Cairn India is currently in discussions with the Sri Lankan government to commercialize the Dorado well in the Mannar Basin, probably including a pipeline from the well to Norochcholai.
However, the pipeline is not expected to serve Norochcholai power plant in the short-term, instead will add to power generation in Colombo.
“We are still in the exploration phase. However, plans are now underway to begin commercialisation of the Dorado. While exploration is overall a statistically unsuccessful endeavor there is significant potential in Sri Lanka,” Cairn India Manager - International Exploration & New Ventures, Dr. Michael Quinn said.
Petroleum Resources Development Secretariat Director General Saliya Wickramasuriya was recently quoted as saying that Sri Lankan government was planning to strike a sales agreement with Cairn India within this year with hopes to join natural gas producing nations by 2017-18.
Meanwhile, releasing its second quarter results yesterday, Cairn India said the company continues to engage in appraisal planning and commercial discussions with the Sri Lankan government for monetizing the discovered gas resources.
The company also said the government has granted an extension to the current exploration phase up to April 2014.
According to government sources, a six-month extension has been granted to Cairn to submit a detailed appraisal of the 3- year exploration process (first phase) and its commercial potential.
Estimated to be a small-medium sized well, Cairn has had preliminary discussions previously regarding the commercialisation of its discoveries, following the confirmation of hydrocarbon potential in two of the exploration wells drilled by the company in April this year.
In October 2011, Cairn Lanka announced that it had discovered natural gas deposits in Dorado, an exploratory well located in the SL 2007-01-001 block in the Mannar basin.
This was followed by a further announcement in November that the firm had discovered gas deposits with hydrocarbon potential in the second exploratory well, Barracuda. A third well was also drilled and subsequently abandoned as a dry hole.
Entering the second phase of exploration, Cairn drilled its fourth well in the Mannar Basin and in March this year and said that well was also plugged and abandoned as a dry hole.
Meanwhile, the second round of bidding for exploration licenses in blocks of the Mannar and Cauvery Basins are scheduled to reach completion on November 29th. (CF)