Production from the country's lone offshore Sangu gas field is set to decline significantly unless new wells are developed there by next year. Sources with the Sangu gas field's operator -- Scottish oil and gas company Cairn Energy PLC -- said it requires drilling of at least three development wells by December 2007 to maintain gas production from the site. Cairn placed a proposal to the Energy and Mineral Resources Division (EMRD) last week seeking approval for further investment. Cairn sources said in the proposal made to the EMRD the company mainly focused on various technical aspects including the present and future production capacity of Sangu gas field. "The EMRD has accepted our proposal that dwells on the operational and technical aspects of the offshore gas field. It requires further investment," a senior Cairn official told the FE. The EMRD also sought financial proposal and work plan from Cairn. "We will submit the financial proposal and work plan to the EMRD later this month (February) as per the government instruction," the Cairn official said. Although Cairn is yet to finalise its budget, the company sources said the company will have to invest US$50 million for drilling three new development wells and conducting exploration at Hatiya. The company sources said US$32 million will be needed for Sangu gas field development, and $18 million for drilling exploratory wells at Hatiya. The Sangu gas field, with a capacity to produce up to 180 million cubic feet gas per day (mmcfd), is now supplying up to 170 mmcf gas daily to the national grid. Besides, Cairn is currently engaged in exploratory activities in blocks 5 and 10, where new seismic data has been acquired, and tied up with Chevron Corp in block 7, where a seismic campaign commenced recently. It has identified a new prospective gas field at Char Jabbar under Noakhali district in block 10 with an indication of 2.30 Trillion Cubic Feet (TCF) of gas reserve. Cairn has also conducted seismic surveys at Meghnama and at Hatiya under the block 16. There are possibilities of finding gas reserves of about 3.5 TCF at Meghnama and 1.76 TCF at Hatiya, the company sources said.
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