Kishor Kumar Kalita

The history of oil exploration and the journey of its extraction in Assam has been the result of British colonial expansion policies that always intended to augment financial health of Great Britain by means of extorting natural resources particularly in the colonies of the third world. The colonial ruler’s first choice was to find such resources in those places where they could easily avoid any kind of human contact and conflict and could establish an un-interrupted supply of natural resources. Therefore in India, the largest colony of British Empire till the middle of last century, the initial exploration was made in untouched virgin forest, barren lands and those frontier regions where the human settlement rarely existed.

Going behind such rule of colonisation British administration after the annexation of Assam in the first quarter of 19th century started their resources related expedition in this region which eventually created another history in oil exploration in India. In April 1828, a young British officer, in charge of one of the upper Assam expeditions, ventured up the Dihing river, a tributary of Brahmaputra river and noticed muggy signs of oil on the surface of the water. The officer recorded such observation in his official report. In 1865, Mr. H.B. Medicott, a Geologist was deputed to visit the coal areas of Assam. His report recommended experimental borings, to taste the value of oil at Makum, close to Margherita towards the south of Dihing River. It was only just seven years after Edwin L. Drake drilled the world’s first oil well in 1859 at Titusville, Pennsylvania, USA, another historical discovery of oil was took place in a remote corner of Assam in the midst of the dark and dense jungles, by a group of avant-garde pioneers searching for black gold. The story of oil exploration in Assam is a mixture of both oral and written documentation. The authentic version of the story goes like such.

The Assam Railways & Trading Company (AR&TC) registered in England and engaged in transportation and trading of coal, tea and timber from the north-east of India was planned to build a railway line from Dibrugarh to Margherita (Headquarters of Assam Railways and Trading Company). Mr W.L. Lake, a Canadian engineer worked under the said company had the responsibility for extending the Dibru-Sadiya railway line to Ledo. During the construction time, in the year 1867, a herd of logging elephants returned to camp with their feet covered in oil after a night time excursion to find food and water. This led Mr.Lake to trace the seepages and finally discovered the natural leakage amidst dense forest. Looking at this, the ecstatic engineer cried out to his men, “Dig boy, dig”. Probably the name of the town Digboi itself came from that word. So that story gave birth to the Oil City of Assam where the first oil well in Asia was drilled. The first refinery was started here as early as 1901. But most interestingly traces of oil in the north-east were discovered even earlier. As early as 1825, army officers passing through the jungles in upper Assam found petroleum oozing out of the banks of rivers flowing by the jungles.

In the year 1967 Mr. Goodenough of McKillop, Stewart and Company, Calcutta, drilled a hand-dug well of 102 feet at Nahorpung near Jaipur about 30 miles south-east of Digboi. It was India’s first well that had been failed to establish satisfactory production. In his second attempt on 26 March 1867, oil was struck at merely 118 feet (35.97-m) at Makum near Margherita area of Upper Assam and it was Asia’s first mechanically drilled well. Subsequently, a number of wells were drilled in Makum and Namdang areas of Margherita and these wells produced crude oil in minor quantities for many decades. The AR&TC drilled the first commercial well Digboi-1 in between September 1889-November 1890 with a depth of 662 feet and it had an initial production of 200 gallons per day. This had developed a new era of exploration and production of oil in this frontier region of India and the oil industry of India officially born.

Since AR&TC did not have any capability of its own in drilling and petroleum refining, it formed a new company called Assam Oil Company (AOC) in 1889 solely for taking care of its oil interests. Before this in 1893, AR&TC installed a miniature test refinery at Margherita where crude oil was sent from Digboi by train. The products included limited quantities of kerosene, lubricating oil, timber staining and preserving oil, iron coating oil and wax. After the institutional formation, the AOC started construction of a full-fledged petroleum refinery in 1900 and commissioned it in 1901. Thus Asia’s first oil refinery was established in the remote town of Assam which is still continuing its production. Unfortunately within a few years of inception, the IOC became ineffective both technically as well as financially due to a number of reasons that includes failure to utilize geologic reasoning, mismanagement, erroneous investment and lack of proper technical support. Later on, UK based Burma Oil Company (BOC) arrived in 1911 in Upper Assam (Surma Valley) and in 1915, after acquiring Oil interest from Budderpore Oil Co. Ltd began testing option in the Badarpur structure in the Surma valley. Gradually by 1921, in a phase-wise manner, BOC acquired petroleum interests of AOC. In 1937, BOC jointly with British Petroleum (then Anglo Iranian Oil Co.) and Shell had proposed before the Govt. of India to carry out a geophysical survey in some of the important plain areas of India. The proposal was accepted and the Assam Government issued a new form of grant known as geophysical license for doing this work. In Assam, a successful seismic survey was carried out in Naharkatia during 1937-39, generating new zeal in oil search and it became the forerunner of discoveries in Assam basins and others also.

