3 Cairn workers and pipes

Creating value through the oil and gas life cycle

Cairn looks to create, add and realise social and economic value for stakeholders through the oil and gas exploration and production life cycle. This includes a broad group of stakeholders within the countries where we operate, such as governments, communities, employees and local businesses.

This value can be measured in financial terms, for example through payment of taxes, de-risking state oil company investment through exploration and appraisal, and trading with local enterprises; and can also be measured in social terms through local employment, building skills and knowledge, and aiding the development of local businesses and infrastructure. We recognise that our operations may sometimes generate adverse impacts, such as the utilisation of scarce resources or the generation of wastes and local social impacts. However, we manage the risks associated with our business responsibly, and continually look at ways to minimise and mitigate against potential negative impacts, and to maximise the social and economic benefits to create value where we operate.

The oil and gas business is, by nature, long term and our approach covers every stage of the oil and gas life cycle.

Graphic showing our value chain

Creating value

Stage 1: Identify

Identify

Description

Cairn uses an extensive screening process, including social, safety and environmental factors, to identify prospective areas for oil and gas.

Recent examples

In 2015, Cairn participated in the 2015 APA and 23rd licensing rounds in Norway.

How we create value and contribute value

  • Licence payment
  • Due diligence expenses

Value contributed in Senegal in 2015

  • Licence fees

 

Stage 2: Explore

Explore

Description

We use sophisticated seismic and geological survey techniques to determine whether viable oil and gas reservoirs may exist and identify potential well locations for exploration drilling conducted using specialist installation and supporting contractors.

Recent examples

During 2015, Cairn successfully completed a 3D seismic survey offshore Senegal.

We were also involved, as non-operator, in exploration drilling in the UK and Norwegian North Sea. Drilling offshore Western Sahara was completed in March 2015, encountering non-commercial volumes of hydrocarbons.

How we create value and contribute value

  • Local employment and supplier opportunities
  • Local fees and taxes
  • Generating and sharing of geological and environmental data
  • De-risking state oil company and partner investment

Value contributed in Senegal in 2015

  • Detailed marine mammal observations shared with local authorities
  • Limited local employment
  • De-risking state oil company and partner investment

 

Adding value

Stage 3: Appraise

Appraise

Description

If exploration drilling is successful, appraisal drilling is then conducted to establish the size and characteristics of the discovery and provide technical information to optimise the method for recovery of the oil and gas.

Recent examples

We commenced appraisal drilling offshore Senegal in 2015 with SNE-2 being completed at the turn of the year. The SNE-3 appraisal well has since been completed and the BEL-1 exploration and appraisal well has commenced.

How we create value and contribute value

  • Local employment and supplier opportunities
  • Infrastructure development
  • Social investment
  • Local fees and taxes
  • De-risking state oil company and partner investment

Value contributed in Senegal in 2015

  • Local employment at Dakar office and port
  • Local contractor development
  • Institutional capacity building
  • Social investment in education, enterprise development and micro-finance projects
  • Local fees and taxes
  • De-risking state oil and partner company investment

 

Stage 4: Develop

Develop

Description

If appraisal wells show technically and commercially viable quantities of oil and gas, a development plan is prepared and submitted to the relevant authorities for approval prior to the development and construction of production facilities. This includes a rigorous assessment of all the potential risks and a long-term assessment of environmental and social impacts.

Recent examples

We are participating as non-operator in two development projects, the Kraken and Catcher fields, in the UK North Sea.

How we create value and contribute value

  • Local employment and supplier opportunities
  • Infrastructure development
  • Social investment
  • Local fees and taxes

Value contributed in Senegal in 2015

Not applicable

 

Realising value

Stage 5: Produce

Produce

Description

During this phase, which can last many decades, oil and gas is produced. Regular reviews are made of social and environmental performance.

Recent examples

We had no operated production at the end of 2015. We anticipate production from our non-operated Catcher and Kraken fields from 2017.

We have a ~10% residual interest in Cairn India Limited, which is in the production phase.

How we create value and contribute value

  • Local employment and supplier opportunities
  • Infrastructure development
  • Social investment
  • Local fees and taxes
  • Production royalties

Value contributed in Senegal in 2015

Not applicable

 

Stage 6: Return and re-invest

Return and re-invest

Description

This phase occurs when an area has not shown commercial hydrocarbon reserves or when hydrocarbons can no longer be extracted safely or economically. We will end operations and restore sites in a manner that protects people and the environment.

Recent examples

In 2015, a non-operated well in St Laurent, France was decommissioned and the site restored.

How we create value and contribute value

  • Local employment and supplier opportunities
  • Local fees and taxes

Value contributed in Senegal in 2015

Not applicable

 

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