In order to realise the ambitions of a large-scale energy transition from coal to cleaner natural gas, India must consider importing large quantities of natural gas from Russia.
At his address to the 6th Eastern Economic Forum (EEF) plenary session, Prime Minister Narendra Modi lauded President Vladimir Putin’s vision for the development of the Russian Far East and underlined the natural complementarities of India and Russia in the development of the same. The time has come for India and Russia to significantly enhance infrastructure and joint development plans to boost bilateral trade, especially in the energy sector.
Interesting developments are taking place in global energy markets with significant ramifications for geo-politics and the world economy. The Organisation of the Petroleum Exporting Countries (OPEC) production cuts, fluctuations in world oil prices, economic sanctions, ageing oil and gas fields, insufficient implementation of energy technology and insufficient export capacity in the crude oil pipeline system have affected Russia’s capacity to export oil effortlessly. It is looking to diversify and expand its energy exports to Asian markets.
Just as Russia is actively pursuing a strategic re-direction toward Asia, so, too, should India as geopolitical instability in the Middle East and North Africa (MENA) region threatens to affect its import routes. India has been impacted by the US sanctions against Iran which have now reduced Iranian crude oil exports to almost zero. Growing at the fastest pace in the world, India’s oil demand is projected to reach 10 million barrels per day by 2030 from the current demand 5.05 million barrel per day. For an energy transition in which large volumes of coal consumption are poised to be substituted by cleaner natural gas, India has to start considering large import volumes of the same from Russia.
With 86.11% of its crude oil being imported, India must explore long-term, reliable and cost-effective options. Russia, being the largest exporter of natural gas and the second largest oil exporter, has the potential to be a reliable and economical alternative supplier. India’s liquid natural gas (LNG) imports are projected to quadruple by 2040. An increase in Russia’s energy production and its ability to export that energy could lend price certainty and supply stability to India’s oil situation.
Graphic: Economic Times
These mutually aligned priorities have resulted in the exploration of a roadmap for Indian investment in infrastructure development projects in the Siberian and Arctic regions. Russia has been the single largest destination for Indian overseas investment in oil and gas projects, with cumulative investment exceeding $30 billion. But two-way trade has languished at just $10-11 billion. This is poised to change with the development of Vostok Oil, whose competitive advantage lies in its proximity to the Northern Sea Route, the arctic transport corridor which is becoming more and more accessible due to climate change.
After reaching its full capacity, the Vostok project is set to produce 50 – 100 million tons of oil per year and Rosneft aims to begin shipping oil from the planned project in 2024 via the Northern Sea Route, an alternative to the Suez Canal which shortens travels to the energy-hungry markets of Asia.
In February, 2020, the state-owned Indian Oil Corporation (IOC) signed a term contract with Rosneft for the supply of two million tonnes per annum of crude oil to India via the port of Novorossiysk (a Russian port on the Black Sea) by the end of 2020. This is the first-ever annual oil purchase deal signed between the two countries. Dharmendra Pradhan, Union minister of petroleum and natural gas as well as steel, described it as an “important milestone”.
During delegation-level talks with Igor Sechin, CEO of Rosneft, Pradhan said, “Hydrocarbon is an important pillar of the Strategic and Privileged Partnership between India and Russia. Indian oil and gas companies value their association with Rosneft, one of the important companies partnering in our energy security objectives.”
Igor Sechin, chairman of Rosneft with Dharmendra Pradhan, minister of petroleum and natural gas. Photo: PTI.
Indian companies have considerable expertise in providing engineering consultancy and executing mega-projects across the hydrocarbon value chain. Russian gas producer Novatek’s agreement with Indian energy firm Petronet LNG Limited is an inimitable case of seizing a reciprocally favourable deal.
For India, importing gas and oil from Russia is imperative if the long-term strategy is to diversify the country’s crude oil supplies from non-OPEC countries, bypass the Strait of Hormuz, stabilise oil prices and provide avenues for other PSU oil refiners to enter into similar contracts for the import of Russian crude oil.
However, China must also be factored into this equation. With the “conspicuous commonalities” of being the largest and third-largest net importers of oil, China and India could consider joint ventures in Russia’s energy sector. China’s competitive technology and India’s huge input and product markets would act as perfect complements for energy engagement. The aggressive nature of China’s strategic culture is likely to be contained by the prospect of a mutually beneficial partnership in Russia.