After India’s independence by 1948, Geological Survey of India (GSI) started a geophysical survey in Cambay area. The first oil discovery in independent India was made by AOC on 1953 in Naharkatia and then in Moran in 1956 both in Upper Assam. Even after the independence the oil industry remained operated by the foreign company for a considerable period. Burma Oil Company (BOC) kept its position as the largest company for a significant time. In the meantime, in 18th February 1959, for development and production of Naharkatia and Moran prospects and to increase the pace of exploration in Assam, Oil India Private Limited was incorporated as a rupee company to take over BOCs affairs in Assam.

Let again come to Digboi refinery. The initial products of Digboi refinery were kerosene, wax, and oil for lubrication, fuel oil and grease with an annual production of 500 barrels. The first oil terminal of Asia was installed at Tinsukia and it had been linked with the Digboi refinery. Alike, the first product pipeline from Digboi to Tinsukia covering a distance of 34 kms was laid in 1926. The refinery was almost completely rebuilt in 1923 after the Burma Oil Company took over from Assam Oil Company in 1921. In addition with the major discoveries of crude were made in nearby Naharkatia and volume of crude availability increased, the refinery had incorporated advanced technology and accordingly its capacity was enhanced, finally reaching a throughput of 0.7 million metric tonnes per annum (MMTPA).  On 14th October 1981, by an act of Parliament, Digboi Refinery, along with the marketing functions of the Assam Oil Company was vested with the Indian Oil Corporation Ltd. and became Assam Oil Division (AOD) of Indian Oil Corporation Ltd. For 119 years from 1901, Digboi refinery is the country’s only integrated oil refinery that undertakes all the operations – drilling and exploration, production of oil, refining and marketing etc and counted as the first refinery in the country to use natural gas as fuel. It also set the pioneering example of distributing piped gas for domestic use. This oldest refinery has the distinction of being the first refinery in the country to export products to Australia, Germany and UK. The Digboi refinery also produced Paraffin which has been considered as one of the best in the world.

Natural Gas

In the Indian context, oil was the primary focus of hydrocarbon exploration and production. The development of the natural gas industry in the country started in the 1960s only after the discovery of gas fields in Assam and Gujarat. However, after the discovery of the offshore Bombay High fields by ONGC, the natural gas gradually gained attraction in terms of production. The ONGC started its gas production from these fields from 1974. By 1984, the government recognised the need for a gas distribution network, and set up a separate state-owned company, the Gas Authority of India Limited (GAIL).

ONGC made another discovery, the western offshore Basin fields, in 1988. The focus on increasing domestic gas production intensified in the 1990s due to an awareness of the need to encourage fuel substitution.

Refineries in Assam:

Guwahati Refinery: After the discovery of new oil fields in Upper Assam even though the establishment of another new refinery became a core issue for uplifting industrialisation but in the real sense, such a vital issue got little appreciation from the Union Government of India. Therefore a spontaneous great mass movement was emerged during the period 1955-57 for protesting the apathy showed by the central government for the establishment of an Oil Refinery in Assam. The people of the state felt that Assam was under-developed as compared to the other states of the country due to the non-establishment of the industry in the state. Moreover, Assam did not get any importance in the first and second five-year plans which flared a feeling of negligence among the public of the state. One of the pioneer Assamese weekly ‘Asomiya’ in its editorial on May 25, 1957, stated that the central government had shown keen interest to establish an oil refinery Assam and neglecting the genuine demand of the people of Assam, it had expressed hurried intention to establish the oil refinery at Calcutta.

