Forced closure of another 10 gas wells in the Cauvery Basin

Vol 3, PW 26 (02 Feb 00) Exploration & Production

It is a sad indictment of local industries in southern India that ONGC has been forced to cap gas wells in the Cauvery Basin because its customers are unable to offtake the gas.

A senior official at ONGCs Southern Regional Business Centre (SRBC) in Chennai tells this report that a total of 36 gas wells in the Cauvery Basin are now closed. In July 1999, Petrowatch reported that ONGC was forced to close 26 wells because of offtake problems with local consumers (Gas wells lie idle in Cauvery Basin Petrowatch/Vol 3/Issue 12).

Then, as now, the principal culprit appears to be the Tamil Nadu Electricity Board (TNEB). This report learns that TNEB has a contractual agreement with ONGC to offtake 1.4m cm/d but is only in a position to receive 50,000 cm/d.

Talks between ONGC and TNEB reveal that the latters power plants, scheduled to receive the gas, will be ready in two years time only. Other companies report similar problems, making it impossible for them to fulfil their contractual obligations with ONGC or GAIL.

The result: more than 2m cm/d of gas (the aggregate from the 36 wells, according to ONGC) is lying capped and unused. Potential production of 2,000 barrels a day (b/d) of oil is also lying untapped.

This information has clouded an otherwise rosy picture for ONGC in southern India. Petrowatch learns SRBC which includes the Cauvery and Krishna Godavari basins will multiply its operating profit this year five times to Rs150cr ($35m) from Rs30cr ($7m) last year, thanks to a string of recent gas finds.