China is building crude oil pipelines in Pakistan and Myanmar to circumvent the persistent ‘Malacca Dilemma’ but India remains a key factor affecting this plan. It could consider “equivalent exchange”, i.e., allowing an India-Russia crude oil pipeline to pass through China and could even share these pipelines.
The maritime link between Chennai and Vladivostok would enable cargo transfers in 24 days compared to 40 days it currently takes to transport goods from India to Far East Russia via Europe. The International North-South Transport Corridor (INSTC), an overland route which can connect the India-backed Chabahar Port in Iran to Azerbaijan, St. Petersburg and North Europe via Russia, providing India access to Europe and Central Asia, needs to be accelerated in view of developments in Afghanistan.
India’s Free Trade Agreement (FTA) with the Eurasian Economic Union – which currently being negotiated – will be hugely impacted by these new routes. With the Northern Sea Route coming into common usage, a vast resource will become more accessible and longer shipping seasons will improve Arctic logistics.
India has displayed interest in the geo-politics of the poles with the launch of its Arctic policy earlier this year. Unlike earlier projects where India had to sell to South Korea or locally, the shorter Arctic Northern Sea Route will provide Delhi with the chance to optimise the pricing of crude oil and logistics costs at any time.
Notwithstanding disapproval limiting resource development in environmentally sensitive regions, national interest and security should steer India and Russia’s Arctic policies. But even environmental pressure groups can be persuaded by highlighting the fact that Russia’s far north Vostok oil fields will be powered by the extensive use of renewables to produce “green barrels” and that India’s energy deal visualises Russian investments in new initiatives for a gas-based economy.
There is a need to intensify and reinforce our traditional friendship, which has witnessed something of a trust deficit of late given India’s growing proximity to the US and Russia’s geo-strategically weighty and economically deep relationship with China. The move to open up alternative sea routes makes economic and strategic sense for both nations and avoids the mistake of leaving Far East Russia entirely to China.
Vaishali Basu Sharma is an analyst on strategic and economic affairs. She has worked as a consultant with the National Security Council Secretariat (NSCS) for nearly a decade. She tweets at @basu_vaishali
While there is growing disquiet over China, unless India is able to overhaul its policy framework to revitalize oil and gas ecosystem, this may not proceed beyond the hype.
In a recent interview, N. Vijaygopal, finance director at Bharat Petroleum, said, “The choices of investing in oil sector will be limited when the world becomes normal and India will be the only happening alternative, … Most of the Western countries will be very afraid of getting into China. So, where else they can go?”.
Are oil companies indeed seeking to exit China in search of a stable market to expand after the pandemic starts to recede? And, more importantly, is India likely to become that alternative hydrocarbon destination?
With predictions that consumption of petroleum may peak as soon as a decade from now, well within the lifetime of most conventional oilfields, and energy companies awash with supply because of booming oil and gas discoveries, there is now a fundamental difference in the interests of energy producers and foreign business seeking governments.
With national governments, rather than independent companies, worried about supply shortages, the equations are changing.
Oil majors are exiting China
Despite the US Energy Information Administration’s estimation that China has nearly 1,115 trillion cubic feet (Tcf) shale gas reserves, second only to that of the US at 1161 tfc, there is skepticism about Beijing’s shale drilling prospects. Since 2011, when China’s State Council approved independent mining of shale gas oil majors have partnered with Chinese companies either through joint ventures or production sharing contracts (PSCs). Yet many multinational operators have exited China in recent years because the geologic conditions of shale gas are vastly complex. With 65% shale at depths of more than 3500 m, scattered through Sichuan (Southwest), Tarim (northwest) and Yangtze (east) regions, over mountainous topography, development of shale gas in China is nearly three times costlier than that in the US. China remains hugely dependent upon natural gas imports.
International oil companies have been involved in gas projects for over a decade, with both Shell and Total successfully partnering with CNPC through production sharing contracts in the Ordos basin. But companies including ExxonMobil, Shell, and BP despite best evaluates and drilling methods, have not experienced any tremendous success in commercial shale gas production.
Amidst external pressures, notably a more bellicose US and rising energy imports, securing energy reserves is on top of its political agenda, efforts to boost domestic output have had little impact on production as China’s ageing oil fields are structurally in decline.