Eventually, this feeling of agony and deprivation had developed the Refinery movement of Assam where apart from the student community all sections of the society spontaneously took part. The role of the student’s community in this movement was quite unique and unprecedented. The representatives of different institutions of greater Guwahati assembled on 1st August 1956, and decided to carry on a strong campaign for the establishment of the proposed refinery at Assam instead of Calcutta. Steadily, the Oil Refinery movement was spread throughout the state of Assam and particularly the student’s community of the state with their uncompromising determination headed the movement to a fruitful ending. A section of the students even also asked the then Ministers, MLAs and the MPs of Assam to resign from their respective posts for showing their support to the cause of this movement and raised one unprecedented demand to declare Assam as a separate state if the demand was not fulfilled. Under such tremendous pressure from the people of Assam in general and students in particular, Mr K.D Malavya, Union Minister of Mines and Oil, on 19th November 1957 had declared the establishment of the oil refinery in Assam on the floor of the Lok Sabha. He also revealed that the Government of India would establish two refineries, one at Guwahati to refine 0. 75 million tonnes yearly and the other at Barawoni to refine approximately 2 million tonnes of crude oil per year. The refinery was inaugurated on the 1st of January, 1962 at Noonmati by Late Pandit Jawahar Lal Nehru, the first Prime Minister of independent India. Dedicating this first public sector oil refinery to the nation Mr. Jawaharla Nehru, characterized it as ‘the symbol of Assam’s plenty and prosperity.’

The Guwahati refinery was built with Romanian Collaboration and has a capacity of 1.0 million metric tonnes per annum. For constructing this refinery the  Government of India had signed one agreement with the Rumanian Government as a result of which Rumania Government sanctioned Rs. 52.38 crores long term loan at the interest of 2.5%. Apart from this construction loan the Rumania Government also supplied machineries and thus the refinery was established with the help of their skilled personnel.

At present this public refinery is under the control of Indian Oil Corporation (IOC) Ltd. The Guwahati refinery produces various types of petroleum products such as Motor Spirit, HSD (High Speed Diesel), Lubricant, Kerosene, Wax etc. The total installed capacity of this refinery is 1 MMTPA. Recently the Guwahati refinery has undertaken a massive expansion programme as a hydro-treatment plant already approved by the Indian Oil Corporation (IOC) for the refinery. The refinery aims at increasing its installed capacity to 1.5 MMTPA from the present 1 MMTPA.

Bongaigaon Refinery: The demand for the establishment of the third refinery in Assam was generated among the masses with the increase of the production of crude in Assam oil fields and also with the increase in the demand of petroleum products in the North Eastern Region. Considering the requirement that gradually turned into a larger public demand, the Petroleum Ministry finally came to a decision to set up the third refinery in Assam in the public sector. On 5 December 1972, the then Prime Minister of India, Indira Gandhi announced in the Lok Sabha the Government’s decision to set up a new Refinery-cum-Petrochemical complex in Assam. The foundation stone of the complex was laid on 19 January 1972 at Bongaigaon. Accordingly, Bongaigaon Refinery and Petrochemicals Limited (BRPL) was incorporated as Government of India Undertaking under the administrative control of the Ministry of Petroleum and Natural Gas on 20 February 1974. The company became a subsidiary of Indian Oil (IOC) on 29 March 2001 after disinvestments of share by Govt of India. At present, BRPL is processing crude available from the oil fields of ONGC and OIL located in the North-East India and Ravva crude oil from the Krishna Godavari basin. The capacity of the Refinery was augmented in 1995 to 2.35 million tonnes per year. An LPG bottling plant of capacity 22000 MTPA was added to the complex and commissioned on March 2003. The main refinery products of BRPL include – Naphtha, Motor Spirit (Petrol), Aviation Turbo Fuel (ATF), Diesel, Kerosene etc. The petrochemical products produced by BRPL include – Para Xylene, Orthoxylene, Cee nine Solvent, DMT, Polyster Staple Fibre(PSF) and PSF Waste.

