Blow out effect: OIL has failed to inspire confidence as the fire at OIL's Baghjan oilfield in Assam rages on | Photo: Sachin Bharali

Blowing Smoke: How Oil India’s credibility crisis could spell doom for oil and gas in Assam

Seventy days after initial reports of a leak at Oil India Ltd’s oil well in the Baghjan oilfield in eastern Assam, the Navratna company’s struggles to contain the blaze looks far from over. The most recent setback, and the biggest yet, came on August 1, when a capping attempt carried out by Singaporean firm Alert Disaster Control at the well collapsed. A statement by OIL clarified the toppling of a hydraulic lift that had been setup to install a Blow Out Preventer in the well is what led to the failure of the attempt. The capping failure, which came about 10 days after three foreign experts received burn injuries during preparations for the attempt, further dents the credibility of OIL’s competency in dealing with the disaster.

Meanwhile, spurred on by OIL’s clear lack of a handle on the situation, protests seeking closure of the facilities have mounted at the company’s oil production units. The company has claimed that widespread and growing protests at their sites are leading to huge production losses, even as it surveys the damage to households in the vicinity of the leak and fire. “Cumulative production loss since May 27, 2020, due to bandhs and blockades: 18,852 MT crude oil, 44.88 MMSCM of natural gas,” OIL’s August 1 release said. While the company has put out statement after statement assuring a speedy resolution to the issues, their very public struggles have ensured that each statement rings hollower and emptier than the last. 

Recently, farmers’ protests and public anger in Tamil Nadu over the central government’s decision to make oil and gas drilling more investor-friendly in the Cauvery delta have forced the state to ban any new oil and gas projects in the region. Can we expect Assam to follow suit? 

The Baghjan Blowout

On May 27, a massive fire engulfed Well No. 5 at Baghjan oil field and its surrounding areas in Upper Assam’s Tinsukia district, when it suddenly started spewing out gas uncontrollably during a workover operation.

The blowout was followed by an inferno on June 9, which killed two OIL firefighters and destroyed a wide area consisting of agriculture land, human settlement, wetlands with exotic aquatic fauna and a riverine system. A Wildlife Institute of India (WII) report submitted to the central government on July 15 flagged immediate and long-term damage to the biodiverse region, including contamination of the groundwater. While 9,000 people were initially moved to relief camps after the blowout, the WII report reveals that 65-70ha of the burnt-out area mapped included crop fields, grasslands, and swamps. “There was a visible oil spill [oil and sediment] on June 16, downstream of the well,” the report stated. The report also highlighted steep decline in bird and fish populations due to the oil slick that accompanied blowout. 

Photo: Bitupon Kolong

While the area had been identified back in 1991, the Baghjan Gas Field was created in 2003 after the presence of commercial hydrocarbon in the area was first established in the first well (Baghjan-1) in the same year. Within a couple of years, the oil and gas field was converted into a Petroleum Mining Lease, and the company currently has 23 such drill sites across the area.

A damning report by an expert panel on the Baghjan blowout incident released at the end of July found serious deficiencies in the operation of the well site from both the contractor and OIL, practically since drilling for the Baghjan-5 well began in 2006. “There was a deficiency in understanding of the gravity of a critical operation like removal of BOP without having a confirmed and tested secondary safety barrier. There was deficiency in proper planning of critical operations. There was a clear mismatch between planning and its execution at site and deviations from the Standard Operating Procedure,” the 406-page panel report revealed. 

Equally alarming was the revelation that OIL had “flagrantly violated” the procedure envisaged under Section 25 and 26 of the Water Act and Section 21 of the Air Act, which establishes procedures for the mandatory Consent to Establish and Consent to Operate that were to have been granted by the Assam Pollution Control Board. The panel report found that OIL had the required consent for drilling and testing of hydrocarbons in the DSNP Area for just three of the 14 years since drilling for Baghjan-5 began.

In 2012, similar concerns were raised by the National Board of Wildlife (NBWL) on the subversion of law for the laying of pipelines in the ecologically sensitive region. 

A new low in risk assessment

In the months before the gas leak and blaze at Baghjan-5, the Ministry of Environment, Forests and Climate Change (MoEFCC) issued Environmental Clearances (EC) for a total of 25 hydrocarbon exploration and extraction to OIL in Mechaki and Tinsukia districts where the Baghjan oilfield is located. The cleared list includes seven exploratory wells covering 96,000 sqm under the Dibru-Saikhowa National Park (DSNP).

In 2011, OIL received EC for drilling of 26 wells for development and 15 wells for exploration in Tinsukia from India’s environment ministry, following two public hearings in July and August 2011. 

For the Extension Drilling and Testing (EDT) of hydrocarbons at seven locations under Dibru-Saikhowa National Park area project, OIL applied for EC from MoEFCC in June 2016 and the Terms of Reference (ToR) was granted in August with the condition that OIL conducts a public hearing. 

Soon after, American consultancy firm EMR was contracted by OIL to conduct an Environment Impact Assessment (EIA) for the seven new sites. OIL submitted the final EIA report to the Ministry of Forest and Environment and Climate Change (MoFE&CC) in December 2018.