Pumpjacks are seen during sunset at the Daqing oil field in Heilongjiang province, China August 22, 2019. Photo: REUTERS
Is India likely to be the alternative destination?
With a surging population, India’s oil demand is projected to double to 1,516 million tonnes of oil, and gas production likely to touch 90 billion cubic metres by 2040. With a growing share of in global energy demand, projected to increase by 2-folds by 2035, India is one of the largest non-OCED petroleum consumers.
Three rounds of bidding for exploration acreage under the open acreage licensing policy and two rounds of bidding under the ‘Discovered Small Fields (DSF)’ policy had helped garner an estimated investment of $58 billion in exploration and production of crude oil and natural gas by 2023. And investments in the midstream sector involving building gas pipelines, terminals, city gas infrastructure might reach $60 billion.
With a view to cut reliance on oil imports by 10% by 2022, the Modi government has been aggressively trying to lure energy majors to enter the Indian market. It is looking for bidders to buy its entire 52.98% stake in the country’s second-biggest oil refiner, Bharat Petroleum Corp Ltd (BPCL), and in this regard has extended the earlier set deadline for bidding by over one-and-a-half months to July 31.
The privatization of BPCL is necessary if the Modi government wants to meet its Rs 2.1 lakh crore disinvestment target for the 2020-21 fiscal year. However, Vedanta chief Anil Agarwal, who was among the first to evince interest in bidding for BPCL, says that the valuation of 52.98% stake at Rs 49,000 crore is too high and was moved up 40%-50% since the time government announced its plan to sell stake in November last year.
Earlier this month the Directorate General of Hydrocarbons (DGH) extended the last date of bidding in Round-V under Open Acreage Licensing Policy (OALP) for 11 oil and gas blocks on offer to June 30. In the previous licensing round Oil and Natural Gas Corporation (ONGC) was the sole bidder in six blocks, and in fact won the bidding for all the seven oil and gas blocks
There have been successes in attracting energy majors. In a first long-term LNG import contract, Indian firm Petronet LNG signed a non-binding MoU with US firm Tellurian Inc. in September last year. Canadian investor Brookfield is set to invest Rs 13,000 crore to acquire Reliance’s 1400 km East West Pipeline (EWPL) which was suffering from production drops in the Krishna Godavari basin. Total LNG has partnered with Adani Group. An MOU was signed between NSIC & ARAMCO Asia for development in Oil & Gas Sectors. Exxon has signed MoUs with IOC and ONGC.
Presently gas accounts for under 6% of energy demand in India and the government has set a target to increase this to 15% by 2030. There is close to a 100 Tcf of natural gas resources is available in India. But the current pricing formula makes natural gas production economically unviable. Natural gas prices experienced a steep drop impacting revenues of producers like ONGC.
Unless reforms are introduced to promote greater use of environment-friendly fuel, energy majors which are now looking to transition into cleaner fuel, are unlikely to invest in India. It shouldn’t be overlooked that opportunities abound in this sector. Door-step delivery of fuel is an opportunity that might attract energy majors to India looking at to expand their market and overcome infrastructure models. In March 2020, Royal Dutch Shell’s Indian arm Shell Energy India Private signed a pact with Inox India for door-step delivery of liquified natural gas (LNG) from its terminal in Gujarat through road to customers who are not connected to pipelines.
There is tremendous scope for expanding the LNG market in India, with focus on the automotive sector to promote LNG as a transport fuel for heavy duty trucks and buses. This and the hydrocarbon-based industry, wherein LPG users might be assisted in converting to LNG are attractive opportunities for energy majors looking to gradually transition to cleaner and cheaper hydrocarbons. As the world’s in the world’s third-largest energy-consuming nation India must reflect on its longer-term energy policy priorities.
Representative image of LNG pipelines. Photo: Reuters
Pandemic impact
As the lockdown eases, demand for oil and gas which had slumped is gradually reversing. Earlier this month, Indian Oil Corp., India’s country’s largest state-run refiner, raised crude throughput to 80% levels at its nine refineries after cutting its overall run rate by 25%-30% following the nationwide lockdown which came into force in March. Gujarat State Petroleum Corp (GSPC) issued force majeure notices to its suppliers in march is now seeking five liquefied natural gas (LNG) cargoes for delivery over July to December.
