Key Developments
Greenland
CR in Greenland
Since 2007, Cairn has acquired interests in 11 exploration licence areas to the west and south of Greenland, believed to be one of the world’s major remaining sources of undiscovered hydrocarbons. They cover approximately 102,000 km2.
Following the three-well drilling operations in 2010, our exploration campaign has continued in 2011 with:
an exploration drilling programme of four exploration wells offshore West Greenland, commencing in June 2011 in the Lady Franklin and Attamik blocks;
seabed and environmental baseline surveys; and
a 3D seismic survey offshore West and South Greenland, which commenced in July 2011.
As was the case in 2010, the programme will be carried out with a focus on safety, including the deployment of two drilling vessels, the ocean rig Corcovado, a sixth-generation dynamically positioned (DP) drill ship and the Leiv Eiriksson, a fifth-generation DP semi-submersible. The drilling vessels will be supported by up to six ice-breaker and iceberg-towing vessels, two wareships, two emergency response standby vessels, three supply vessels, a freighter and four helicopters (two for crew change and two with emergency search and rescue capability).
Environmental and Social Impact Assessments
Our approach to each new project includes undertaking independent Preliminary Environmental Impact Assessments (PEIAs), or Environmental Impact Assessments (EIAs) and Social Impact Assessments (SIAs), to minimise any potential impacts of our activities. In 2010, we undertook – with the assistance of Environmental Resources Management (ERM) – PEIAs for all our seismic and site survey activities, and for our drilling operations, we undertook both EIAs and SIAs in Greenland. In 2011, we have carried out further EIAs - with the assistance of Environmental Resources Management (ERM) - for both seismic and drilling activities and an SIA for drilling activities.
As part of these assessments, NGOs, local authorities, labour organisations, contractors, authorities and community representatives were consulted, and a series of public hearings held. In total, 95 separate consultation meetings were held across 14 towns and settlements in Greenland as part of our SIA studies in 2010 and the first quarter of 2011 (see 'Public Consultation' below).
Public Consultation
During a six-week public hearing process in March and April 2010, the EIA and SIA non-technical summary reports were made available to the public in English, Danish and Greenlandic. Public meetings were also held, at which Cairn explained the proposed drilling projects and the results of the EIA and SIA. Cairn provided written responses to the Greenland Government for every comment or concern raised by stakeholders. This process was the first of its kind for an exploration drilling programme in Greenland.
Cairn has continued to engage with local communities in 2011 to explain our current activities and to better understand the local communities’ views. As part of the SIA process, Cairn and joint venture partner Nunaoil held public meetings for local people to hear the findings of the EIA and SIA studies and learn about the proposed 2011 exploration programme.
Spill Contingency and Ice Management
Wherever Cairn operates, our first priority is safety, both in terms of people and the environment. We aim to prevent incidents and reduce the risks and impacts of our activities as much as is reasonably practical. In addition to preventative and well control measures, we also have plans in place to manage an incident appropriately, in the unlikely event of one occurring. Such plans include an extensive Oil Spill Prevention and Contingency Plan, which was reviewed and approved by the Greenland regulatory authority and the National Environmental Research Institute (NERI), backed up by dedicated equipment and regular training exercises, and form an integral part of our Environmental Management Plans.
Also, working with some of the world’s leading ice management companies, we have developed a comprehensive ice management strategy. This capitalises on skills and techniques learnt offshore eastern Canada, 10 years of satellite data, and information on iceberg movements and size.
Impact Benefit Agreement
In Greenland, our community development programme is defined within an Impact Benefit Agreement (IBA) that looks to adress the key issues identified by the SIA, to minimise any adverse social impacts of a project and enhance its benefits. The first IBA was signed in 2010 between Cairn, the Bureau of Minerals and Petroleum (BMP) and the municipalities affected by the 2010 exploration drilling programme. The IBA had four main elements:
- supporting education and skills development in Greenland to promote greater participation by Greenlanders in future oil and gas activities;
- raising awareness of the opportunities and requirements for participation of local enterprises in future oil and gas activities;
- investing in infrastructure to support oil and gas operations; and
- supporting environmental research.
A second IBA for our 2011 exploration drilling programme has been co-signed by Cairn, the BMP and the municipalities affected by our operations. The IBA encompasses support for education and skills development among Greenlanders, promoting opportunities for local enterprises, investing in local infrastructure and supporting environmental research. We calculate that the likely overall value of the benefits of our operational activities – economic, educational, employment related, social and environmental – is ~US$160 million (DKK 800 million) in 2011, up from US$100 million (DKK 505 million) in 2010.
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India
CR in India
Cairn India’s focus on safe and efficient operations has ensured the processing and delivery of more than 50 mmbbls of crude oil to India refiners since production start-up at the MPT facility in August 2010. The Mangala field has been producing ~125,000 bopd for over one year, and the Saraswati field is currently producing 250 bopd, having commenced production at the end of May 2011.
Transporting crude oil through the 600 km crude oil pipeline, from Barmer in Rajasthan to Salaya in Gujarat means it is no longer carried on the roads by tankers, thereby reducing the risk of traffic accidents
Work on the development of the Bhagyam field and installation of further process trains at the Mangala Processing Terminal (MPT) is ongoing, with construction activities for the initial phase nearing completion. Production is on schedule to commence in Q4 2011.
Health and Safety
With the completion of the initial process trains at MPT and the pipeline, the number of construction workers has decreased and the focus has moved to operations. CIL has been developing and rolling out programmes to enhance its safety culture among employees and contractors, such as Effective Safety Leadership, ‘Health, Safety and Environment (HSE) Essentials for You’ and a hands and finger injury campaign on three drilling rigs. It has also carried out integrated HSE audits at all operating assets and a National Safety Day was observed on 4 March.
The high emphasis on safety has fed through into improved performance. Both the Ravva and Suvali sites recorded 9 million lost time injury (LTI) free hours, the midstream projects reached 8 million hours without an LTI and the Rajasthan project reached the 5 million hours milestone. During H1 2011, 19.17 million hours were worked and four LTIs occurred, down from nine in the corresponding period in 2010, resulting in a lost time injury frequency rate (LTIFR) of 0.21 per million hours. In addition, recordable incidents fell from 35 to 20 and no fatalities among employees or contractors were recorded during this period.
Environment
The GHG intensity for H1 2011 was 84.7 tonnes CO2e per 1,000 tonnes hydrocarbon produced, and CIL’s oil spill severity rate of 5.57 tonnes of oil spilled per million tonnes of oil produced represents a significant reduction from the 53.2 tonnes recorded for H1 2010. This is largely attributable to the end of crude oil trucking operations after the commissioning of the pipeline.
Sri Lanka
With the mobilisation of the drillship Chikyu from Japan, Cairn India commenced its three-well exploration drilling campaign in the Mannar basin offshore Sri Lanka in August 2011. The HSE Management System for the drilling campaign has been implemented, and a detailed oil spill contingency plan has been developed, as have incident action plans for various scenarios. Test exercises are ongoing and training for relevant personnel was conducted in June 2011.
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Other Locations
- In January 2010, we lifted contractual force majeure on our acreage in Nepal, based on an assessment of the security situation.
- Preparations are under way for an offshore exploration drilling campaign in Sri Lanka, which is expected to commence in July 2011.
- At the end of 2010, we received notice of the award of offshore exploration blocks in Spain.
- In a programme of disposal of non-core assets, we relinquished our interest in the Louza Block and sold the Nabeul Block in Tunisia to Cooper Energy, and transferred our remaining interests in Bangladesh to our partner Santos.
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