The Oil Ministry is likely to ask the Cabinet to decide on proposals of Reliance Industries and Cairn India to drill exploration wells in already producing oil and gas fields.
While RIL has proposed to drill an exploration well on the flagging D1&D3 gas fields in the KG—D6 block to study reservoir characteristic, Cairn wants to drill new probes to help raise output from the Rajasthan block to 300,000 barrels per day from 175,000 bpd.
The ministry was in agreement with the operators on the need to drill exploration wells within a producing oil or gas field so as to add more reserves and increase production life but it does not want to take a decision on its own, official sources said.
The Directorate General of Hydrocarbons (DGH), the ministry’s technical advisory arm, had few years back taken a view that exploration is not permitted within an area that has been delineated after discoveries for production of hydrocarbons.
Globally, exploration is permitted in fields that are under production so as to keep adding new reserves to replinish ones that have been produced. In absence of rejuvenation, the fields will terminally decline from the day output starts.
The same has been followed in fields in Assam and Mumbai offshore.
Sources said the CCEA would be asked to consider allowing exploration during mining lease and production stage.
Cairn believes that production from its prolofic Rajasthan block can reach 300,000 bpd or 15 million tons per annum and has made an application to the government seeking permission to explore within the 3,111 square kilometer mining lease covering 25 oil and gas finds.
It has even given up its rights under Production Sharing Contract (PSC) by proposing that it will not seek recovery of cost of the exploration well unless it is successful i.e., results in a commercial discovery. Cost of a dry or no discovery well will be borne by the company.
RIL however does not believe in surrendering its rights guaranteed under PSC — that is to recover all exploration and production cost from sale of oil or gas before sharing profits with the government.