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| Sunday, 31 August 2003 |
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Oil prospecting off Western coast by Elmo Leonard The government is in the process of luring international oil and gas exploration companies to detect and exploit off-shore oil reserves, which creditably exist in the western coasts of the island. Earlier, oil exploration activities were concentrated in the Cauvery Basin, in the Palk Strait, at depths of less than 200 metres. The latest advancement in technology, enables oil extraction from depths of more than 2,500 metres. Thus, it is possible to explore oil into the Gulf of Mannar Basin, hitherto, overlooked because of its depth of water, a spokesman for the Ministry of Power and Energy said. The international investment forum to attract petroleum explorers is scheduled to be held end-year in Colombo. The Ministry of Power and Energy and the Ceylon Petroleum Corporation (CPC) are the organisers, while the Sri Lanka Foreign Ministry carries out the campaign, overseas. For the purpose, the Petroleum Resources Bill; the pivotal piece of legislation drafted, is before Parliament. First, the Attorney-General determined that the provisions of the bill are not inconsistent with the Constitution and are not subject to any prohibition or restrictions imposed by the 13th Amendment to the constitution. Drilling offshore wells cost over $10 million and a minimum of 10 wells must be dug to hit oil, according to some international information. Investment in exploration for hydrocarbon involves an extraordinary risk in comparison to other investments and, all money could be lost, if the exercise becomes futile. When oil is found, a period of over five years is needed before breaking even, the spokesman for the Energy Ministry, said. The foreign investors would be concerned about the basis for profit sharing; area demarkation for exploitation and prevention of pollution from offshore petroleum operations regulations and the like. On the Sri Lankan side, the concern would be to ascertain, who owns the petroleum resources; setting up a Petroleum Resources Agreement, a Petroleum Resources Development Secretariat and fiscal provisions. The Government is hastening oil exploration, because 10 percent of the total imports of the country constitutes petroleum. Besides, oil is price-wise, a volatile commodity, likely to go up. Sri Lanka will reach saturation of hydropower generation with the completion of the Upper Kotmale Hydropower generating project, local energy experts said. With it, the country would be forced to use thermal power to generate electricity to meet the demand for electricity, which grows at 8 percent per annum. India, on her part, began exploring for hydrocarbons along the Cauvery Basin, along the area which separates the two nations as early as 1954. Since then India has drilled over 100 test wells. The results are that India exploits over 3 million barrels of oil per annum and 180,000 cubic metres of petroleum gas. Moreover, several other oil and gas fields in an offshore area of the Cauvery basin have been discovered and left aside, for future exploitation, according to Indian sources. On Sri Lanka's part, in the late 1970 and 1980's, oil exploration drilling was undertaken. In the late 1980's, the move initiated by CPC in collaboration with international giant, Cites Services, resulted in the drilling of seven wells in the Gulf of Mannar. When all seven wells proved dry, no further attempts were made, while India, struck oil following the drilling of 30 dry wells. In 2001, a team of consultants from the New South Global (Pvt) Ltd, affiliated to the University of New South Wales, Australia, revived the interest in exploring oil, stalled for one-and-a-half decades. This scheme was funded under an ADB grant. The Australians recommended conducting seismic surveys offshore focusing on two main sedimentary basins, the Gulf of Mannar and Cauvery. CPC, in turn, entered into an agreement with TGS - NOPEC, a Norwegian Geophysical company, to acquire ship borne 2D seismic data on non-exclusive and cost recovery basis. Phase I of the exercise acquired 1000 kilometres of seismic revealed greater potential for exploring hydrocarbon offshore of the island's western coastal belt. Simultaneously, CPC entered into collaboration with Swedish International Development Agency (SIDA) to conduct Satellite Gravity Surveys. Foreign reports on the subject indicate that potential for petroleum is greater in the Cauvery and Gulf of Mannar basin which is associated with rift complexes of the late Jurassic, cretaceous age. Studies have further shown that the Cauvery basin has the basic geological structures that are required to contain oil and gas, such as fault related structures off flanks of major structures and it should have reservoirs with a potential of 10-50 million barrels. Meanwhile, studies suggest that the Gulf of Mannar basin is both oil and natural gas prone and has geological structures such as margin, fault and other technical necessities. This area could have a potential of 100 million barrels. |
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