Playing umpire in a CBM row between ONGC and DGH

Vol 13, PW 1 (18 Jun 09) Exploration & Production

Playing mediator is never fun, as oil ministry bureaucrats know well.

On June 4 they were out in force to hear ONGC director exploration DK Pande make a presentation to the oil ministry defending the state-owned explorer’s CBM record at its Jharia block following a stinging rebuke from the DGH. Two weeks earlier on May 14 the DGH detailed in a letter to additional oil secretary and ONGC director S.

Sundareshan what it alleged were serious lapses and cost overruns at Jharia through negligence. Hoping to set the record straight, Pande made his presentation to Sundareshan with oil secretary RS Pandey, DGH deputy director general SK Srivastava and others in attendance.

“ONGC made a presentation to make its point,â€‌ says a source that attended. “It was nothing more than a progress review.

â€‌ Others disagree, saying the DGH was scathing in its May 14 letter about ONGC’s methodology, comparing it with similar projects undertaken by Mukesh Ambani-controlled Reliance Industries and YK Modi-controlled Great Eastern Energy. “DGH officials say ONGC is spending Rs90cr ($20m) per horizontal (CBM) well,â€‌ we hear, “while Reliance has spent much less than that.

â€‌ CBM drilling sources confirm the number, confirming that Reliance paid Rs8.5cr ($1.8m) plus mobilisation for each horizontal well at its Sohagpur CBM blocks compared to ONGC’s expenditure of Rs90cr per well. “ONGC’s methodology is flawed,â€‌ adds a source.

“These wells are being drilled for the first time in India,â€‌ says a DGH source. “We made a presentation to them but they never listened.

â€‌ Another CBM expert adds Reliance has drilled only two horizontal wells to about 800 to 900 meters depth. These were drilled along with vertical wells, which open the reservoir to increase production.

Results from ONGC’s horizontal wells are yet to be ascertained. ONGC has completed one horizontal well at Jharia to a depth of around 1000 meters and should complete the second well this week.

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