Cairn India Annual Report | 2011 - 12

BUILD I CONSOLIDATE I DELIVER
Annual Report and Financial Statements 2011-2012

FY2012

Q1 Mangala Development Pipeline
fastest growing energy company in
Asia and the fourth fastest growing
04 Management Speak Internal Controls and their Adequacy
Abridged Financials
44
45
Consolidated Balance Sheet
Consolidated Statement of
112
113
Average daily gross operated Project declared runners-up in the world at the Platts Top 250 Board of Directors 02 Business Risks 46 Profit and Loss
production at 171,801 boe in “Project of the Year” award Energy Company Awards 2011 at Chairman’s Letter 04 Corporate Social Responsibility 48 Consolidated Cash Flow 114
organised by Project Management the International Energy Week, Managing Director and CEO’s 06 Statement
RJ-ON-90/1
Saraswati field commenced
International Singapore Letter
52 Corporate Governance Notes to Consolidated Financial
Statements
116

production at the end of May 2011 Sri Lanka
CLPL-Dorado-91H/1z well was the
Rajasthan Operations bagged 12
awards in the “Silver Jubilee Mines 08 Management Analysis
Discussion & Report on Corporate Governance 54
Glossary 147

More than 11 million barrels (mm first ever exploration well drilled in Safety Week” function at Bikaner, Additional Shareholder 63
bbls) of crude oil safely delivered Sri Lanka in 30 years and also the Rajasthan under the aegis of the Achievements 10 Information
through the pipeline first with a hydrocarbon discovery Directorate General of Mines Safety The Rajasthan Project 12 Certificate of the MD & CEO 67
(DGMS) Global Hydrocarbon Resources 18 and Dy. CFO
Gross cumulative Rajasthan Discovery and establishment of a Q4 Well Services and Production 20 Auditor’s Certificate 68
development capital expenditure working hydrocarbon system in the Optimisation Directors’ Report 69
stood at US$ 3,115 million Mannar Basin; success in the first The Mangala Processing Terminal 24

KG-ONN-2003/1
well of the three well programme
Q3
RJ-ON-90/1
Bhagyam field commenced
The Mangala Development Pipeline
Rajasthan Sales
26
28 76 Audited Financial
Statements
The JV entered Phase-II of the production on 19 January, 2012 Financial Overview 29
exploration period Other Producing Assets 30 Auditors’ Report 78
The Vedanta Group now holds 59% Marginal Oil field Raageshwari Explore, Discover and 32 Balance Sheet 81
Ravva of the issued share capital of the commenced production on 8 Add Value Statement of Profit and Loss 82
Infill drilling campaign completed; company March, 2012 Human Resources 36 Cash Flow Statement 83
infill programme met the objective Health, Safety, Environment 39 Notes to Financial Statements 85
of slowing down production decline RJ-ON-90/1 Rajasthan potential resource for the and Assurance Auditor’s Report on Consolidated 111 CONTENTS
Aishwariya field development block is now estimated at 7.3 bn boe Financial Statements Annual Report 2012
Cumulative crude sales in excess of underway; EPC contractors engaged gross in-place from 6.5 bn boe gross
50 mm bbls to Indian refiners in-place
KG-ONN-2003/1
Q2 Drilling of an exploration well Following positive results from the
ongoing to appraise the Nagayalanka EOR polymer pilot and a decision to
discovery submit a Field Development
Average daily gross operated Plan (FDP), 70 mm bbls booked as
production at 169,944 boe Sri Lanka gross proved and probable reserves
Cairn India is one of the largest independent oil and gas exploration and
Completed Phase I exploration in the production companies in India. Cairn and its JV partners’ account for more
Cairn India shareholders approve frontier Mannar Basin. Three well Sales arrangements renewed with
the acceptance of conditions drilling campaign resulted in two buyers for volumes in excess of than a fifth of India’s domestic crude oil production. It has been operating
imposed by the Government of successive discoveries, Cairn Lanka 175,000 bopd
India (GoI) for the Cairn PLC and notifies the Government of Sri Lanka
in India for more than fifteen years. Cairn India’s producing assets are in
Vedanta transaction of its intention to enter Phase 2 of Others Rajasthan, Cambay and Ravva. It has a total of 10 blocks in its portfolio
the exploration period in the block The Cairn India Dividend Policy was
RJ-ON-90/1 approved by the Board of Directors. in three strategically focused areas.
Completed two years of production Others The aim is to maintain dividend
from the Mangala field The company was adjudged the payout ratio at around 20% of
annual consolidated net profit

2 I CAIRN INDIA ANNUAL REPORT 2011-12 CAIRN INDIA ANNUAL REPORT 2011-12 I 3
BOARD OF DIRECTORS BOARD OF DIRECTORS

From left to right, seated: Mr. Navin Agarwal,
Mr. Aman Mehta, Mr. Naresh Chandra

