Cairn’s ramp-up goes KG D6 way?

Cairn India could very well become the second energy major after Reliance Industries to promise a pie in the sky to investors and run into rough weather.
Reports have it that the Anil Agrawal (pictured)-steered company is finding it difficult to ramp up production from its Bhagyam oilfield in Barmer in Rajasthan from 25,000 barrels per day (bpd) to 40,000 bpd due to reservoir pressure problems.

It got approvals for the ramp up of the field to 40,000 bpd around January 2012.
The issue may force the company to revise its production guidance in the third quarter results announcement in January 2013.

A company spokesperson refused to confirm or deny the report. Cairn India, which is currently held by UK-based Vedanta Resources, was planning to raise its production from 175,000 bpd to 240,000 bpd by 2013-end.
Sources close to the company said it is still on track to achieve this target, while not mentioning about any problem in the Bhagyam field.

However, a point to note here is that the company has a 670 kilometre pipeline which has the capacity to transport 175,000 bpd.

But Cairn cannot ramp up production unless the 24-hour heated pipeline’s capacity is increased.

“Cairn is currently using DRA technology to increase the capacity of the pipeline, and unless that is ramped up, how can it increase the production from the Barmer fields,” asked an industry source, and added that the target to ramp up Bhagyam to 40,000 bpd is the end of the current fiscal.

Besides, the company has to drill a few more wells and drilling processes are unpredictable and can always pop-up surprises, this person said.

The company currently has three producing fields in the Barmer basin – Mangala, which produces 150,000 bpd, Bhagyam with 25,000 bpd and Aishwariya, which is not commercially producing.