The Petroleum Resources Agreement (PRA) for the block was signed on 7th July 2008. Petroleum Exploration License (EL 01-2008) was awarded for a period of 8 years with an effective date of 16th October 2008. The exploration period of eight years is made up of three consecutive exploration phases of 3+2+3 years. The block is located in the Mannar Basin, NW offshore Sri Lanka and covers an area of 3000 Km2.
The first exploration phase of three years included a work program to acquire process and interpret 1450 Km2 of 3D seismic data, acquisition, processing and interpretation of 5000 LKM of gravity and magnetic data, and conduct a bathymetry survey. In addition, the seismic program included reprocessing of 1450 Km2 of 3D and 300-450 Km2 of PSDM. Phase-I commitment also included drilling of three exploratory wells.
Cairn Lanka acquired ~1,750 km2 3D seismic data along with high resolution gravity, magnetic and bathymetry studies in the Mannar Basin in Sri Lanka between December 2009 and January 2010. Based on the 3D seismic interpretation, several prospects and leads were identified and technical work to understand the petroleum system in the Mannar basin was undertaken. The Mannar basin is an under-explored frontier basin, with both structural and strati-graphic plays. A drill ship was contracted and the three exploration wells programme commenced in FY2012.
The seismic programme exceeded the Phase- I commitment by 20% and the drilling programme exceeded the drilling depth commitment by 50%. The exploration programme resulted in two successive gas and condensate discoveries: the CLPL-Dorado- 91H/1z well and, the CLPL-Barracuda-1G/1 well. The third well, CLPL-Dorado North 1- 82K/1 was plugged and abandoned as a dry hole. The potential commercial interest notification was submitted for the Dorado Discovery, as per the terms of the Petroleum Resources Agreement (PRA).
The two notified discoveries, Dorado and Barracuda, are first ever reported hydrocarbon discoveries in Sri Lanka and importantly, the success of the drilling programme proved a working petroleum system in the Mannar basin. The exploration wells were completed with the highest safety standards and without any safety or environment incident.
The Company subsequently notified the Government of Sri Lanka of its intention to enter Phase 2 of the exploration period in the block.
Exploration Phase II:
Cairn entered second phase of exploration in FY2012. The Company drilled a fourth exploration well on the Block as part of the Phase-II exploration programme. The drilling of Phase-II exploration well was completed in February 2013. The well encountered high quality reservoir sands, which were water bearing. Consequently the well was plugged and abandoned, and the rig demobilised.
Two gas discoveries were made in the block, out of the four exploration wells drilled under phase 1 and 2. Cairn is considering options to appraise, develop and monetize the two discoveries. The government has also granted an extension to the current exploration phase upto April 2014.
In 2013, Cairn India concluded appraisal and commercial studies to determine the next steps for the gas discoveries made on the block. The Company is in discussions with the Sri Lankan Government regarding commercial terms necessary to monetize the discovered gas resources on the block and to maximize benefits from the maiden natural gas discoveries in the Mannar Basin. Cairn India also participated in Sri Lanka’s offshore bidding round for M-5 block, south of the Company’s current block in the Mannar Basin in November 2013.