From left to right, standing: Mr Rahul Dhir,
Mr. Tarun Jain, Dr. Omkar Goswami,

Board of Directors Ms. Priya Agarwal, Mr. Edward Story

MR. NAVIN AGARWAL August, 2006. Mr. Dhir has over 25 years Committee on Corporate Governance, MR. AMAN MEHTA School of Economics. He is a D. Phil with Ogilvy & Mather and in Human
Chairman and Non-Executive Director of experience in the Oil and Gas sector India’s Ambassador to the USA, Senior Non-Executive and Independent Director in Economics from Oxford University. Resources with KornFerry International,
covering technology, finance and business Advisor to the Prime Minister, Governor He has taught in several academic Vedanta Resources and HDFC Bank.
Mr. Navin Agarwal, 51, is a Bachelor in leadership. Mr. Dhir started his career as of Rajasthan, Cabinet Secretary to the Mr. Aman Mehta, 65, is an economics institutions in India and abroad; edited
Commerce from Sydenham College in an oil and gas reservoir engineer before Government of India, and Chief Secretary graduate from Delhi University. He has one of India’s best known business MR. TARUN JAIN
Mumbai, India. He is the Deputy Executive moving into investment banking. He has to the Government of Rajasthan. A reputed over 35 years of experience in various magazines; was the Chief Economist of Non-Executive Director
Chairman of Vedanta Resources plc and worked at SBC Warburg, Morgan Stanley administrator and diplomat, Mr. Chandra positions with the HSBC Group. Mr. Mehta the Confederation of Indian Industry;
was appointed to its Board in November and Merrill Lynch. Before joining Cairn serves as an independent director on the occupies himself primarily with corporate and is the Executive Chairman of CERG Mr. Tarun Jain, 52, is a graduate from the
2004. Mr. Agarwal has played a key role India, he was the Managing Director and boards of a number of companies. governance, with Board and Advisory roles Advisory Private Limited, a consulting Institute of Cost and Works Accountants
in strategic planning for Vedanta, and Co-Head of Energy and Power Investment in a range of Companies and Institutions and advisory firm. Dr. Goswami serves of India and a fellow member of both
drives the execution of organic growth Banking at Merrill Lynch. MR. EDWARD T STORY in India as well as overseas. Formerly, he as an independent director on the board the Institute of Chartered Accountants
and acquisitions. He also oversees Non-Executive and Independent Director has been a Supervisory Board member of a number of companies and has of India and the Institute of Company
capital raising initiatives, global investor Mr. Dhir holds a degree in Bachelor of of ING Group NV and a Director of Raffles authored various books and research Secretaries of India.
relations and talent development at the Technology from the Indian Institute Mr. Edward T Story, 68, holds a Bachelor Holdings, Singapore. He is also a member papers on economic history, industrial
management level, and has over 25 years of Technology, Delhi; MSc. from the of Science degree from Trinity University, of the governing board of the Indian economics, public sector, bankruptcy He is the Director of Finance of Sterlite
of experience. He chairs the Vedanta’s University of Texas at Austin and MBA San Antonio, Texas and holds a Masters School of Business, Hyderabad and a laws and procedures, economic policy, Industries (India) Limited. Mr. Jain
group Executive Committee. In this role, from the Wharton Business School in degree in Business Administration from member of the International Advisory corporate finance, corporate governance, has over 27 years of experience in
he provides strategic direction and guides Pennsylvania. the University of Texas with an honorary Board of Prudential of America. He has public finance, tax enforcement and legal corporate finance, accounts, audit,
the sharing and implementation of best Doctorate degree by the Institute of had a long association with INSEAD where reforms. taxation, secretarial and legal matters.
management practices across the group. MR. NARESH CHANDRA Finance and Economics of Mongolia. He he was a member of their Indian Advisory He is responsible for Sterlite’s strategic
Non-Executive and Independent Director is the Chairman of the North America Council. MS. PRIYA AGARWAL financial matters, including corporate
MR. RAHUL DHIR Mongolia Business Council. Mr. Story Non-Executive Director finance, corporate strategy, business
Managing Director and CEO Mr. Naresh Chandra, 77, is a post has more than 40 years experience in DR. OMKAR GOSWAMI development and M&As.
graduate (MSc. in Mathematics) from the international oil and gas industry Non-Executive and Independent Director Ms. Priya Agarwal, 22, has done B.Sc.
Mr. Rahul Dhir, 46, joined Cairn India as Allahabad University and a retired IAS and is the founder, President and Chief Psychology with Business Management
an Additional Director and was appointed officer. Previously, Mr. Chandra was Executive Officer of the London Stock Dr. Omkar Goswami, 55, holds a Master from the University of Warwick in the UK.
as the Managing Director and CEO on 22 Chairman of the Indian Government Exchange listed SOCO International PLC. of Economics Degree from the Delhi She has experience in Public Relations

