At a time when ageing oil fields and dented prospects of prominent natural gas fields have raised concerns over India’s energy security plan, Cairn India’s recent plea to the oil ministry to return portions of the Barmer basin it relinquished in Rajasthan can potentially raise stakes for the company and boost the country’s hydrocarbon output.

It has now emerged that oil reserves from the source rock in Barmer Hill, which feeds the most prolific reservoir oil blocks like Mangala and Bhagyam, may have migrated into the relinquished areas. This opens up the prospects of finding oil prospects in the relinquished 7,997 sq km.

In a letter to the oil ministry on April 5, 2013, Cairn India CEO P Elango sought restoration of the entire 11,108 sq km block it originally held when the production sharing contract (PSC) was signed in 1997. A company official confirmed that maps of surveys it conducted show that oil reserves from the source rock have migrated into some of the relinquished land. The source rock is situated at a depth of about 1,200 metres within the 3,111 sq km land currently held by the company.

According to the official, typically 90% of the hydrocarbon reserves remain in the source rock while around 2% migrate and get trapped in reservoirs. About 8% of the reserves are usually lost in migration. To date, Cairn India’s 26 discoveries put its potential reserves at around 7.3 billion barrels of oil equivalent. So, possibly, the reserves in the source rock are several times larger, though the recovery factor from source rocks globally stand at around just 7-20%, the official said.

Cairn India also plans to drill a well at the source rock and recover oil through fracking. ?In India, we normally forget the source rock and drill in the reservoir rock. Now, if you look at the source rock, it is a tight rock which is not very porous. For this, we have to use fracking to produce oil,? the official said.

The prospects that the company sees in the Barmer block was highlighted through its 26th oil discovery which was announced as early as April this year.

The Mangala, Bhagyam and Aishwariya fields constitute Cairn India?s main assets in Rajasthan. The company has given a guidance for exiting FY14 at production levels of 200,000-215,000 barrels of oil per day (bpd), against current production levels of 175,000 bpd.

The relinquished area is still held by the government and is not awarded to any third party. Cairn believes that as it has surveyed the areas for years, it has a good understanding of the prospectivity of the entire block. Also, it already has the infrastructure in place to explore in the relinquished areas. ?As the company has technical and scientific knowledge over the relinquished area, this would enhance the chances of exploration success,? Elango’s letter adds.

While oil ministry officials say that a final decision on restoring the land has not been arrived at, an official from the directorate general of hydrocarbons (DGH) said that the company has reason to be optimistic. The official said if any of the company’s existing wells spills over into relinquished land, they can make a claim for that portion of land.

In a separate communication with the oil ministry dated April 12, Elango has requested fast-track clearance for its Rs 5,000 crore integrated block development plan (IBDP) in its existing Barmer block spread over 2013-16.

For this, the company has sought approval for an over-arching IBDP rather than the government’s present policy of allowing capital expenditure only for discoveries that can be commercially exploited.

The IBDP can reduce the lead time between discovery and production from 36 months to 18 months and enhance production of hydrocarbons in the country, Elango added.