1 billion alkaline surfactant polymer (ASP) enhanced recovery programme at the Mangala field, which has been on stream for more than a decade.

Cairn claims the EOR programme would be the largest of its kind in the world.

The Rajasthan block, led by the MBA oilfields, is currently producing about 150,000 boepd and Sah believes the upcoming ASP programme, along with the unconventional campaign, can significantly boost output from the asset.

Cairn hopes to see incremental recovery of 8% to 10% from the Mangala ASP programme in line with its Rajasthan output goals.

“We are fast-tracking it,” Sah says. “The EOR… is quite important to us for ramping up production from Rajasthan.”

The company has completed a pilot project on the planned EOR scheme, along with the key engineering works.

“We are now working on the contracting aspects for the facility. The approval of the management committee shall be taken as part of the execution process in due course,” Sah explains.

The block’s management committee is a key oversight group that includes members from the Indian Petroleum Ministry and all key stakeholders involved in the onshore asset.

Sah notes that ASP programmes of this scale typically take two to three years to implement.

However, the company is “taking a modular concept” that will enable the operator to start incremental production from the EOR scheme later this year.

Full-scale production from the EOR scheme is still expected to take another two years, he adds.

Cairn has implemented waterflood and a full-field polymer flood EOR programme at the Mangala field in the past, which helped boost oil recovery by more than 10%.

It recently started polymer injection programmes in the Bhagyam and Aishwariya oilfields that are said to have yielded positive results.

In 2018, the Indian government 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 policy, the government will charge a relatively lower cess (tax) on fields for EOR and improved oil recovery schemes.

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

Offshore efforts

On the offshore front, Cairn Oil & Gas continues to expand the potential of its Ravva and Cambay assets, which are seen as critical to its plans to increase domestic output in the coming years.

At Ravva, off India's eastern coast, the company is aiming to initiate a seven-well exploration campaign later this year, part of an ongoing effort to boost production rates.

“Over the past few years, we have done an infill drilling campaign in Ravva to boost volumes,” says Sah.

“We are targeting a seven-well exploration and development drilling campaign in Ravva that is expected to start in the next three to four months.”

The company is currently producing about 16,000 boepd from the Ravva block and the new campaign is aimed at boosting near-term volume at Ravva to between 25,000 and 30,000 boepd, as well as establishing more resources through exploration, he says.

Cairn recently signed an agreement with Halliburton aimed at increasing its recoverable reserve from key offshore assets, including Ravva, to as much as 300 million boe, an almost 10-fold increase from the present cumulative 30 million boe, the company said previously.

In addition to Ravva, Cairn’s offshore assets include the Cambay block, off India’s western coast.

The operator also has 51 onshore and offshore exploration tracts in the country that were awarded as a part of India’s Open Acreage & Licensing Policy (OALP).

Sah notes that Cairn has started drilling exploration wells across the Rajasthan, Cambay and Assam basins in the OALP blocks.

“We have already established two discoveries in Rajasthan and Cambay,” he notes.

The company intends to continue drilling across the three regions and is targeting a few additional offshore exploration opportunities in the OALP blocks in the near term.