Gas Safety: ONGC/GAIL planning Rs1500cr spend

Vol 18, PW 12 (12 Feb 15) Midstream & Downstream

Nothing frightens GAIL more than the idea of another gas leak and explosion like the one at its pipeline in Andhra Pradesh in June 2014.

Hardly surprising then to hear GAIL and ONGC have sprung into action with a plan to install gas dehydration facilities at ONGC’s Cauvery and Gujarat assets to prevent water content in gas corroding GAIL pipelines and causing leaks. ONGC will most likely appoint state-owned Mecon as its Engineering Procurement and Management Consultant (EPMC) for the estimated Rs1500cr ($240m) job.

Mecon was chosen because it has already prepared a study on the health of GAIL’s pipelines in the Cauvery and Gujarat assets. “Mecon knows about the gas gathering station facilities at both assets,” confirms ONGC.

“This is why we plan to award them the contract on an 'open book estimate' basis." Or put simply, where Mecon invoices ONGC for actual costs plus its own margin and ONGC later splits the cost 50-50 with GAIL in line with an oil ministry directive issued in December.

Under the directive, ONGC must 'dehydrate' or remove liquid from gas at production installations before transferring it to the Custody Transfer Point for injection into GAIL’s pipeline network. Most welcome the ministry’s intervention.

Until now ONGC and GAIL have been wasting time blaming each other for the lack of a dehydration plan.