Harvesting Oil in India's Rajasthan Desert

Abstract

The Thar Desert in India’s western state of Rajasthan is a desolate region characterized by wind-blown sand dunes. The state is a major tourist attraction, drawing millions of visitors annually to tour forts of medieval kingdoms and visit camel fairs. It is here that Cairn Energy, a Scottish oil company, took over a production-sharing contract (PSC) from Shell in 2003 and developed a major oilfield that has recoverable reserves of at least 1 billion BOE. The major oil companies have conducted little wildcat exploration in South Asia. From 1980 to 1991, the majors drilled 8,000 wells in Southeast Asia, but only 12 in South Asia. Indigenous exploration in Rajasthan began with an inconclusive exploration attempt by the government of India in 1955. In 1988, Oil India discovered natural gas near the town of Jaisalmer and has been producing 0.6 million sd m3/d since 1996. Floated on the London Stock Exchange in 1988, Cairn Energy first entered South Asia by signing a PSC with the government of Bangladesh. In 1997, during a swap of properties with Shell, Cairn acquired a 10% interest in the Rajasthan PSC, which Shell had initially signed with the government of India in 1995. The PSC covered block RJ-ON-90/1 consisting of an initial area of almost 12 000 km2—3111 km2 is now included in the development area, with India’s public sector oil company, Oil and Natural Gas Corporation, holding 30% ownership. After the discovery of the Guda field in 1999, Cairn increased its participation to 50% and eventually took over Shell’s remaining share in 2003 at a cost of USD 7.25 million and became the block’s operator. “Drill Till You Drop” Strategy The geology of the block in Rajasthan’s Barmer basin consists of channel sands stacked on top of one another to create a fluvial reservoir that has high permeability (1–25 darcy) and high porosity. From 2004, Cairn adopted a “drill till you drop” strategy. In January 2004, the company made its initial Mangala discovery with the 16th well in the basin. Following the drilling of appraisal wells, 3D-seismic-data analysis, and well tests, Mangala was confirmed as the largest oil discovery in India since 1985. The Mangala reservoir has a 150 m oil column of medium gravity (20–28°API) viscous crude (9–17 cp) with sulfur content of about 0.1%. The crude has high paraffin content that makes it suitable as a secondary feedstock for refineries, but pipelines and trucks carrying the crude require heating and insulation. Up to 2005, the company drilled more than 140 wells in Rajasthan with a yield of 25 discoveries. In addition to Mangala, Cairn’s major discoveries are Bhagyam and Aishwariya, with 22 other fields including Guda, Saraswati, Raageshwari, Greater Raageshwari, and Kameshwari. In August 2009, the Prime Minister of India, Manmohan Singh, joined Cairn Energy Chief Executive Bill Gammell in inaugurating oil production from the Mangala field.