MANAGEMENT SPEAK MANAGEMENT SPEAK

Chairman’s Letter We are witnessing continuous global
economic uncertainty. Global economy,
dividend payout ratio of around 20 per
cent of the annual consolidated net
Government of India. Despite the current
economic uncertainties, the outlook
though recovering, has been put profits to our shareholders. for oil price remains good and we are
Dear Shareholder, under threat by the Eurozone’s preserving our investment trajectory.
financial turbulence. These prevailing We operate in an industry, where our
This is my first year as Chairman. uncertainties have subdued the oil commitment to the health and safety We are proud to produce energy for India.
markets with the resultant impact on of our people and sustainability of Jai Hind!
I am delighted to have taken
prices and volatility. We are living in a the environment and communities in
over the Chairmanship of your very interdependent world. Developing which we work, are very critical. I am
Company and would like to thank economies like India are especially committed to meet our world-class
my predecessor, Sir Bill Gammell, vulnerable to volatility in oil prices – standards in safety and operational
for his exceptional stewardship our import dependence is increasing. excellence, and I am quite confident
of the Company. Cairn India is With expected growth in demand for that everyone in Cairn India joins me
oil, it would be critical for the nation to in that commitment. Navin Agarwal
a great company with a very
secure energy supplies. Chairman
well established track record. The support of the Government of
The performance of Cairn India Your Company’s world class assets in India, the state governments, our Date: 20 April, 2012
is testament to the strength of Rajasthan have played a significant joint venture partner ONGC, local
our people. Their unrelenting role in securing nation’s energy communities and key contractors has
commitment is admirable. supplies, to the nation’s exchequer, been a key enabler. I personally thank
and to the development and income all for their help. On your behalf, I
Following the completion of the
generation in the states of Rajasthan also wish to thank all employees of
Vedanta Group’s purchase of and Gujarat. During the year, we your Company for their focus and
the majority share in Cairn India reduced oil imports by US$ 6 billion. commitment on finding and producing
Limited, your Company is well energy safely, reliably and efficiently.
poised for its next phase FY2012 was an exciting year for
of growth. your Company. Cairn India reached I remain confident that we will
an important milestone: crude oil continue to meet India’s energy
production from the Rajasthan block challenges and deliver enduring value
touched 175,000 barrels of oil per for our shareholders. With the talent
day (bopd). Similarly, your Company and commitment of the people of
also commenced production from the Cairn India, we are strong, resilient,
Bhagyam, Raageshwari and Saraswati and well-positioned for the future.
fields in Rajasthan.
Looking forward to FY2013, we remain
Your Company’s international foray committed to operate our business
met with successes. The discoveries in efficiently. Your Company is now in
Sri Lanka were the first in 30 years. We a strong position to work towards
have now entered our second phase of basin production potential of 300,000
exploration. bopd, subject to further investments
and approvals from our Joint
Your Company’s Board of Directors has Venture partner, the Oil and Natural
approved its dividend policy. We aim a Gas Corporation (ONGC) and the

MANAGEMENT SPEAK MANAGEMENT SPEAK

Managing Director The chapter on Management Discussion
and Analysis gives the details of your
place supports our vision of producing
300,000 barrels of oil per day (bopd)
There is more to deliver. With the
much needed correct alignment
Company’s operations during the year. In out of Rajasthan. between your Company on the one
& CEO’s Letter this letter, allow me to highlight some that
have brought me great satisfaction as this • On the exploration front, we have
hand, and its Rajasthan JV partner,
ONGC, and the Ministry of Petroleum
Company’s Managing Director and CEO. had two sets of discoveries: (i) the and Natural Gas, I am confident that
Dear Shareholder, We have seen safe operations across all frontier exploration programme more will happen in the years to come.
your Company’s assets — with a rigorous in the Mannar Basin in Sri Lanka Just as I am confident that the new
focus on health, safety and environment opened real possibilities in an entirely majority shareholder, the Vedanta
FY2012 was truly a terrific year
(HSE), asset integrity and operating new geography, and (ii) our success Group, will do all that is necessary to
for your Company, as the business effectiveness. I am proud to inform you in Nagyalanka has established accelerate growth, seek new assets,
delivered on all fronts — operations, that all the assets had over 98 per cent hydrocarbons in the onshore part develop greater exploration potential,
projects, explorations and financial plant uptime with high standards. The of the KG basin. and create an even more robust
numbers – while in the midst of latter was evident in the high operational foundation for an enterprise that the
considerable on-going uncertainty. uptime and low operating costs — • The business has real sustainable country can, and should, be proud of.
resulting in a high EBIDTA. potential — as evidenced by our
This speaks volumes about the
ability to replace 175 per cent of our
robustness of the organisation • Despite numerous challenges, the production.
and its commitment. Bhagyam development was completed
and the production started in January • We are uniquely placed to contribute
2012. Integrated production facilities to India. In FY2012, the assets Rahul Dhir
were scaled up to support production operated by Cairn India contributed Managing Director and CEO
in line with a unified block offtake US$ 2.4 billion to the exchequer.
capability. And oil production from these assets Date: 20 April, 2012
helped reduce oil imports by over
• The polymer phase of EOR enhanced US$ 6 billion.
oil recovery (EOR) pilot at Mangala
has been successful; and your Board • Average daily gross production
of Directors has approved the field increased by 16% — from 149,103
development plan (FDP) for a full field barrels of oil equivalent per day
implementation of polymer injection in (boepd) in FY2011 to 172,887 boepd
Mangala. As a consequence, we have in FY2012.
been able to convert 70 mm bbls from
contingent to 2P reserves. This will • We have also done well financially.
be one of the largest polymer flood Revenues grew by 15.4% to Rs.118,607
projects in the world — and illustrates million in FY2012. EBIDTA rose by
how Cairn India is using innovative 10.7% to Rs.92,544 million. PBT
technologies to enhance recovery and increased by 22% to Rs.84,235
create value for all stakeholders. million. And PAT rose by 25% to
Rs.79,378 million.
• In Rajasthan, extensive technical
studies have highlighted over 3.1 billion I would say that Cairn India has
barrels of oil equivalent (bn boe) in delivered. To the nation. And to its
exploration potential. This, along with shareholders.
the 4.2 bn boe of discovered oil in-

