Cairn plans more exploration in B'desh after gas find

British oil and gas firm Cairn Energy Plc has discovered new gas in one offshore well but has failed to find any in two other offshore fields in the Bangladesh sea, government officials said on Sunday.

The firm completed exploratory drilling in the Hatiya structure in the Bay of Bengal, 60 kilometers south of the port city of Chittagong, an official said.

"The firm informed us today that they have encountered hydrocarbon/petroleum in the structure which is not commercially viable," said Muhammad Muqtadir Ali, a director of state-run Bangladesh Oil, Gas, and Mineral Corporation or Petrobangla.

But Cairn has discovered new gas in a well at the Sangu offshore field.

"The firm will be able to add at least 25 to 30 mmcfd of gas in its total production," another official said.

Earlier, the firm did not find any commercially viable gas in Magnama, another offshore field in the sea.

"Now the firm proposed to conduct a 3D seismic survey in both the fields either in late December this year or early next year," Muqtadir told Reuters, referring to Hatiya and Magnama.

After the 3D survey is completed, Cairn will conduct an appraisal for a final decision which will cost altogether about $90 million for each field, the official said.

Muqtadir said the firm had already spent about $200 million in offshore exploration work.

The firm started drilling after completion of 2D seismic surveys but failed to discover commercially viable gas there.

Petrobangla, based on seismic surveys, has estimated that there was a potential reserve of 3.5 trillion cubic feet of gas at Magnama and 1.8 TCF at the Hatiya structure.

The firm operates Bangladesh's only offshore gas field at Sangu in the Bay of Bengal, producing up to 80 million cubic feet of gas per day .

Cairn has been in Bangladesh for more than 10 years and, along with its joint venture partner, U.S. firm Halliburton Co., has invested nearly $790 million, officials said.

Bangladesh's proven and recoverable gas reserves of 13.54 tcf are expected to be exhausted by 2011, officials said.