Annual Report 2007 in PDF - Cairn Energy PLC

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OPERATING AND EXPLORATION REVIEw Dr Mike Watts, Exploration & New Business Director Phil Tracy, Engineering & Operations Director 25% increase In manGala planned plateau prOduCtIOn tarGet tO 125,000 bOpd 40,000 bopd peak prOduCtIOn In bhaGyam fdp eor Pilot start up In 2009 14 CAIRN ENERGY PLC ANNUAL REPORT 2007 GOOD PROGRESS IS BEING mADE ON THE CIVIL wORkS AND PROCESS FACILITIES CONSTRUCTION CONTRACTS which have been awarded for the rajasthan upstream project. all access roads to the four hundred acre site have been built and work on the civil works on the mangala terminal has started. rajasthan (block rj-On-90/1) (Cairn India 70% (Operator), OnGC 30%) development – upstream good progress is being made on the civil works and process facilities construction contracts which have been awarded for the rajasthan upstream project. all access roads to the 400-acre site have been built and work on the civil works on the mangala terminal has started. mangala will be brought on stream in phases with production commencing in h2 2009. the transportation of the crude will be via pipeline to the coast for which the feed are complete. the long lead procurement process is under way and construction is due to commence in h2 2008. the construction of two purpose-built rigs which will be used to drill the development wells is nearing completion and these rigs will be available in india in the second half of the year. these state-of-the-art rigs will allow the drilling and completing of the mangala wells (some of which will be horizontal), which cairn india intends to use to deliver the first phase of production from the rajasthan fields. a 120 km 2 high definition 3d seismic survey was completed over the mangala field and processing of the data is expected to be complete during 2008. this data will be used for more detailed reservoir characterisation for development drilling and for the application of future time lapse monitoring techniques. an upgrade of the mangala stoiip and reserves and resources has been submitted to the jv partners and the goi. the increase in the 2p stoiip and 2p reserves and resources is 21% and 29% respectively over the original fdp. this represents an increase of 8% and 11% over the figures provided at the time of the ipo of the indian business. Gross stOIIp 2p Gross reserves/ 2p net reserves/ 2C resources resources (mmboe) Cairn d&m Cairn d&m Cairn d&m rajasthan mba fields rajasthan mba eor rj small fields: saraswati 2,054 2,118 685 308 701 308 479 216 491 216 & raageshwari oil/gas 300 144 12 39 9 27 rj other fields 1,397 1,216 72 54 51 38 Total 3,751 3,478 1,077 1,102 755 772 notes: 1. cairn holds a 70% net working interest in rj-on-90/1. 2. the gross proven plus probable and possible (3p) initially in place cairn estimate for mangala is approximately 1,600 mmboe indicating the potential for further volumetric upside. 3. 2p reserves include estimates of expected production during the current production sharing contract (psc) term (14 may 2020 for rajasthan). 2c resources are those volumes expected to be produced outside the current psc term (end of field life) or where development planning or approval is pending. 4. these are current estimates which have not been booked. for booked net entitlement reserves please see the entitlement reserves section on page 129.
Rajasthan, India the increased resource in the mangala field provides a commensurate increase in the production potential of the mangala field. the mangala field is capable of producing at plateau rates of up to 125,000 bopd. this represents an increase of up to 25% on the mangala production rate contained in the original fdp submitted in 2005. the fdp for bhagyam, the second largest field in the block, is pending final approval on the basis of a planned plateau production rate of 40,000 bopd. the bhagyam and shakti fields are contained within a second development area of 430 km 2 . the aishwariya fdp, which has already received government of india (goi) approval, has a planned plateau production rate of 10,000 bopd. an upgrade of the aishwariya 2p stoiip has been submitted to the jv partners and the goi in january 2008. this represents an increase of 37% and 17% over the figures provided at the time of the fdp and ipo respectively. it is expected that this upgrade in stoiip will also result in a commensurate increase in the field reserves. enhanced Oil recovery (eOr) cairn is currently studying the staged and early application of aqueous-based chemical flooding eor techniques for the mba fields. early application of eor in these fields would be designed to extend their crude oil production plateau periods, reduce water production, mitigate future decline rates and potentially accelerate crude oil production. the first phase of laboratory studies for the mangala field was successfully concluded in january 2007. the coreflood data has been successfully matched in a reservoir simulator