MANAGEMENT DISCUSSION AND ANALYSIS
8
MANAGEMENT DISCUSSION AND ANALYSIS

51
MANAGEMENT
DISCUSSION &
ANALYSIS

FY2012 ACHIEVEMENTS MANAGEMENT DISCUSSION AND ANALYSIS

FY2012 saw many Rajasthan, crude oil sales earlier estimate of 2.5 bn boe
achievements in Cairn India agreements have been renewed gross in-place to 3.1 bn boe gross
Limited (‘Cairn India’, ‘CIL’ with buyers for volumes in excess in-place. The Rajasthan recoverable
or ‘the Company’). Some of of 175,000 bopd for FY2013. risked prospective resource is
now estimated at 530 mm boe, an
these were:
increase of 112%.
Higher output from all
Completion of Vedanta’s operations in India. The
average daily gross operated Higher production potential
purchase of the majority
production in FY2012 from in Rajasthan. The total resource
share in Cairn India. With
Rajasthan, Ravva and Cambay was base in Rajasthan now provides
effect from 8 December, 2011,
172,887 barrels of oil equivalent a basin potential to produce
the Vedanta Group became the
per day (boepd). The average price 300,000 bopd, subject to further
promoter of the Company.
realisation was US$ 102.7 per boe. investments and regulatory
approvals. This is equivalent to
Approval of Dividend Policy. approximately 40% of India’s
Higher revenue and profits. current crude oil production.
The CIL Board approved a
Consolidated annual revenue of
Dividend Policy that aims to
the Company was US$ 2.4 billion
maintain a Dividend payout
— or an increase of around 10 per Second discovery in the
ratio of around 20% of annual
cent over FY2011. Net income KG Onshore Basin. The
consolidated net profits to its
was US$ 1.6 billion, representing Company had a second successful
shareholders.
a growth of 19.4 per cent over discovery at the KG basin in Andhra
the previous year. The earnings Pradesh. This was Nagayalanka-
Successful scaling up per share (EPS) for FY2012 was SE-1 in the KG-ONN-2003/1 block.
of production from our Rs.41.71, compared to Rs.33.35 It is the largest onshore discovery
Rajasthan fields. After in FY2011. in the KG basin to date — with an
consistently producing at its estimated in-place resource of
previously approved rate of around 550 mm boe.
125,000 barrels of oil per day
Successful enhanced oil
(bopd) for over one and a half recovery (EOR) Pilot raises
proven plus probable (2P) Successful discovery in deep
years, production from the
Mangala field has been ramped reserves at Rajasthan. The sea waters off Sri Lanka.
up to 150,000 bopd following field scale EOR pilot project in Similarly, Cairn India’s Sri Lanka
GoI approval. The Bhagyam Mangala gave positive results. offshore operations had exploration
field commenced production in Consequently, Cairn India has successes. Two out of three wells
January 2012. Including output booked 2P reserves of 70 mm bbls. drilled had discoveries. These
from two other neighbouring discoveries were the first in Sri
fields, Raageshwari and Saraswati, Lanka in 30 years, and have helped
Potentially higher resource open up the frontier Mannar Basin
Cairn India’s production from
Rajasthan has reached 175,000
base in Rajasthan. After a for future opportunities.
thorough review, the Rajasthan
bopd.
block’s resource potential was
estimated at 7.3 bn boe gross in-
Sales agreements for place. There have been exploration
Engineers
larger off-take. Given the upsides — with the prospective
at the Boiler
increased production from resource base rising from an
Stack, MPT

MANAGEMENT DISCUSSION AND ANALYSIS MANAGEMENT DISCUSSION AND ANALYSIS

BHAGYAM

N-I-NORTH

Following a comprehensive review, the Rajasthan block’s resource potential was boe gross primarily due to generation S HAKTI

of additional leads and prospects. S HAKTI N E
estimated at 7.3 bn boe gross in-place. There have been exploration upsides — • The Company with ONGC, its JV N-I
with the prospective resource base rising from an earlier estimate of 2.5 bn boe partner, is working with GoI to obtain NC WE ST OI L & GAS

gross in-place to 3.1 bn boe gross in-place the necessary approvals required BHAGYAM SOUTH

to carry out further exploration and MANGALA

The Rajasthan Project •
appraisal activity in the block.
The discovered resource base has
MANGALA BAR M E R H I LL

AIS HWAR IYA

increased from 4.0 bn boe gross N-E

The Rajasthan project is crucial for the the project was signed on 15 May, 1995. independent estimate of reserves and in-place to 4.2 bn boe gross in- DEVE LOPM E NT AR EA 2 VAN DANA
Awarded November 2008
nation. Oil production from the project In 1997, Cairn acquired an interest in the contingent resources; it also reviewed place. This is due to an increase in N-P
VIJAYA

helps the country to reduce significant block. In 2002, Cairn acquired 100% of the majority of the leads and prospects. the Stock Tank Oil Initially in Place DEVE LOPM E NT AR EA 3
G S-V

Awarded December 2008
quantities of oil imports. the exploration interest and assumed D&M also undertook a separate reserves (STOIIP) from Mangala and other SARASWATI CR E ST

KAAM E S HWAR I WE ST-6 GAS
the role of operator. certification exercise on behalf of the Rajasthan fields. SARASWATI

KAAM E S HWAR I WE ST-3 GAS
The Mangala, Bhagyam and Aishwariya RJ-ON- 90/1 joint venture (JV). • The Rajasthan block’s Expected KAAM E S HWAR I

KAAM E S HWAR I WE ST-2 OI L
(MBA) fields, among others, constitute Ultimate Recovery (EUR) has RAAG E S HWAR I OI L
Rajasthan Hydrocarbon DEVE LOPM E NT AR EA 1
Cairn India’s key assets in Rajasthan. • Based on the Company’s assessment, increased from 1.4 bn boe gross to 1.7 S HAH E E D TU KARAM OM BALE
Resources Awarded October 2004

The MBA are the three largest finds in the potential resource for the bn boe gross on account of increased RAAG E S HWAR I DE E P GAS

Rajasthan. The Mangala field — considered Rajasthan block is now estimated at recoverable risked prospective G U DA

OI L FI E LD
to be the largest onshore hydrocarbon As mentioned earlier, during FY2012 7.3 bn boe gross in-place. This is resource estimates.
GAS FI E LD
find in India in last two decades — was Cairn India carried out a comprehensive primarily due to an increase in the • Given these new evaluations, the OI L DISCOVE RY
GAS DISCOVE RY
discovered in January 2004. This was review of the resource potential of the exploration upside with the prospective total resource base now provides a OI L S HOWS
followed by discoveries at the Bhagyam Rajasthan block. This was done using resource base now estimated at 3.1 bn basin potential to produce 300,000 OI L DISCOVE RY & GAS S HOWS

and Aishwariya fields. To date, 25 detailed studies involving innovative boe gross in-place, versus an earlier bopd, subject to further investments
0 5 10 20
discoveries have been made in the technologies and advanced geo- estimate of 2.5 bn boe gross in-place. and regulatory approvals. This is
KI LOM ETR ES
Rajasthan block. Studies indicate that science. In addition, a specialist agency, • The Rajasthan recoverable risked equivalent to approximately 40%
it has further potential for growth. The DeGolyer and MacNaughton (D&M), prospective resource has increased of India’s current crude oil Rajasthan Block
Production Sharing Contract (PSC) for has conducted a study to arrive at an from 250 mm boe gross to 530 mm production.

