ONGC controversy

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— The controversy over drilling by the Oil and Natural Gas Corporation (ONGC) within the precincts of the historic Ahom-age amphitheatre, Rang Ghar, in Sivasagar district has subsided with the tendering of an apology by the oil major that it was a mistake on its part to start operations at the protected site. Had the ONGC seen reason earlier, it could have avoided the controversy and not drawn the ire of the people in the process. The spontaneous reaction from the public and different organizations following the drilling operations was understandable but the ONGC chose to ignore it for quite some time. Even a more serious lapse on the part of the ONGC was to feign ignorance about the sanctity of the monument protected under the Ancient Monuments and Archaeological Sites and Remains Act, 1958 that prohibits any construction and mining activities within a radius of 300 metres of such monuments. Now, the ONGC has undertaken to contribute to the upkeep and maintenance of all historic sites in Sivasagar district, which is most welcome.

A common grievance of many organizations has been that the various public sector majors having operation in the State have been far from liberal when it comes to contributing to the cause of the State. Even during the ongoing floods, the issue of discrimination against the State by the PSUs in the matter of financial assistance has become a heated debate. The common accusation is that these PSUs have contributed to Bihar, another State ravaged by floods this year, in a much bigger way than they have done to Assam. Apparently, the criticism has some merits but resorting to violence to force a donation is perhaps not the ideal way to ensure charity. Some organizations have gone to the extreme of stopping flood relief-laden trucks going to Bihar. While this act in itself is irrational and unfortunate, we ought to also remember that we are only hampering our own prospects of getting similar help from outside during our times of crisis. If the PSUs indeed need persuasion, our actions have to be guided by reason and not aggression. Harassing the PSUs for hefty donations for mundane causes by varioius organizations has emerged as an unhealthy trend in the State. source: assam tribune

