Wednesday, July 14, 2010

Sri Lanka: Search on for oil off Southern coast



By Devan Daniel | The Island
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The government collected 2D seismic data on a 600 km stretch of sea floor off the Southern coast in search for signs that oil may be discovered, a petroleum ministry report said.

The survey which was carried out in 2009 was intended to investigate the petroleum potential of two gravity anomalies indicated by satellite off the Southern coastal belt of Sri Lanka, the 2009 Performance report of the Ministry of Petroleum Industries said.


The ministry charted a seismic data acquisition ship which collected the data of nearly 740 linear kilometres late February 2009.

"Currently, the data is being processed at Fargo Seismic Imaging Services in Mumbai. Preliminary views of the data suggest the existence of sedimentary basins in the survey area which is the first requirement in the search for petroleum," the ministry said in the report, which was released last month.

The Mannar basin off the North-Western coast and the Chauvery basin off the Northern coast have been identified as potential locations for offshore oil.

In July 2007, the government awarded Cairn India a license to search for oil on a single block of sea bed on the Mannar basin which amounted to an area of 10 percent of the total extent on Sri Lanka’s side of the basin. India, has already found oil on its side and commercial extraction is already taking place.Cairn India paid Sri Lanka a signature bonus for being awarded the license and it plans to invest around US$ 110 million in searching for a possible drilling site and subsequent assemble of an oil rig if a commercially viable carbon deposit is found.

A Petroleum Resources Agreement was singed between Cairn India and the government which resulted in the incorporation of Cairn Lanka Limited.

The company recently acquired 3D seismic data of the 3,400 sq km exploration block offered to it and the data is being analysed by Cairn India’s geologists looking for the best place to start drilling but meanwhile it is studying wave and water current patterns in the Mannar Basin, crucial data to determine the type of oil rig they would have to lease.

Exploration drilling is expected to commence by 2011 and according to government estimates, there is a 60 percent probability of finding offshore oil deposits.

Two other blocks in the Mannar Basin were offered to India and China but so far the governments of the two countries have not responded to these offers.

Meanwhile, the government has entered into an agreement with Nexant Inc of USA to develop regulations for offshore petroleum operations with funds from US Trade and Development Agency.

The new regulations being drafted are: Sri Lanka Offshore Petroleum (SLOP) Geophysical Regulations, SLOP Drilling Regulations, SLOP Occupational Health and Safety Regulations, SLOP Environmental Protection Regulation, SLOP Registration and Administration Regulations, SLOP Production and Conservation Regulations and SLOP Diving Regulations.

The drafts to the above regulations have been completed and once translations in to Sinhala and Tamil are completed, the regulations would be subject to a consultative process after which the Attorney General would review and format the regulations.

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