According to the EIA report, the seven subsurface locations located within DSNP are to be drilled by Extended Reach Drilling (ERD) from three surface well pads within Baghjan PML, with the nearest boundary of DSNP situated about 1.34 km from the ERD surface locations. The report further stated that land around the sites is primarily used as settlements, homestead plantations and agricultural lands for the villages Dighaltarang and Baghjan, which are surrounded by several tea plantation estates.

Photo: Business Standard

Incidentally, the report also claimed that the likelihood of blowouts in the wells to be “Occasional/Rare”. Their assessment was based on the database on on-shore drilling and comprehensive root cause analysis of the US Gulf Coast blowouts between 1960 and 1996. It further stated that ‘the probability of ignition of blow out releases of hydrocarbons for the proposed exploratory drilling project will be about ~0.027% and can be considered to be as negligible.’ Notably, a comparable analysis for Indian conditions was conspicuously absent in the report.

Admitting a petition filed by Assam-based conservationists Bimal Gogoi and Mridu Paban Phukan against the EC granted to OIL for drilling in the Dibru-Saikhowa National Park, the National Green Tribunal (NGT), on July 20, directed India’s environment ministry, OIL, APCB and the Assam State Biodiversity Board to explain how drilling in the national park was permitted. The conservationists have raised doubts over the legality of the EC as neither a biodiversity assessment study, nor a public hearing was conducted for the project—which is in violation of September 2017 Supreme Court order, and the Environment Impact Assessment (EIA) Notification of 2006 respectively. The matter is now listed to be heard by the NGT on August 13. About a month before that, on June 25, the green court also penalised OIL with an interim penalty of ₹25 crore for the oil major’s failure to stop the blow out.

Perhaps even more egregious is the apparent reluctance to engage with public consultations for the project. Despite being granted the ToR for drilling activity being conditional on public consultations, OIL was evidently in no mood to conduct any such hearing.

In the 20th EAC meeting held on February 27 and 28 2017, OIL requested an exemption from public hearing for the drilling project in the vicinity of the national park by citing details of public hearings conducted in 2011 for the 26 development and 15 exploratory wells for which EC had been granted. This stance was validated by the MOEFCC’s Expert Appraisal Committee (EAC) in July 2017. While the EAC insisted on holding public hearings over the drilling project in DSNP by OIL till May 2019, this requirement was curiously dropped thereafter. During an EAC meeting on 8 May 2019, the OIL chairman pressed for an exemption from public hearings stating “it will otherwise jeopardize the whole process, for which OIL is persuading since 2016”.

The EAC cleared the project considering its “national importance” for energy security on January 16, 2020.

Will Assam go the TN way?

OIL’s hesitance to undertake public hearings in the area also reveals the public discontent with the project, much before the latest wave of protests following the blowout at Baghjan-5. “It was informed that conducting a public hearing in the area is a big challenge and couldn’t be completed at times due to unruly acts by the local pressure groups,” OIL further added in a testament to the EAC.

Public anger with the company has only worsened over the past two months as OIL floundered in its attempts to manage the blaze, and demand to halt all oil and gas exploration and development is gaining volume in the state. In addition to the ecological devastation brought on by the blow out, damage to agricultural land and plantations has fanned anger among local populations. This is perhaps the most worrying aspect for OIL and other oil and gas operators in the state. Unless OIL moves beyond insipid palliative assurances regarding the safety of their operations, the risk that the public anger could snowball into an existential threat for hydrocarbon exploration and development in the state.

Photo: Indian Express

Recent developments in Tamil Nadu speak volumes of how persistent public anger can translate into political pressure. The Cauvery delta is estimated to hold 700 million tonnes of hydrocarbon reserves here, such as oil and natural gas, including CBM and shale gas. The region is also among the most agriculturally potent lands in the state, accounting for a bulk of the rice grown. The agricultural sensitivity to hydrocarbon exploration, and the vulnerability of agricultural lands to accidents spurred protests across the state, starting in a tiny village of Neduvasal in 2016. While agricultural and student groups from across the state kept the pressure on the state government to halt the expansion of exploration and drilling in the region, the central government moved in the opposite direction in a bid to make oil and gas drilling more investor friendly.

Something had to give. In January this year, as the Indian government announced exemptions from EIA for onshore and offshore oil and gas drilling, farmers’ protests and public anger in the state rose to a fever pitch. Acknowledging the public sentiment, the state government promptly requested the Centre for an exclusion from the exemption. This was followed by the state government’s declaration of the delta as a ‘protected agricultural zone’ where no hydrocarbon projects would be allowed. The move puts into suspended animation plans by Vedanta and ONGC to drill 274 and 67 wells respectively, at a cumulative cost of ₹18,000 crore.

The Tamil Nadu experience ought to serve as a cautionary tale for oil and gas companies in the country. But it probably won’t. As this article was being written, reports of a fresh gas leak from one of ONGC’s facilities in Assam have surfaced. Energy companies have long hidden under the cloak of “national interest” to dodge accountability for lapses in procedure and operational safety. The credibility of this claim and of the entities that make them can only erode further, barring the elevation of the fact that a nation is nothing without its people, and national interest necessarily has to be in the interest of the public, including primarily those directly affected by these installations.

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