Canoro faces leaking wells at Changpang in Nagaland

Vol 11, PW 25 (01 May 08) Exploration & Production

Canoro Resources will have its work cut out if and when it assumes its new role as developer of the discovered Changpang field in Nagaland.

One of Canoro’s immediate priorities at Changpang will be to reverse a looming threat to the local environment as oil spillage from abandoned wells seeps into the ground. “When Changpang was shut in 14 years ago ONGC left in a hurry,â€‌ we hear.

“Twenty-nine wells were drilled in Changpang of which around a dozen were producing. Several of these are leaking.

â€‌ Locals from surrounding areas looking for scrap metal are believed to be the most likely cause of the damaged wellheads, which are believed to have been leaking for several years. After cleaning up the oil spill Canoro believes it can bring Changpang production back up to the 1000 b/d range the field was producing when separatist militants expelled ONGC from the state at gunpoint in 1994.

“Changpang hasn’t been producing for 14 years so a lot of the pressure will have built up making it easier to produce,â€‌ we hear. “If 12 wells were producing it makes sense to re-enter all 12 wells beginning with the leaking ones to stop the environmental damage.

â€‌ If Canoro signs its agreement with ONGC in time, Canoro could deploy one of two contracted rigs to Changpang from Assam, where it operates the Amguri field and exploration block AA-ON/7. Canoro expects to begin work at Changpang after the monsoon in September or October this year, assuming agreement is reached with ONGC.

“As soon as Canoro has a deal with ONGC,â€‌ we hear, “it will start work.â€‌ In Delhi meanwhile, senior Canoro management is negotiating the finer points of a service contract with ONGC amid hopes the government will revise its marginal fields policy to make it more attractive by allowing operators working with ONGC to receive more than the present $35/barrel ceiling allowed in the service contract and eventually take equity.

“Initially the agreement with ONGC will be structured around a service contract,â€‌ we hear. “But eventually Canoro will want more than a standard marginal fields’ contract.