Numaligarh Refinery Limited (NRL): The fourth refinery in Assam came into existence as a result of Assam Accord 1985. This refinery was set up in the joint sector in pursuance of the said accord with major equity participation of the IBP (Indo- Burma Petroleum) and Assam Government. The Numaligarh Refinery is located at Morangi, Golaghat district, Assam and at present owned by Numaligarh Refinery Limited, a joint venture between Bharat Petroleum (61.65%), Oil India (26%) and Govt of Assam (12.35%). As of 2014, it had a capacity of 3 million metric tonnes per year. In January 2019, the Cabinet Committee on Economic Affairs approved plans to increase the refinery’s capacity to 9 million metric tonnes per year. Numaligarh Refinery Limited (NRL) was formed in April 22, 1993. The refinery was completed by the end of 1998 and was commissioned on April 1999. This refinery was dedicated to the nation on 9th July 1999 and commercial production started from October’ 2000. The NRL has different units that include (i) Crude Distillation Unit (CDU)(ii) Vacuum Distillation Unit (VDU)(iii) Delayed Coker Unit (DCU) (iv) Hydro-Craker Unit (HCU)(v) Hydrogen Unit (HU)(vi) Coke Calcination Unit (CCU)(vii) Sulpher Recovery Block (SRB)(viii) Catalytic Cracking Unit (CCU)and (ix) Captive Power Plant (CPP). The refinery products are Liquid Petroleum Gas (LPG), High Speed Diesel, Aviation Turbine Fuel (ATF), Kerosene and Calcined Coke.

Current Scenario and future prospect:

In the frontier north eastern part of this country, there are two sedimentary basins-Upper Assam Shelf and Assam Arakan Basin. The Upper Assam Shelf basin covers the plains of upper Assam and parts of Arunachal Pradesh whereas the Assam Arakan fold belt basin covers the hilly terrains of Assam, Arunachal Pradesh, Meghalaya, Mizoram, Manipur, Nagaland and Tripura. The Upper Assam Shelf covers an approximate area of 56,000 sq km whereas the Assam-Arakan fold belt covers an area of 60,000 sq km. These basins contain prognosticated hydrocarbon resources estimated to be of the order of 5,040 MMT out of which 2,224 MMT (44%) has been established so far. The exploration in the upper Assam shelf has been done to the tune of 90% and current productions of oil and natural gas have been extracted mainly from this basin. But in the case of Assam-Arakan basin, only 10% has been until now explored. The major part of the Assam-Arakan fold belt falls between the prolific hydrocarbon producing regions of Bangladesh and Myanmar.

The prognosticated hydrocarbon resources in North East India are around 18% of the national figure and the amount is quite significant because till date vast expanse of the region is not surveyed. In terms of resource conversion, huge potentiality is still exist in this region as around 56% of hydrocarbon in this region is not explored as well as produced till the date.

Prognosticated Hydrocarbon Resources in North East India

BasinOffshore(MMT)On land(MMT)Total(MMT)% of Total
Assam-Arakan Fold Belt0186018607%
Upper Assam Shelf03180318011%
Total05040504018%
India18815927028085100%

(Source: Hydrocarbon Vision 2030 for North East India, Ministry of Petroleum & Natural Gas page-41)

 

 

Prognosticated Hydrocarbon Resources in North East India

Sr.NoKey IndexVolumes(sq km)Exploration as % of total sedimentary basin in NE
1Total sedimentary basin area1,16,000 
2Area awarded under pre-NELP (New Exploration Licensing Policy)and NELP43,72237.69%
3Currently active nomination PEL(Petroleum exploration license)49054.3%
4Currently active PML(Petroleum Mining License)(Nomination +PSC)9,6658.3%
5Total area under exploration  in NER58,35550.3%
6CBM(Coal bed Methane) area  under exploration113
7Shale gas area under exploration1262 

(Source: Hydrocarbon Vision 2030 for North East India, Ministry of Petroleum & Natural Gas page-42)

            At present, besides national oil companies such as ONGC and OIL, many private operators are exploring and producing hydrocarbons in the North East region. Some renowned such private companies are GeoEnpro, Jubiliant Energy, Assam Company of India Ltd, Essar Oil  and Dart Energy

MINERAL PRODUCTION IN ASSAM

Minerals2015-162016-172017-182018-19
12345
Coal (‘000 Tonnes)397600782783
Natural Gas (Utilized) (MCM)2903290730343083

 

Petroleum (Crude) (‘000 Tonnes)4513420243454222

 

Lime Stone (‘000 Tonnes)442159714321651

 

Sulpher4322657183396956

 

(Source: Statistical Handbook Assam, 2019, page-158)

 

                                    Distribution of reserves by state/region

Estimated crude petroleum and natural gas reserves in India by state/region as on 31 March   2017.