Energy security and alternative sources

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— Pabitra Chaudhuri
With the surging demand of energy and burgeoning rise of crude oil price, the crying call today is energy security particularly with the voracious demand of energy by the emerging economic powerhouses like China and India. There is a concentrated effort by the government and the premier oil companies to attain energy security. With that end in view, companies like ONGC and Oil India, have been scouting all over the world to enter into consortiums to explore and produce oil and in fact ONGC has been successful in producing oil from their Russian field Shakaline and has recently bought a Company named Imperial oil Company. Apart from ONGC and OIL, down-stream companies like IOC, BPCL, GAIL have entered into various consortiums to find oil and natural gas. OIL has started their operation of exploration along with another global company in Libya and is working out various plans to obtain oil exploration rights in Gabbon, Nigeria and Sudan. In the immediate context, such an endeavour’s gestation period is long and securing oil from such blocs abroad will take quite some time. Within the country, both on-shore and off-shore, there are many blocs, which have been awarded to the oil companies to explore oil and gas. Krishna-Godavari find has been a good boost, particularly in the gas sector and oil find in Rajasthan by Cain Energy Ltd has opened a new vista of hope and has put Rajasthan in a big way in the oil map of India joining the pantheon of Assam, Gujarat, Maharashtra and Andhra Pradesh. OIL has introduced various modem methods like Horizontal and J Bend drilling to boost up their production in Assam fields and endeavouring to make their heavy oil found in their Rajasthan field pumpable. Yet there is a yawning gap between the indigenous supply and demand in the country.With the above scenario, it is necessary to look for alternative sources. Biofuel has already become a buzz-word translated into reality in Brazil, Sweden, Germany and the USA - we in India can also play our role in our quest for energy security. Securing oil in foreign lands with various consortiums is a long and arduous task and certainly cannot match the burgeoning requirement of oil in the country. To fill this gap, some indigenceous efforts can be made in acquiring bio-diesel from Jathropa plantation by using the fallow lands lying in Assam and other states. The North-East has good climatic condition with adequate rainfall to grow bio-diesel trees. The State Government in Assam has a Jathropa Mission, which by now should be in place to plant and grow bio-diesel trees- it is necessary to put it on a fast track.It may be noted that in 1900 when Rudolf Diesel introduced the diesel engine for the first time in the world, the first engine ran on peanut oil. The world has again come full circle using bio-diesel in the backdrop of the high cost of crude oil. The western countries barring USA have signed the Kyoto Protocol, which enjoins them to use bio-diesel in the immediate future. Since then the USA has also become conscious of global warming and worldwide pollution and has been making determined strides in introducing alternative sources of energy like bio-diesel, even making a dent in their food production.India is poised at the threshold of reaching higher and sustainable growth path and has become a substantial economic power-house. To maintain this growth, energy security is a crying need. Assam, being the home land of petroleum industry (first oil well was drilled in 1889, ten years after the first world’s oil well (popularly known as Drake’s well) was drilled, has to play an important role and ONGC and OIL will have to achieve better results. Fortunately OIL has found its place as a good E and P Company and according to their own announcement is focused to double their crude oil/gas production in the next 5 years.Changes are taking place rapidly in the hydro-carbon industry with competition becoming intense. Boundaries are quickly vanishing with globalisation of economy. Within the country there is a large potential for growth, the key engine for attainment of success is the use of better technology for seismic, drilling, well services, emission reduction and knowledge management tools.By all accounts sedimentary rock formation in Assam-Arakan basin has natural gas potential for e.g. proved production in upper Assam, Cachar, Tripura and likely deposits in Mizorum, Manipur and Nagaland, the enormous natural gas find in Rakhine (Arakan Basin) in Mynmar has opened up a new vista where it is estimated 20 mscmb can be supplied for 20 years. If ever a pipeline materialises carrying gas from Rakhine to India through Assam with the addition of gas from North East, the region will grow and develop. Today the resource that has surfaced to the top of the energy pile is natural gas now regarded as cheaper, more efficient and more plentiful than the fast depleting oil and also more cost effective.Another project, which can be seriously thought of, is the conversion of sugar cane into ethanol (already a certain percentage of power-alcholol is being used in petrol). Brazil and USA have been using over 14 billion litres of ethanol as automobile fuel more than our present annual petrol consumption of about 12 billion litres. India’s peak production so far of 350 million tonnes of cane can be processed entirely into 26 bi1lion litres of ethanol or conversely the same quantity of sugar cane can be processed into 18 million tonnes of sugar and 15 billion litres of ethanol. However an area of concern is if somehow indigenous production of ethanol gets affected by vagaries of climate etc and in such an eventuality it will be necessary to firm up supplies from abroad. Naturally a question may be asked whether normal petrol engine can take a total ethanol fuel. Flexible fuel engine will need to be introduced which can burn petrol or ethanol or combinations of both. This technology once used will cost about 100 dollars, per vehicle, which is nothing much, which can be further reduced with the increasingly big volume of vehicles in India.Coal liquefaction is another route for energy security. Although it is a costly project yet it could be cost-effective in the background of burgeoning price of crude oil. Production of synthetic fuel from coal is a strategic option to be properly studied. Oil India has carried out various experiments — mainly CTSL coal only catalytic two-stage liquefaction and Direct Coal liquefaction. It is understood that the DCL route is a good economic return in the backdrop of high cost of crude oil. It is further understood that OIL in partnership with Engineers India Ltd has decided to set up a small commercial plant before going an a full scale commercial plant. Another route for alternative source could be coal-bed methane (CBM), which now is well up in the cards in USA. Methane is associated with coal as a by-product of the coal formation process-it is trapped in coal beds. If effectively recovered coal bed methane could be a significant potential source of energy. Although the process is in the infancy in India, there is some work going on in Jharia coalfield, Jharkhand and the project cost of Rs.77 crore is sanctioned by the Government of India. The prognosticated CBM resource in India as per Directorate General of Hydro-carbon is pretty high. CBM could be used in power generation, auto-fuel in form of compressed Natural gas (CNG), feed-stock for fertilizer, fuel for industrial use and host of other uses.Another process is under-ground coal gasification – this is primarily to exploit coal resources which are either uneconomic to work by conventional under-ground coal extraction or inaccessible due to depth or other geological considerations. UCG is a method of converting unworked coal, deep underground, into combustible gas which can be used for industrial heating, power generation or the manufacture of hydrogen synthetic natural gas other chemicals.Solar energy is taking a front seat in all the developed countries and India also is very much in the government scanner. The Prime Minister is well-seized with its importance and while releasing the National Action Plan on Energy stated that solar power has the potential of changing the face of India. The objective is to generate atleast 1000 MW of solar thermal power. To change the face of the nation it is a very modest plan in a country, which is bestowed with abundance of sunlight in most of the areas including the deserts. We need to go in a big way as the other developed countries are doing and with our technical ingenuity and knowledge, with private-public partnership we could become Solar Thermal Electricity Generation (STEG) technology leader and suppliers to the world along with it get plenty of clean energy in the country. Wind energy is another source of clean energy and is already installed in coastal areas of Tamil Nadu. This needs to be further spread out particularly in the long coastal areas of the country. Anothersource of energy which does not cost much should be introduced is the conversion of municipal garbage into energy — along with using animal waste to produce energy; multiplied into millions of houses, the energy production will be mind-blowing. Nuke deal has formed the main headlines in the media and the Lok Sabha passed it. Nuclear energy is a must for the country; not only it would produce energy but also can turn into world’s workshop for building nuclear power-houses — the engineering and technological knowledge of India could certainly make a success of this endeavour in the next few years.Political and administrative will is necessary to have a blue-print and implement it to obtain energy security in the country. We need to put in place in a solid manner public-private partnerships in this endeavour and it has to be put on a fast track. source: assam tribune editorial 03.09.08

