Cairn may be sitting on a big gas find in Rajasthan

Preparations for a major processing plant suggest a significant discovery

Rajasthan may come to the rescue of gas-based industries, with Cairn India’s Barmer fields showing significant blue fuel prospects. Though the company has not disclosed the potential, it is working on a new plant at the Raageshwari Gas Terminal to process up to 8.5 mmscmd (million standard cubic metres a day) of the fuel.

This, according to industry trackers, points to significant gas resources in the block, south of the Barmer acreage.

Extension of contract

If Cairn and its block partner, ONGC, prove high gas prospects, they can get a 10-year extension for the asset. Although the production-sharing contract is valid till May 14, 2020, the joint venture has approached the Ministry seeking an extension with an eye on making future investments; it is yet to hear from the Ministry.

The contractor may not have a problem getting a five-year extension as the production-sharing contract for the block allows initial extension of five years.

However, a 10-year extension is allowed if the block’s gas sales profile extends beyond 2020. The contractor is also eligible for an indefinite extension subsequently.

Cairn-ONGC has drilled two high-impact prospects to test potential gas accumulation in the area. The results are encouraging and testing is underway, a source said. At present, the block produces only a small quantity of gas.

With output from the country’s largest gas fields in the east coast seeing a steep decline and the contractors unable to curtail the drop, power projects dependent on gas have been hit.

Any incremental addition to the domestic production will benefit the industries dependent on this fuel.

Pipeline system

Earlier this month, the joint venture invited expressions of interest under the international competitive bidding process from contractors (Indian and international) for upgrading the gas transportation facility.

Also, as part of the Rajasthan Gas Development Project, the ONGC-Cairn venture intends to install a natural gas pipeline system to take the gas to the nearest grid. An international expression of interest has been floated for this. The project involves installation of a natural gas trunk pipeline system from the Raageshwari Gas Processing Terminal, Barmer, to Palanpur, Gujarat, running over 200 km.

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