The Rajasthan Block approval for higher Mangala
offtake of 150,000 bopd.
• Cairn India is the operator with • Some other fields within the block
70% participating interest. Its joint have also commenced production.
venture (JV) partner, ONGC, has a The Bhagyam field started
30% participating interest. production on 19 January, 2012 and
• The block consists of three is currently producing at around
contiguous development areas: 25,000 bopd. Saraswati began
(i) Development Area (DA) 1, production on 27 May, 2011 and has
which comprises the Mangala, produced over 75,000 barrels of
Aishwariya, Raageshwari and oil till date. Raageshwari, which is
Saraswati (MARS) fields; (ii) DA primarily a gas field with marginal
2, consisting of the Bhagyam and oil, also commenced production
Shakti fields; and (iii) DA 3, having on 8 March, 2012 and is currently
the Kaameshwari West fields. producing in excess of 250 bopd.
• At present, the block is producing
175,000 bopd, thanks to GoI


Total
Resource Potential (mm boe)
RJ gross in-place
resource
7,278 11
Expected Ultimate 24
Recovery 1,739

from previous
% increase
2,168 2,010 3,100

EXPLORATION
BH+19 Disc
MBARS*

1,044 (~48%) 530 (~17%)

165 (~8%)

Gross Gross EUR* Gross Gross EUR Gross Gross EUR
in-place in-place in-place

Under Development Future Development
& Prospective Resource

Expected Gross Production (kbopd)
300***
Significant part
of 240***
175

April 2012 CY2013**
Note:
*Gross EUR Includes EOR potential of 238 mm bbls; balance 70 mm bbls booked as 2P reserves
MBARS – Mangala, Bhagyam, Aishwariya, Raageshwari, Saraswati
** Sometime in CY2013
Company upgraded the numbers as on 31 March, 2012
*** Subject to approvals

Mangala, Bhagyam, Mangala of 62 development wells have been
Aishwariya and Other drilled till date with 21 producers and
At Mangala, a total of 148 development wells four injectors operational; 12 producer
Rajasthan Fields
have been drilled and completed with 96 wells are yet to be drilled. Both Mangala
producers and 33 injectors operationalised. and Bhagyam are connected to the
The Mangala, Bhagyam and Aishwariya The Company has successfully drilled and Mangala Processing Terminal (MPT),
(MBA) fields have gross recoverable oil completed 11 horizontal wells at Mangala. which processes the crude oil from the
reserves and resources of over one bn Going forward, the Company intends to bring Rajasthan fields.
boe. This includes proven plus probable other wells on stream in a staged manner.
(2P) gross reserves and resources of 636 Aishwariya
mm boe with a further 308 mm boe or Bhagyam
more of EOR resource potential. Today, The Aishwariya field is the third
Mangala and Bhagyam are cumulatively Bhagyam is the second largest field in largest discovery in the Rajasthan
contributing more than 20% of India’s the Rajasthan block, with an approved block. Following an assessment of Monitoring
current domestic crude oil production. production plateau of 40,000 bopd. A total higher production potential and activity at a Train
location, MPT


Enhanced Oil Recovery

What are we doing and what • Preparations for next phase of
are the results? ASP flooding are in progress

Based on the oil and reservoir Based on the positive response, a
properties, Cairn India recognised full field polymer flood development
the potential for EOR application in plan has been prepared for Mangala.
the MBA fields early in their life. The development plan would include:
• Drilling of new injector wells from
Screening and laboratory the existing 15 wellpads
evaluations identified chemical • Formal approval from the
EOR methods viz. Polymer Flooding JV partner and regulatory
and Alkaline-Surfactant-Polymer authorities.
(ASP) flooding as the most suitable
methods for the MBA fields. Accordingly, the Company has
booked 2P reserves of 70 mm bbls.
We are currently conducting an EOR
pilot in the Mangala field. Details of Going forward, post Mangala
which are: implementation, we also intend to
• Eight wells including four injectors, implement chemical flooding in
one central producer and three Bhagyam and Aishwariya fields.
observation wells were drilled for
this test The current assessment of the
• Polymer injection was started EOR resource base is more than
through newly built facilities in 300 mm bbls of incremental
August 2011. Polymer flood results recoverable oil from the MBA
Night view of
were positive fields.
Raageshwari Gas
Terminal

Start of Polymer Injection
design optimisation due to increased Raageshwari Deep Gas Field Saraswati and was earlier envisaged. The Company
reserves and resources, Cairn India Raageshwari Fields has carried the resource potential in
has commenced development work in The Raageshwari Deep Gas field is books as contingent resources. Field
the field. meant to supply gas to meet the The Saraswati Field, which commenced Development Plans (FDPs) for four Water cut
energy requirements at the MPT and production in May 2011, is currently fields have been submitted; and FDPs
The development will include nine the Mangala Development Pipeline, producing at a rate of 250 bopd. Till date, for remaining fields are under various
well pads, 36 producer and 15 injector which runs approximately 670 km from it has produced over 75,000 barrels of stages of preparation.
wells. Well fluids from Aishwariya will Barmer to Viramgam to Salaya and then oil. This oil is processed at the MPT, and
be collected at a Cluster Well Pad — on to Bhogat, near Jamnagar, on the blended with the Mangala oil which is Barmer Hill and other Fields
and the carbon dioxide rich associated Arabian Sea coast. sold through the pipeline. The marginal
gas will be separated before oil field at Raageshwari also commenced Evaluation of other discoveries with the
transporting the well fluid to MPT. During FY2012, the Company carried production in March 2012. objective of optimising the Rajasthan

