Rajasthan refinery no deterrent to Cairn's plans

Shirish Nadkarni
OGJ Correspondent

MUMBAI, Sept. 19 -- Cairn India and India's state-owned Oil & Natural Gas Corp. (ONGC), partners in Barmer field in Rajasthan, said they will not "go slow" in constructing a preheated pipeline to carry the waxy crude from the field.

This is despite the Rajasthan government's saying it would build a refinery to process the oil, making the $750-million pipeline superfluous.

"The pipeline is the most feasible option and is likely to [be built] before the start of crude oil production," said a senior official of ONGC, Cairn's 30% partner in the oilfield.

He said building a refinery with a capacity of about 7.5 million tonnes/year "would take around 40 months, whereas work on the pipeline is expected to take just 18 months," he said.

A Cairn India executive revealed that 83% of the pipeline engineering design work has been completed and that tenders for construction would open soon.

The Scottish explorer's oil discovery in Rajasthan is the largest in the country since ONGC struck oil in Bombay High in 1972. Barmer field is expected to produce 150,000 b/d during its 4-year peak production period.

Pipeline vs. refinery
Although a refinery in Rajasthan would mean another buyer for the company's crude oil, "we know the economics of the refinery are dubious," the Cairn executive said.

ONGC agreed: "There is simply not enough crude oil in the field to justify a new refinery. The state consumes only 5 million tonnes/year of oil products. With new refineries coming up in Bina [in Madhya Pradesh] and Bhatinda [Punjab], there will be no market for the Rajasthan refinery.

The price of the oil also must be resolved. Its poor quality, Cairn says, likely will garner the companies about 10% less than the Brent benchmark. Refiners, however, hope for a discount of more than 20%. "The contract allows pricing to follow the international prices of similar oil," Cairn said.

The pricing will determine how cost-effective a preheated pipeline would be. The cost of operating the pipeline and its heating stations would be higher than for normal pipelines. If Cairn does not get a good price, the gains may not justify the cost of the pipeline.

A buyer has yet to be finalized, but Cairn executive said talks were under way "with almost all refineries. The Bhatinda and Bina refineries are keen on taking our crude oil."

ONGC said a realistic date for production to begin is yearend 2009. Design must be completed, land acquired, heating stations built, and more wells drilled. "All of this has to synchronise with the start of production. Production may be delayed [for] some time."

Related Articles

Inhofe, Lankford say new BIA rules threaten Osage oil operations

07/10/2015 New US Bureau of Indian Affairs regulations that increase production expenses on tribal lands could put the Osage Nation out of business, Oklahoma’...

BHI: US rig count continues upward creep

07/10/2015 Although the overall US drilling rig count only edged up 1 unit to 863 rigs working during the week ended July 10, it represented the third consecu...

Chevron Phillips Chemical makes executive appointments

07/10/2015

Chevron Phillips Chemical Co. LLC has made several executive appointments, all effective Aug. 1.

Twelve workers killed in Nigeria pipeline explosion

07/10/2015 Eni SPA reported that an explosion occurred July 9 at the repair site for the Tebidaba-Clough Creek oil pipeline in Nigeria’s onshore Niger Delta.

Lukoil taps new blending technology for Russian refinery

07/09/2015 OAO Lukoil has selected Honeywell Process Solutions (HPS), a division of Honeywell International Inc., to provide process control technology design...

PDO to use solar to displace gas in thermal EOR work

07/09/2015

Petroleum Development Oman (PDO) plans to use a solar plant to displace natural gas in enhanced oil recovery (EOR) efforts in Amal oil field.

Ending crude export ban would help rural US areas, House panel told

07/09/2015 Rural US communities generally have benefited from the nation’s crude oil production renaissance, and potentially could be helped more if restricti...

MOL completes Ithaca Norge acquisition

07/09/2015 MOL Group, Budapest, has completed its acquisition of Ithaca Petroleum Norge from Ithaca Energy Inc. for $60 million plus possible bonuses of up to...

Husky Energy reports unplanned maintenance at Lloydminster upgrader

07/08/2015

Husky Energy Inc. reported unplanned maintenance at its Lloydminster heavy oil upgrader in Saskatchewan.

White Papers

UAS Integration for Infrastructure: More than Just Flying

Oil and gas companies recognize the benefits that the use of drones or unmanned aerial systems (UAS) c...

Solutions to Financial Distress Resulting from a Weak Oil and Gas Price Environment

The oil and gas industry is in the midst of a prolonged worldwide downturn in commodity prices. While ...
Sponsored by

2015 Global Engineering Information Management Solutions Competitive Strategy Innovation and Leadership Award

The Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global...
Sponsored by

Three Tips to Improve Safety in the Oil Field

Working oil fields will always be tough work with inherent risks. There’s no getting around that. Ther...
Sponsored by

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by
Available Webcasts


Operating a Sustainable Oil & Gas Supply Chain in North America

When Wed, Oct 7, 2015

Short lead times and unpredictable conditions in the Oil & Gas industry can create costly challenges in supply chains. By implementing a LEAN culture of continuous improvement you can eliminate waste, increase productivity and gain end-to-end visibility leading to a sustainable and well-oiled supply chain.

Please join us for this webcast sponsored by Ryder System, Inc.

register:WEBCAST


The Resilient Oilfield in the Internet of Things World

When Tue, Sep 22, 2015

As we hear about the hype surrounding the Internet of Things, the oil and gas industry is questioning what is different than what is already being done. What is new?  Using sensors and connecting devices is nothing new to our mode of business and in many ways the industry exemplifies many principles of an industrial internet of things. How does the Internet of Things impact the oil and gas industry?

Prolific instrumentation and automation digitized the industry and has changed the approach to business models calling for a systems led approach.  Resilient Systems have the ability to adapt to changing circumstances while maintaining their central purpose.  A resilient system, such as Maximo, allows an asset intensive organization to leverage connected devices by merging real-time asset information with other critical asset information and using that information to create a more agile organization.  

Join this webcast, sponsored by IBM, to learn how about Internet of Things capabilities and resilient systems are impacting the landscape of the oil and gas industry.

register:WEBCAST



On Demand

Taking the Headache out of Fuel License and Exemption Certificates: How to Ensure Compliance

Tue, Aug 25, 2015

This webinar, brought to you by Avalara, will detail the challenges of tax document management, as well as recommend solutions for fuel suppliers. You will learn:

-    Why it’s critical to track business partner licenses and exemption documents
-    The four key business challenges of ensuring tax compliance through document management
-    Best practice business processes to minimize exposure to tax errors

register:WEBCAST


Driving Growth and Efficiency with Deep Insights into Operational Data

Wed, Aug 19, 2015

Capitalizing on today’s momentum in Oil & Gas requires operational excellence based on a clear view of what your business data is telling you. Which is why nearly half* of oil and gas companies have deployed SAP HANA or have it on their roadmap.

Join SAP and Red Hat to learn more about using data to drive process improvements and identify new opportunities with the SAP HANA platform running on Red Hat Enterprise Linux. This webinar will also show how your choice of infrastructure impacts the performance of core business applications and your ability to achieve data-driven insights quickly and reliably.

*48% use SAP, http://go.sap.com/solution/industry/oil-gas.html

register:WEBCAST


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected