Vol 3, PW 7 (28 Apr 99) Exploration & Production

Indias Essar Group is widely believed to be obstructing ONGC exploration and production activity in Gujarat.

This report understands Essar is behind a letter written by the state government of Gujarat ordering a number of District Collectors not to allocate land to ONGC if it has Coal Bed Methane (CBM) potential. The report reflects a potential wider conflict of interest in areas of Gujarat - like Sobhasan - where CBM activity is possible in areas where coal seams overlap oil-bearing sandstone.

For ONGC, this presents a major problem. CBM extraction requires that coal seam bearing zones must be de-watered, leading inevitably to a fall in reservoir pressure.

Essar has made no secret of its wish to exploit CBM in Sobhasan. In the past, ONGC experienced similar problems with Reliance Industries, which also has an interest in CBM exploitation.

Essars action is also impacting on ONGCs own efforts to exploit CBM. Parts of Gujarat contain areas where methane can be produced from coal seams without affecting hydrocarbon production.

ONGC wants to explore these areas but has effectively been banned by the Gujarat government, acting on behalf of Essar. The matter is now before TS Vijayaraghavan, Secretary in the Indian oil ministry.

For its part, ONGC is keen to move ahead - fast. Holditch & Associates, a US-based CBM consultancy, with experience in Jharia, Bihar, has been hired for Gujarat and ONGC has ordered in special pumps to pump water out from coal beds.

The equipment is expected to arrive within three months.

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