For now, the oil majors, have outlined plans to sharply reduce production. These output cuts are impelled by a record decline in oil demand because of global lockdown restrictions leading to swelling stock of crude with drop in prices. In such an atmosphere to reboot their interest to invest in an ecosystem that infamous for its slow pace of decision-making and not too large reserves, will be a tough task for the government. This is not the first time that foreign oil players have shown interest in exploration activities but delayed approvals, policy hurdles and production upsets prompted many like Petrobras SA of Brazil, ENI SpA of Italy, Royal Dutch Shell of the Netherlands, Statoil ASA of Norway and Anglo-Australian miner BHP Billiton Ltd, which either surrendered licenses or abandoned joint ventures with Indian companies.
While there is a lot of excitement over the assertion that oil majors have all realized that this is the time to look at India, unless the government is able to overhaul the policy framework to revitalize oil and gas ecosystem and establish a conducive business environment, this may not proceed beyond the hype. Contract negotiations and investment continues to be stalemated because of gas price sensitivity. Although there has been progress with LNG import terminals, holdups in building pipeline infrastructure and complex, long winded gas allocation policies frustrate demand growth. In case of Saudi Aramco, India is yet to find land for the $60 billion-dollar oil refinery project. For FDI in the energy sector to really take off the government must ensure that policy reforms are swiftly implemented and that partnerships stick.
Vaishali Basu has worked as a consultant with the National Security Council Secretariat (NSCS) for several years. She is, at present, associated with the think tank Policy Perspectives Foundation.
New studies of Saturn’s moon Titan should’ve made it more familiar – but the more we learn about it, the more outlandish Titan gets.
New studies of Saturn’s moon Titan should make it more familiar – but the more we learn about it, the more outlandish Titan gets.
Saturn in the background of Titan, its largest moon. Credit: gsfc/Flickr, CC BY 2.0
Titan probably smells weird. It looks like a ball of dirt. It has ponds and streams of liquid ethane and methane and lakes of the two ethanes, with nitrogen bubbling up in large patches, near its poles. It has clouds of hydrocarbons raining down more methane. And like the water cycle on Earth, Titan has a methane cycle. Its atmosphere is a stifling billow of (mostly) nitrogen. Its surface temperature often dips below -180º C, and the Sun is as bright in its sky as our moon is in ours. In all, Titan is a dank orgy of organic chemistries playing out at the size of a small planet. And it smells weird – like gasoline. All the time.
But it is also beautiful. Titan is the only other object in the Solar System known to have bodies of liquid something flowing on its surface. It has a thick atmosphere and seasons. Its methane cycle signifies a mature and stable resource recycling system, just the way a functional household allows you to have routines. Yes, it’s cold and apparently desolate, but Titan can’t help these things. Water would freeze on its surface but the Saturnian moon has made do with what wouldn’t, and it has a singularly fascinating surface chemistry to show for it. Titan has been one of the more unique moons ever found.
And new observations and studies of the moon only make it more unique. This week, scientists from the Georgia Institute of Technology reported Titan possibly has dunes of tar that, once formed, stay in formation because their ionised particles cling together. The scientists stuck naphthalene and biphenyl – two organic compounds thought to exist on Titan’s surface – into a tumbler, tumbled it around for about 20 minutes in a nitrogen chamber and then emptied it. According to a Georgia Tech press release, 2-5% of the mixture lumped up.
The idea of tarry sands is not new. The Cassini probe studying the Saturn system found strange, parallel dunes near Titan’s equator in 2006, over a hundred metres tall. Soon after, scientists were thinking about ‘sediment cohesiveness’, the tendency of certain particles to stick together because of weak but persistent static charges, to explain the dunes. These charges are much weaker among sand particles and volcanic ash on Earth. Then again, in a 2009 paper in Nature Geoscience – the same journal the Georgia Tech study was published in – planetary geologists showed that longitudinal dunes, as they were called, were known to form in the Qaidam Basin in China. A note accompanying the paper explained:
More recent models for linear dune formation are centred on two main scenarios for formation and perpetuation. Winds from two alternating directions, separated by a wide angle, result in the formation of dunes whose long axis falls somewhere between the two wind directions. Alternatively, winds blowing from a single direction along a dune surface that has been stabilized in some way, for example by vegetation, an obstacle or sediment cohesiveness, can produce the same dune form.
That the Georgia Tech study affirmed the latter possibility doesn’t mean the former has been ruled out. Scientists have shown that bi-directional winds are possible on Titan, where wind blows in one direction over a desert and then shifts by 120º and blows over the same patch, forming a longitudinal dune. One of the Georgia Tech study’s novelties is in finding a way for the dune’s particles to stick together. Previous studies couldn’t confirm this was possible because the dunes mostly occur near Titan’s equator, where the weather is relatively much drier than at the poles, where mud-like clumps can form and hold their shape.
The other novelty is in using their naphthalene-biphenyl model to explain why the longitudinal dunes are also facing away from the wind. As one of the study’s authors told New Scientist, “The winds are moving one way and the sediments are moving the other way.” This is because the longitudinal dunes accrue on existing dunes and elongate themselves backwards. And once they do form, more naphthalene and biphenyl grains stick on them thanks to the static produced by them rubbing against each other. Only storms can budge them then.
The Georgia Tech group also writes in its paper that infrared and microwave observations suggest the dune’s constituent particles don’t become available through the erosion of nearby features. Instead, the particles become available out of Titan’s atmosphere, in the form of ‘haze particles’. They write: “[Frictional] charging provides an efficient process for the aggregation of simple aromatic hydrocarbons, and may serve as a mechanism for the formation of dune grains with diameters of several hundred micrometers from micrometer-sized haze particles.”
A big-picture implication is that Titan’s surface features are shaped by agents that are almost powerless on Earth. In other words, Titan doesn’t just smell weird; it’s also sticky. Despite the moon’s being similar to Earth in many ways, there are still drastic differences arising from small mismatches, mismatches we’d think wouldn’t make a difference. They remind us of the conditions we take for granted at home that are friendly to life – and of the conditions in which we can still dream of the possibility of life. Again, studies (described here and here) have shown this is possible. One has even warned us that Titanic lifeforms, if they exist, would smell nowhere as good as their name at all.
Understanding the dunes is a way to understand Titan’s winds. This is important because future missions to the moon envisage wind-blown balloons and cruising gliders.
Rather than allowing every protest to degrade into name-calling, where protestors are branded ignorant or anti-national, it may be worthwhile to engage with substantive issues raised by them.
Rather than allowing every protest to degrade into name-calling, it may be worthwhile to engage with substantive issues raised by them. To this end, an FAQ follows.
Villagers protesting in Neduvasal. Credit: Nityanand Jayaraman
On February 15, 2017, India’s central government announced the award of contract for development and extraction of hydrocarbons from 44 contract areas nationwide, including 28 on-land fields and 16 offshore. Within a day of the announcement, protests broke out in Neduvasal, a little known village in Pudukottai district in southern Tamil Nadu.
The Neduvasal oil field had been awarded to Karnataka-based Gem Laboratories. Less than two weeks following the announcement, the agitation has gathered steam, feeding off the young energy from the recently concluded protests against the ban on jallikattu. Proponents of the project have questioned the credentials and intelligence of the protestors. Union minister of state for shipping, road transport and highways Pon Radhakrishnan has appealed to the people not to oppose the project blindly. “Are all of them scientists who know enough to oppose the project?” he asked.
The people of the villages in and around Neduvasal are not aware of the project’s specifics. However, interactions with protestors suggest that what they know in general about oil exploration and production, and about the track record of ongoing oil production operations in Nagapattinam, Tiruvarur and Thanjavur districts, is robust enough to form an opinion on the desirability of the project.
The region’s farmers fear that hydrocarbon extraction will disturb the comfortable agrarian economy extant in this region. Neduvasal is located in an area rich in groundwater and blessed with the fertile soil of the delta. Unlike the lower reaches of the delta, where agriculture is in distress, Neduvasal still has a healthy multi-crop farm economy.
The issues raised by the protestors are worth engaging with. Rather than allowing every protest to degrade into name-calling, where protestors are branded ignorant, anti-national, misled or foreign-funded, it may be worthwhile to engage with substantive issues raised by them. To this end, the following is an FAQ on the subject.