allowing full field simulation of polymer and alkaline-surfactant-polymer (asp) flooding. a pilot for polymer and asp flooding for the mangala field has also been conceptualised and approvals will be sought in 2008 from the jv partners and the goi to commence the pilot following commencement of production from the field in 2009. the current assessment of the eor resource base is more than 300 mmbbls of incremental recoverable oil from mangala, bhagyam and aishwariya. if the mangala field pilot is successful it is envisaged that eor could be introduced at a field scale in rajasthan in 2013 or even earlier, commencing in mangala and that an increase in plateau offtake will be considered on a field by field basis. the first phase of laboratory work for the bhagyam field has also been successfully completed. the second phase of laboratory work for the mangala field has commenced; this is designed to confirm and refine chemical selection for the pilot project. nOrthern appraIsal area (Cairn India 100%) a declaration of commerciality (doc) for the three discoveries made in this area (kameshwari west 2, 3 and 6) has been approved by the jv partners, along with a proposed new development area of 1,178 km 2 . the doc is now awaiting approval from the goi. these three discoveries have opened up a new play in the barmer hill/lower dharvi dungar sands on the western margin of the rajasthan basin. development – midstream work on the midstream is progressing well with key orders placed. the contracts to ensure timely construction of the pipeline in 2009 have been placed. the contracts for the line pipe, with tracer tube and insulation and for the skin effect heat management system have been awarded. the orders for gas engines for the heating stations, export pumps and drivers and main block valves have also been awarded. the engineering procurement contract (epc) for the pipeline has been issued, as has the epc for land development of the viramgam terminal. site preparation work commenced at the viramgam terminal site in mid february 2008. the process of obtaining access to the land on which the pipeline will be built is well advanced under the rou process in gujarat and rajasthan. the land for all eight heating stations in rajasthan and ten stations in gujarat along the route of the pipeline has been purchased, as well as land for the viramgam terminal. discussions are ongoing with the goi regarding the potential inclusion of the midstream infrastructure within the fdp for cost recovery purposes. CAIRN ENERGY PLC ANNUAL REPORT 2007 15
Page 1 and 2: ANNUAL REPORT & ACCOUNTS 2007 CAIRN
Page 3 and 4: CAIRN is an edinburgh based oil and
Page 5 and 6: CAIRN INDIA performance First comme
Page 7 and 8: 2000 lakshmi disCovery 2001 sarasWa
Page 9 and 10: THE RESTRUCTURING OF THE GROUP INTO
Page 11 and 12: ajasthan midstream the government o
Page 13 and 14: Cambay Basin, India CAIRN ENERGY PL
Page 15: Cairn india assets 30% 30% 49% 40%
Page 19 and 20: Detail heading here relore min ullu
Page 21 and 22: uk (West Of shetland) Block 214/19
Page 23 and 24: nePal the security situation in nep
Page 25 and 26: angladesh reserves sangu gross 2p r
Page 27 and 28: activities in all operated blocks.
Page 29 and 30: 2007 marked the beginning of a new
Page 31 and 32: key financial performance indicator
Page 33 and 34: CAIRN INDIA CAPITAL EXPENDITURE FOR
Page 35 and 36: 3 9 12 4 8 1 Sir Bill Gammell, Chie
Page 37 and 38: 2007 ACCOUNTS Risk Factors 36 Corpo
Page 39 and 40: RISk FACTORS CONTINUED The developm
Page 41 and 42: RISk FACTORS CONTINUED Corporate Re
Page 43 and 44: CORPORATE GOVERNANCE STATEMENT CONT
Page 53 and 54: DIRECTORS’ REPORT CONTINUED At 31
Page 55 and 56: DIRECTORS’ REPORT CONTINUED Elect
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Page 59 and 60: DIRECTORS’ REMUNERATION REPORT Re
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DIRECTORS’ REMUNERATION REPORT CO
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DIRECTORS’ REMUNERATION REPORT CO
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INDEPENDENT AUDITOR’S REPORT TO T
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PRINCIPAL LICENCE INTERESTS ASIA In
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GROUP INCOME STATEMENT For the year
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BALANCE SHEETS As at 31 December 20
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NOTES TO THE ACCOUNTS For the year
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NOTES TO THE ACCOUNTS CONTINUED Net
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NOTES TO THE ACCOUNTS CONTINUED 34.
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RESERVES Direct Direct working enti
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NOTICE OF ANNUAL GENERAL MEETING No
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NOTICE OF ANNUAL GENERAL MEETING CO
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GLOSSARY OF TERMS CONTINUED TECHNIC
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