Region  Crude oil reserves
(in million metric tonnes)
Share of oil (%)  

 

Natural gas reserves
(in BCM)
 

 

 

Share of gas (%)
Arunachal Pradesh 

 

1.520.25 0.93 0.07
Andhra Pradesh 8.151.35 48.31 3.75
Assam 159.9626.48 158.57 12.29
Coal Bed Methane 

 

00 106.58 8.26
Eastern Offshore 

 

40.676.73 507.76 39.37
Gujarat 118.6119.63 62.28 4.83
Nagaland 2.380.39 0.09 0.01
Rajasthan 24.554.06 34.86 2.70
Tamil Nadu 9.001.49 31.98 2.48
Tripura 0.070.01 36.10 2.80
Western Offshore 

 

239.2039.60 302.35 23.44
   
Total  604.10 100  1,289.81  100

 

 

 

GROSS PRODUCTION OF NATURAL GAS AND QUANTITY OF GAS FLARED IN    ASSAM (In Million Cubic Meter)

YearCategoryGross ProductionUnavoidable Loss (Gas Flared)Percentage of Gas Flared over Gross ProductionGas Returned to Natural ReserveGas used for petroleum mining operationNet production
2016-17OIL

 

ONGC

 

Total

2692.67

 

435.59

 

3128.26

122.93

 

84.21

 

207.14

4.57

 

19.33

 

23.9

Nil

 

Nil

310.46

 

184.82

 

495.28

2259.28

 

166.57

 

2425.85

 

 

2017-18OIL

ONGC

Total

2710.99

507.84

3218.83

122.43

80.68

203.11

4.52

15.89

20.41

Nil

Nil

304.21

221.33

525.54

2284.35

205.32

2489.67

 

2018-19*OIL

ONGC

Total

2481.93

482.56

2964.49

138.19

79.16

217.35

5.57

16.4

21.97

Nil

Nil

307.02

210.22

517.24

2036.71

193.17

2229.88

*Excluding production for Dirok Bloc

(Source: Statistical Handbook Assam, 2019, page-158)

The crude oil production in Assam has declined over the last a few years due to fall in production in already matured fields and inability of the concerning oil producing companies to explore new areas. As the fields of North-East India are very old and some of them are becoming almost futile, most of them are in the third stage.i.e terminal decline (every reservoir has a limited reserve of hydrocarbons and follows a trend of increasing production, a plateau stage, and finally terminal decline). Oil has been extracted from these fields since 1960 and therefore out of 15 producing fields of oil in North East India, 13 are in the third stage of production. Moreover, these fields have already produced oil at their natural reservoir pressure. As the pressure has been dropped in the reservoir, the natural flow rate has declined. To extract oil at the same previous flow rate and to increase oil production, enhanced oil recovery techniques are required. Further, since production has been declining from mature areas, exploration and producing  companies need to find out new oil fields for producing crude oil. Though in last a couple of years new discoveries made in many parts of North Eastern region but these could not result positive trend in oil production.

Production Forecast for Crude Oil in NER (in MMTPA) (with indicative)

State/blocks2014-152019-202024-252029-30
ONGC1.0652.192.081.90
OIL3.413.783.803.80
Others0.070.050.040.04
Total4.546.025.925.74

(Source: Hydrocarbon Vision 2030 for North East India, Ministry of Petroleum & Natural Gas page-55)

Production Forecast for natural gas in NER (in MMSCMD) (with indicative)

State/blocks2014-152019-202024-252029-30
ONGC4.359.5910.921.01
OIL6.918.78.78.7
Others0.060.960.940.94
Total11.3219.2520.5720.65

 

(Source: Hydrocarbon Vision 2030 for North East India, Ministry of Petroleum & Natural Gas page-57)

In regards the production of natural gas in the northeast region then we find that at present nomination blocks of ONGC and OIL and production sharing contracts(PSC) blocks of Kharsang, Dirok, Kathalchari and Amguri are currently producing gas. Moreover, gas production from the Tripura asset is likely to provide a much –needed boost for the region. Further, there can be a significant increase in gas production from this region  particularly through exploration in Arunachal Pradesh and Mizoram. Therefore, in near future, if the government of India can properly follow the policies that have been mentioned in the different policies including in Hydrocarbon Vision 2030 for North East India, then this region will definitely become a dominant hub at the forefront of India’s energy map by utilizing its hydrocarbon potential.

 

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Udit Gupta
Udit Gupta
1 month ago

A very Interesting and well curated article . A very rare read to find in these times. Mr. Kishore you have put in great efforts in this article.
Also the history of Explorations you have put out is really appreciable.