The people of Neduvasal are blindly opposing the project. How can they oppose it without knowing the specifics of the project, especially when ONGC has been successfully extracting hydrocarbons in the delta region for decades without protest?
While specific information may not be available, villagers are aware about the general consequences of hydrocarbon extraction thanks to a successful and popular campaign against a controversial coal-bed methane (CBM) project in Thanjavur between 2010 and 2016. Led by the late G. Nammalwar, a popular organic farming proponent, the campaign included a massive awareness drive to educate villagers about CBM as well as about how hydrocarbons are extracted from Earth, the effects of such operations on the environment and on people’s livelihoods.
An exploratory well constructed by ONGC near Neduvasal in 2008-2009 also gave villagers a sense of things to come. “For three months after the well was dug, they would burn the gas night and day. Sometimes the gas would burn orange with black smoke, and sometimes blue with no smoke,” says T. Amudha, an engineering graduate who gave up her job in Chennai after being disillusioned by city life to return to farm in her village. Pointing to a pit filled with oily wastes, she says, “Look at that. That has been lying there for seven years. If there are heavy rains, the wastes flow out of the pond into the neighbouring lands. This is only a small quantity, generated during the exploration stage. Much larger quantities will be generated during oil production.”
“With this in front of me, how am I to believe that they will behave responsibly?” she asks.
Within 100 km from Neduvasal, ONGC operates about two-hundred oil wells and a score of other installations. ONGC’s track record of operating these wells is bad. In 2010, 2011 and 2012, crude oil leaked from underground pipelines running through people’s fields in Nagapattinam and damaged standing crops, irrigation canals and contaminated groundwater.
K. Dhanapalan, a farmer and activist with the Cauvery Delta Farmers Protection Association, says “Fields damaged by oil leaks are never restored, and a meagre compensation after long-drawn complaints process is all that farmers see. Lands scarred by oil take years to recover.”
Incidents of gas leaks and the threat of fires in residential areas add to the concerns of neighbouring communities.
Farmers turn out in large numbers at public hearings to oppose ONGC’s proposals to sink new wells or expand operations. The concerns raised during public hearings highlight the lack of compliance to environmental regulations by ONGC, and a failure by the district administration and the Tamil Nadu Pollution Control Board to enforce the law. At an environmental public hearing conducted in 2014 for drilling wells in Nagapattinam, air and water pollution, groundwater depletion and increased incidence of respiratory diseases, farmland contamination and lapses in restoring damaged lands and awarding compensation were the most common concerns raised by local farmers.
In 2015, farmers from Tiruvarur demolished a shed being constructed by ONGC on paddy lands citing earlier gas leaks and the company’s poor track record.
Dhanapalan points out that “if people know and trust that the extraction of oil and gas can and will be done without harming the environment, they will not protest. The government must prove that hydrocarbons can be extracted safely by putting its existing operations in order, in restoring damaged farmlands and compensating affected farmers.”
Why did the people of Neduvasal not protest at the exploration stage itself?
The exploratory well in Neduvasal is actually not in Neduvasal but in a neighbouring village called Karukkakurichi, on five acres of land belonging to two brothers, Govinda Velar and Kulandai Velar. Banana and sugarcane were being cultivated on the land at the time. “They first came in 2008. But they never gave me any details about the project,” said Govinda Velar, a potter who lives near a kiln in a spacious tree-lined compound. “They said they were running some tests to see if there was petrol beneath our lands, and that it was only a short-term operation. We did not want to part with the land. But they were persistent and brought in the VAO and the tahsildar, who insisted that this was a government project. They took my signature on a piece of paper. I do not even have a copy of that letter,” he recalls.
The statutory environmental public hearing required to be held under the Environmental Impact Assessment Notification (EIA), 2006, has never been held for the Neduvasal exploration project. The environment ministry’s website, which claims to be up-to-date with all relevant information as part of its ease-of-doing-business and transparency initiatives, has neither an EIA nor an environmental clearance for the Neduvasal explorations.
In fact, only one environmental clearance mentions Pudukottai district. But that, too, is dated 2013 and refers to two locations in Pudukottai: Tiruvonam and Karambakudi. It does not mention Neduvasal.
What is known about the project?