Oil rate (bopd)

Water cut (%)
out drilling and completion of additional development is currently under way.
Oil rate
The Company received JV approval wells to augment gas production from Satellite Fields To test the potential of the Barmer Hill
in December 2011 to start work on the field as well as water production formation, Cairn India has planned a
the field. Hence, it has awarded key from the nearby Thumbli saline aquifer In Rajasthan, there are 19 other discoveries pilot hydraulic fracturing programme,
contracts including the main EPC; and water field. beyond MBARS and Barmer Hill — referred subject to GoI approval. A declaration Time

the contractor has been mobilised on- to as the satellite fields. These have been of commerciality for the Barmer Hill Schematic illustrating success of
polymer pilot; appreciable decline
site. Crude oil production is expected Application of new fracture stimulation tested for hydrocarbons and have prospect was submitted to the GoI in March 2010, in the water-cut following polymer
to commence towards end CY2012, and completion technology has proven for commercial development. In fact, Cairn and an FDP is under preparation. A injection with a simultaneous
subject to JV and GoI approval. to be successful in the field. India’s recent technical work indicates a staged development is being planned to increase in the oil rate
higher potential for these fields than what monetise this reservoir.

Assessment results for
Global Hydrocarbon mean, undiscovered,
technically recoverable

Resources oil for provinces of the
world by region

US Geological Survey (USGS) World Petroleum
Resources Project released new estimates for the
Undiscovered Conventional Oil & Gas Resources of
the World, 2012

This is a complete reassessment of the world since
the last report was published in 2000 66,211

In this study, 313 Assessment Units within 171
geologic provinces were defined and assessed for
83,386
undiscovered oil and gas accumulations
9,868
For undiscovered, technically recoverable
resources, the mean totals for the world are:

• 565,298 million barrels of oil (MMBO) 111,201
5,855 47,544
• 5,605,626 billion cubic feet of gas (BCFG)
• 166,668 million barrels (MMBNGL) of
natural gas liquids

The assessment results indicate that about 75 115,333
percent of the undiscovered conventional oil of
the world is in four regions: (1) South America
and Caribbean, (2) Sub-Saharan Africa, (3)
125,900
Middle East and North Africa, and (4) the Arctic
provinces portion of North America. Significant
undiscovered conventional gas resources remain Note: Figures in mm bbls
in all of the world’s regions Source: 1. An Estimate of
Undiscovered Conventional
Oil and Gas Resources of
Hydrocarbon Reserves the World, 2012, World
Petroleum Resources
The E&P industry accordingly has significant Project, USGS
potential to increase world’s proved reserves 2. BP Statistical Review of
World Energy, June 2012

Rajasthan Block Resource Potential

RJ Block Resource Potential RJ Block Exploration Potential · Potential resource for the block now
Over the years, world proved reserves have continually increased: The reserves +11% estimated at 7.3 bn boe gross in-place
increased from 1,032 thousand million bbls at beginning of 1992 to 1,652 thousand million
+24%
bbls at the beginning of 2012 · Exploration potential now estimated at
530 mm boe gross recoverable risked
India, though, constitutes an insignificant part of the world pie: Indian proved reserves prospective resource
represent 0.3 percent of the world’s pie, but its share in consumption pie is 3.9 percent 6.5 7.3 +24% 3.1
2.5 +112%
· Increasing confidence on the Mangala
India’s Proved reserves base has fallen from 6.1 thousand million bbls at the 1.4 1.7 0.53 EOR polymer pilot led towards booking of
0.25
beginning of 1992 to 5.7 thousand million bbls at the beginning of 2012 70 mm bbls of gross 2P reserves
Gross in-place Expected Gross in-place Recoverable
Resource Ultimate Recovery Resource

bn boe gross in-place 31 March, 2011 31 March, 2012


The Company became the first operator in India to successfully deploy straddle
stimulation technology for production and injection wells in the Rajasthan block