Tripura ONGC rapped

Agartala, June 29: The Tripura unit of the Oil and Natural Gas Corporation (ONGC) and the state government appeared to be on a collision course with industries minister Jiten Chowdhury launching a thinly-veiled attack on the corporation for its failure to increase the production of natural gas.

“The natural gas being produced in the state is not enough to meet the requirements for upcoming projects and new industries. We have approached the Centre to raise the investment, manpower and infrastructure for increased production,” said Chowdhury, on the concluding day of the budget session on Friday.

Replying to a call-attention motion, the minister said talks were on with the ONGC as the demand for natural gas had registered a steep rise.

He said at a high-level meeting held in 1997, the ONGC authorities had assured the government that the production of natural gas would rise from 4.5 million cubic metres to 8 million cubic metres daily by the end of the Tenth Five Year Plan in March 2007.

“But subsequently, the ONGC authorities had presented statistics showing a decrease in the production,” said Chowdhury.

The ONGC authorities had informed the state government in February last year that it was not even in a position to fully supply the 1.78 cubic metres of gas allotted by the Union petroleum ministry to different projects in Tripura.

The authorities also said they would be able to maintain the supply of 1.5 cubic metres of natural gas to the Gas Authority of India Ltd (GAIL).

“Recently, the ONGC authorities have told us that by 2012-2013 they would be able to raise the production of natural gas to keep the ONGC’s Palatana thermal power project, Neepco’s Monarchak thermal project and the Rookhia and Barmura thermal plants well supplied,” said Chowdhury.

He told the House that at present, ONGC was carrying out explorations on 6,691 square km of land and GAIL is exploring 1,680 square km in collaboration with Jubilant Oil and Gas in the state.

“Unless the exploration ends on a successful note, the supply will not improve,” he added.
Chowdhury said the Union ministry of oil and natural gas generally determined the price of gas but in Tripura, ONGC had set four separate rates.

“We have brought this to the notice of the Union ministry of oil and natural gas and requested for a price revision, considering the socio-economic position of the northeastern states,” he said.
He added that the state government was awaiting a positive response from the Union ministry.