A scene from the protests in Neduvasal, Tamil Nadu. Credit: Nityanand Jayaraman
The Neduvasal oil field reportedly has a seven-year mining lease that expires on December 31, 2019. The leased area is 10 sq. km from within which oil and gas can be extracted by the contractor. The recent award is part of the Indian government’s October 2015 Marginal Field Policy, aimed at inviting private sector participation in exploitation of marginal and small oil fields.
The project is not a coal-bed methane- or shale-gas-extraction project. So the use of hydraulic fracturing or fracking is unlikely – although it can only be ruled out pending further assessments. The proposal appears to be for a conventional oil and oil-associated gas extraction project with total extractable reserves of 430,000 tonnes of oil and oil-equivalent of gas. Speaking to The News Minute, Gem Laboratories has revealed that it has not made up its mind on the technology to be deployed to extract the hydrocarbons.
Onshore exploratory and production wells in the Cauvery delta are drilled to depths of between 1,750 m and 6,000 m. And the Neduvasal field, too, if developed will be drilled on to these depths.
How are conventional hydrocarbons extracted?
Before production wells are dug, developers sink a large number of appraisal wells to physically assess the extent and characteristics of the reservoir. If the Neduvasal project takes off, these wells will be located within the 10-sq.-km lease area.
The entire lease area will not be acquired; only areas around the proposed drill locations will be leased or acquired. Roughly five acres will be required for each drill site. Neither the locations nor the number of such wells are known at this point. Some wells may subsequently be abandoned or converted to other uses.
Production wells are usually dug to the base of a reservoir while appraisal wells may not go that deep. In the early days of production, when pressure differentials are high, oil/gas will gravitate to the low-pressure area at the bore and emerge to the surface on their own. Only 10-15% of the extractable reserves can be harvested at this primary stage.
Secondary recovery involves injecting high-pressure fluids to flush out the oil or gas trapped inside or in the interstices of the source rocks (sandstone, shale, etc.). New injection wells may need to be drilled for this purpose, or existing appraisal wells may be used. In ONGC’s Cauvery assets, “produced water” – a toxic by-product separated from the extracted hydrocarbons – is used for flushing.
Tertiary or enhanced recovery could involve fracturing the source rock using high-pressure fluids along with harder substances, like sand or aluminum beads that will wedge themselves between fissures, to facilitate hydrocarbon flow.
How is drilling done?
Drilling for exploration, appraisal or production have similar consequences. A drill site may require approximately five acres. The site preparation will involve flattening the land, laying access roads, laying concrete platforms to accommodate the drilling rigs and other infrastructure. Land-use change, alteration of drainage patterns, noise and air pollution are key concerns in this stage.
Once installed and the drilling has begun, the rig will operate on electricity from diesel generators 24×7 until the desired depth has been achieved. During this time, air pollution from generator sets and vehicular movement, and noise pollution, are key concerns.
A drilling fluid, usually water-based mud (WBM), is used to protect the structural integrity of the drilled hole, cool and lubricate the drill-bit and to evacuate the excavated drill cuttings (mud, sand and rock chips) to the surface. WBM is the least toxic of drilling fluids. Nevertheless, along with drill cuttings, it may be contaminated with trace levels of arsenic, cadmium, chromium and mercury depending on the geology of the area. This is a waste stream that requires careful disposal.
Drilling is followed by encasing the well with steel and concrete. The steel casing prevents the well from collapsing – and the concrete and steel also insulate the various water aquifers from the oil, gas and hydrocarbon-tainted brine that will emerge from underground once the well begins operating. However, in the time between drilling and encasing, there is a risk of contamination of exposed aquifers to chemicals or material that are part of drilling fluids.
What are the environmental effects likely to be encountered during the lifetime of a well?
A woman farmer with a sickle at the protest. Credit: Nityanand Jayaraman
Failed well sites have to be restored and returned to the land-use that prevailed prior to drilling – that is, agricultural use in the delta region. According to Dhanapalan, this is seldom done. Of the 600 or so wells that are part of the Cauvery assets, only 200 are producing wells. The remainder, barring a few that are used as injection wells, is abandoned. According to Dhanapalan, “None of these have been restored. At five acres a well, that translates to 2,000 acres of fertile land abandoned to become dense thickets of the dreaded karuvelam (Prosospis).” Karuvelam is a thorny weed that desiccates the land and has taken over the Tamil countryside.