Well Services and Production Optimisation
Cairn India’s endeavour is to maintain The treatment techniques were utilised
plateau production in Rajasthan for as to stimulate wells using various chemical
Well Bore long as it is physically and geologically recipes, which were developed through
possible. Doing so requires the use of comprehensive laboratory analysis and
novel, state-of-the-art well services practical observations.
and intervention technologies. Cairn
Coil Tubing
India has applied some of the best such Advanced Down-hole Tools
interventions in Rajasthan. Here are
some examples: High impact Roto-Jet cleaning
Casing
technology: This has been effectively
used to clean-out deposits such as
Straddle Stimulation
sediment, wax and scale through the
Technology
use of ‘stress-cycling’. Removal of
such deposits has led to increased
The Company became the first operator productivity of certain producer wells,
in India to successfully deploy straddle particularly those in which inflow
stimulation technology for production control devices were installed. Thus far,
and injection wells in Rajasthan area. incremental production of approximately
Operated through a tele-coil, the 1,850 bopd has been achieved through
system is an advanced version of the this technology in three producer wells.
conventional coiled tubing string, and
Perforation
is used to capture real-time data, which
Roto-Pulse technology: By creating
allows for more accurate understanding Coil tubing
Packer
of the reservoir’s response to different hydraulic vibrations down-hole, this tool
operations at the
stimulation treatments. effectively dislodges ‘plugging fines’ and
Mangala field
Damaged
Perforation
Zone

Packer
1 2 3 4 5 6

Perforation Accurate Allowed treatment Optimal usage of cost Delivered conformance Avoid corrosion Removing blockage
placement of under a positive intensive chemicals, in water injection wells and erosion of Well from SSDs and ICDs;
Key advantages of treatment fluids well pressure thus thus making large thus enhancing well completions by increase production
Straddle Stimulation across non- mitigating the need scale application potential and allowed limiting the exposure from non-producing
technology: contributing to ‘kill’ well during economical commencement of to corrosive treatment zones
sands operations EOR polymer pilot chemicals

Straddle
Packer
Schematic


DATA PROCESS FLOW
Plant Data Server Application Software

Verify

Customised
Well Test
Pages

SCADA Well Log Manual Data Reports

Production
DCS Well Config Dashboards System Outputs
Allocation
Exaquantum Coefficient i. Daily Production Report
Historian SQL DB
Generator ii. Joint Venture Report
Real Time Data Real Time Reconcile Reporting & iii. Real time Data
Historian Validation Database
Data Historian Visualisation
Visualisation
iv. Real Time Optimisation
v. Process Integration
vi. Common Production
Production Production Reservoir Data Store
Operations Optimisation Development Well Services JV / DGH Management

Process flow of the Digital Oil Field

other undesirable deposits such as wax Thus, production was regained without Barmer and Gurgaon for the storage
and scale, which retard well productivity. substantial production down time. of DCS data
It has delivered excellent results in • Remotely accessing DCS screens
producer wells which were installed with Digital Oil Field (DOF) at the Company’s offices in the MPT
sand screens. Thus far, an incremental and Gurgaon
production of approximately 5,400 DOF is a key technology project which • Developing a ‘Well Test Interface’
bopd has been achieved through this was conceptualised during the Rajasthan to record daily well tests
technology in six producer wells. field development phase. It integrates • Installing a main Production Server
the production process with efficient and an alternative Test Server
Coiled tubing conveyed perforation: well monitoring — thus optimising the for uninterrupted reporting and
This technology was applied to execute entire asset. DOF provides a user friendly, monitoring, while simultaneously
under-balanced perforation in order web-based interface with enhanced data continuing development activities
to minimise near-well-bore damage mining and visualisation capabilities. • Setting up a centralised database
— usually caused due to conventional It also acts as a central location for reconciliation package which is now
explosive based perforation. Moreover, accessing real-time data available becoming the central database for
it has helped to optimise the time spent through distributed control systems/ production related data
in perforating long intervals, particularly supervisory control and data acquisition • Incorporating a ‘Production
in water injector wells, thus reducing (DCS/SCADA) systems — which involves Reporting System’ (PRS) which
the cost of large scale perforation manually entered production data, includes Mangala and the JV’s daily
operations. laboratory data and other allocated production reports
production as well as field-level data.
Perforation Using Reactive Element Given below are some details. Commissioning of the DOF project for
Charges: This approach was utilised Mangala in November 2011 marks an
to conduct a balanced perforation in • Capturing real time well-head important milestone for the Company.
water injector wells. This avoids debris parameters from nearly 200 wells Thanks to it, the Rajasthan project
deposition in perforation tunnels — a and process parameters from DCS/ has seen significant efficiency gains
phenomenon associated with regular SCADA and cost reductions. This is largely on
explosive based perforation. • Allowing a unique production account of smart monitoring, error free
allocation system with two different production reporting, early detection
Advanced Fishing and Milling methods for a more robust and of well productivity and injection
Technology: State-of-the-art technology, reliable well-head level allocation issues, and troubleshooting of network
Slickline activity such as indexing tools and flow-activated • Configuring modules to capture the bottlenecks. Going forward, Cairn India
in progress at elbows, were applied to overcome down- crucial manual production data intends to expand the DOF and the PRS
Bhagyam field hole complications in certain cases. • Setting up of high-end servers at to the entire Rajasthan field.

Cairn India Annual Report | 2011 - 12

Cairn India Annual Report | 2011 - 12

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