source: telegraph india

Crisis in Numaligarh refinery

Crisis in Numaligarh refinery

— Subhas Chandra Goswami

Oil refineries are to purchase crude at international price whether it is imported or domestic product. The international price of crude at around 70 US dollars a barrel a year back has jumped to the present level of around 130 US dollars. October 19, 1889 is a red letter day in the annals of petroleum history, when the first gush of commercially viable oil was struck in Digboi well No. 1. But till independence of the country native people around took no interest in this industry. But after independence, specially after discovery of oil fields at Naharakatia, though the oil business was still controlled by the British, people started taking notice of the happenings around and slowly but surely started emotionally attracted to the oil industry. But construction of the first oil refinery under public sector at Barauni and laying of 1157 km long pipe line from Naharakatia to Barauni to carry Assam crude away from Assam was considered by the people of Assam as new form of exploitation. From then on ‘oil’ became emotionally sureharged word for the people of Assam and word ‘oil’ even today touches the inner cord of the people of Assam. It is a fact that the oil refineries at Guwahati and Bongaigaon came through agitation by the people of Assam. Even the last of the four refineries of Assam at Numaligarh is the outcome of an accord signed after a protracted agitation. Under this scenario the people of Assam are naturally concerned at the news of crisis of the “Accord Refinery”.What is the problem of Numaligarh refinery? In fact there are more than one problem faced by the refinery. Let us start with the availability of crude. Today total installed capacity of the four refineries of Assam is 7 MMTA. It we add 3 MMTA capacity of Barauni refinery, which was planned to run on Assam crude, the total production of crude from north eastern region should have been 10 MMTA. Perhaps this was the projection given by some people somewhere to justify the decision to build the fourth refinery at Numaligarh, when the actual crude production was about 5 MMTA at the time of signing the accord in 1995. Ironically the crude production of NE region presently has come down to about 4.5 MMTA. So when Barauni refinery is no more supplied with Assam crude from 2000, BRPL is bringing in RAVVA crude from Andhra Pradesh from 2003, the four Assam refinery including the one at Numaligarh are still short of 1MMTA for full capacity utilisation. As a result these refineries with total installed capacity of 7 MMTA are gasping for breath due to short supply of crude, when economy of scale demands that a modern refinery should have atleast 9 MMTA installed capacity to be economically viable. Did an element of pressure and emotion prevailed over economic consideration in taking vital decision in Assam oil sector?Oil refineries are to purchase crude at international price whether it is imported or domestic product. The international price of crude at around 70 US dollars a barrel a year back has jumped to the present level of around 130 US dollars. This has not only jeopardised the profitability of oil companies but also has put a great stress on the economy of the country, which is importing about 72 per cent of its crude oil need. Earlier even with shortage of crude supply, the Assam refineries did not incur loss due to the Government of India’s Administered Pricing Mechanism (APM) till 1998. The cost plus system also ensured the profitability of the refineries. However from early 1998 the Government of India had gradually dismantled the facilities given to the oil companies through APM and cost plus system. The Government of India did this with an objective to bring in market driven mechanism, because of policy business globalisation. In reality however it did not happen, because presently crude is priced at international level, whereas the product prices are controlled by the government. This is the paradox and this has created problem for oil companies, more so for small companies like NRL.To offset the problems the government allowed 100 per cent excise duty relief to NRL since its inception. However from 2002 refineries at Digboi, Guwahati and Bongaigaon also were offered 50 per cent excise duty relief and unfortunately for NRL, the excise duly relief on products of NRL also was curtailed to 5p per cent. Not we understand that Chief Minister Tarun Gogoi has taken up with the Prime Minister to restore the 100 per cent excise duty relief to NRL.For some years for crude oil supplied by ONGC and OIL to NE refineries, the pipeline transportation cost and Sales Tax were borne by ONGC and OIL. Now it is borne by the refineries. Because of the fact that for oil producing companies the steep rise in international crude price has come as a windall, the oil producing companies should be convinced to bear the cost of transportation of crude as they did earlier.The loss of public sector oil marketing companies like IOCL, BPCL and HPCL Offset to a great extent by the Central Government by offering 33.3 per cent discount 42.7 per cent loss is also offset by the Central Government by issuing oil bond. This however, affects cash flow. Though cash is not available, the taxes etc are to be paid on the accrued earning. These reliefs available to oil marketing companies till now are not available to NRL.In the changed scenario unable to sustain the growing losses without government assistance, Reliance and ESSAR have closed most of their retail outlets now. NRL, a Government of India undertaking has also decided to close down its retail outlets in a phased manner.Permission of Government of India was obtained by NRL in mid nineties to set up about 500 retail outlets across the country. The first few such outlets were set up around 2005. Today there are 108 outlets across the country. Now a question has arisen why after starting the marketing activities NRL got into trouble presently. In late nineties there was some instructions from Petroleum Ministry to BRPL also to start retail marketing activities by BRPL. After some preliminary works, for various reasons BRPL did not pursue with the retail marketing activities. During the period when NRL obtained permission from the government of India to start retail marketing activities, the scheme of issuing oil bonds to oil marketing companies was the ague. The NRL loving people of Assam have a right to known from NRL management as to whether NRL sought clarification from Ministry of Petroleum and Natural Gas on applicability of such bonds to their marketing operation before starting retail marketing business.The Chief Minister of Assam has already taken up with the Prime Minister to mitigate the crisis of NRL. He should relentlessly pursue the matter till the benefits given to other public sector oil marketing companies are available to NRL also. However we should not stop by looking at the problems of NRL in isolation. There are problems in oil sector in the North East. Considering low availability of crude oil in Assam, the small capacities of refineries, need of transportation of products through long distance due to inadequate local market, heavy investment needed by refineries to meet the new fuel standards, lack of any other major industry in the region, a comprehensive plan covering oil exploration, production, refining and marketing by the oil companies working in the region is the need of the hour to make oil business in NE meaningful and rewarding.(The writer is a former GM of BRPL) Source: Assam Tribune