Canoro had earlier requested the government to split up the PSC for AA-ON/7 – 770 sq km of the block falls in Assam while 218 sq km falls in Nagaland, into two parts. The company wants the Nagaland portion of the block to be spun off into a separate PSC as the area is militancy prone and has peculiar land laws, which does not allow any exploration works.
The Canadian upstream firm has done ample work and has been able to hammer out a consensus to begin explorations in the acreage. Canoro will drill a total of two wells at a cost of Rs 60 crores in the Nagaland portion, local sources said.
Canoro is expected to shortly finalize a site for a well on the Nagaland side. Work is currently underway in the Naga foothills for the construction of the access road and a well site to drill the deep sub-thrust well. Notably, work on drilling the fifth exploration well in the onshore block is scheduled to begin February 2009. Canoro recently plugged and abandoned the Borkathani exploration well after no commercial reserves were found during a series of testing operations.
Canoro is the operator with a 65% stake in the block and is keen to exploit new areas in the acreage, especially after the failed test on Dolakharia. Prior to Dolakharia, Canoro had to abandon its first exploration well, the Sonakhet in the Assam block, because the well did not encounter any major hydrocarbon bearing sands. Also, subsequent drill stem tests (DST) carried out on various zones were not very encouraging.