The land surrounding the exploratory well in Karukkakurichi, near Neduvasal, is a case in point. While the surrounding lands have standing crops and healthy vegetation, the lands surrounding the idle well is carpeted by karuvelam.
Production wells also pose other challenges:
Produced water – When oil and gas are brought up to the surface, they emerge along with water that coexists with hydrocarbons in the reservoir. This is a significant waste stream by volume in oil-and-gas extraction operations. Where extraction is enhanced through flooding the reservoir with water, the quantities of produced water can be even greater. Depending on the age of the well and the nature of production, between two and nine barrels of produced water can be generated for every barrel of oil extracted.
Produced water is highly saline and corrosive, and will contain hydrocarbons like the toxic benzene, polycyclic aromatics, heavy metals and naturally occurring radioactive material like dissolved uranium, radon and radium. Pipelines or vessel interiors used to store or transport these effluents are prone to corroding and developing scales and salt deposits. The scales themselves tend to concentrate the toxins within the effluent, and ought to be handled as hazardous wastes.
ONGC’s delta operations claim to have 21 effluent treatment plants (ETP) to handle 70 million litres of produced water per day. Some of the treated water is reused in injection wells for waterflooding hydrocarbon reservoirs and the remainder disposed by pumping into old wells. Deepwell injection for disposal or for waterflooding are governed by dedicated rules in other countries and followed up with monitoring as well as informing the public of it.
However, produced water is dealt with casually in India. The EIA reports, which ought to dedicate entire sections to predicting and managing the impact of produced water, has nothing more than one passing reference to the waste stream. No information is available in the public domain about the performance of these ETPs either.
Groundwater contamination can occur if the well casing in production wells fail or wells collapse, exposing the aquifers to produced water and hydrocarbons emerging from the bore. They can also occur in abandoned or idle wells that may not be plugged, or where the plugs get damaged over time. Where and when this happens, hydrocarbons, gases and associated water can enter drinking-water aquifers. Idle wells that are not plugged should be subjected to routine checks for fractures in the casing or other defects. The exploratory well near Neduvasal has not been monitored since it was capped in 2009.
Groundwater, surface water and land contamination can also occur due to improper handling of waste streams – e.g., spills of produced water, temporary or long-term surface storage of produced water or oily wastes, leaks from crude oil pipelines, etc.
Air pollutioncan occur due to fugitive emissions or leaks. Volatile organic compounds (VOCs), including toxic chemicals like benzene (which causes leukaemia), ethylbenzene, xylene and toluene, can be mobilised in the air. Flaring or venting of gases is generally not a good practice as it represents a waste of the fuel that is to be harvested.
However, where this is done, ground-level air quality tends to deteriorate and pose a localised health hazard. Many of the VOCs can combine with nitrous oxides emitted from diesel exhaust to form ground-level ozone, a respiratory irritant.
Since methane – a potent greenhouse gas – is a major constituent of natural gas, venting the gases into the atmosphere can appreciably worsen global warming risks.
Blow-outs and explosions – Hazardous incidents such as blow-outs – caused by sudden surges in pressure inside the bore – result in gases erupting and exploding from the well mouth. These are the most hazardous incidents that can occur at a well site, and result in the discharge of large quantities of pollutants into the atmosphere. A single blow-out can last from a few minutes to several days. The 2010 Deepwater Horizon spill at BP’s oil installation in the Gulf of Mexico has been the worst blowout incident to date. It took five months to tame.
Blow-out risks are sought to be reduced by safety devices and good practices, and are relatively rare.
Land subsidence and salinity intrusion– Large-volume extraction of fluids, such as water or hydrocarbons, can result in land-subsidence. According to the US Geological Service, “This induced subsidence, which is either sub-regional or local in extent, has its greatest impact on flat coastal plains and wetlands near sea level where minor lowering of the land surface results in permanent inundation.”
This is particularly problematic for the delta region, which is already facing sea-water intrusion owing to rising sea levels, rampant sand-mining and the exploitation of underground resources like groundwater, apart from oil and gas. Note: The sections on oil and gas extraction and environmental/health effects of hydrocarbon production has been sourced from several documents, including those already cited above. More here, here and here.
Nityanand Jayaraman is a Chennai-based writer and social activist.
