The Hindu Business Line : Reserves of strength

The petroleum saga of India began in the rainforest country at the head of the Brahmaputra valley when the British military personnel guarding the frontiers of India in the early years of the 19th century came across oil and gas seepages and recorded their findings. So did the tea planters, the coal explorers and timber merchants who followed.

A scientific edge to these discoveries was given by officers of the Geological Survey of India who recommended the drilling of a few test wells in the Makum-Namdang area (today known as Margherita). The results of drilling carried out in 1867-69 were positive but the reserve quantities did not generate much excitement, but opened up possibilities.

To get these jungle-clad resources of tea, coal, timber and oil to the centres of commerce and industry, a railroad was necessary to Dibrugarh on the banks of the Brahmaputra. Accordingly, the Assam Railways and Trading Co Ltd (AR&T) was incorporated in 1881 in London to build the railroad from Dibrugarh to Margherita. While laying the tracks in 1888-89 the workmen saw prolific oil seepages; they also suffered from the heavy odour of oil at Borhbil (essentially today’s Digboi). The enterprising AR&T decided to include oil-drilling in its portfolio. Accordingly, Digboi Well No.1 was drilled in 1889 and completed as a producing well in 1890 at a depth of 662 ft. This event marked the dawn of the modern petroleum era in India.

The discoveries that followed were more from intuition than geological reasoning and hence carried the seeds of self-destruction. As oil was found, no questions were asked. A subsidiary, the Assam Oil Co (AOC), was formed to look after the oil interests of AR&T but it was too late to reverse the tide. By 1912, the euphoria evaporated. Indifference to geological concepts, random drilling, lack of cost-consciousness, and dwindling production brought the company to the brink of liquidation.

Learning stages

In 1911-12, Burmah Oil Co Ltd (BOC) having made a successful debut in Burma (Myanmar) crossed over the Arakan Yomas for oil prospecting in the Surma Valley. It established an oilfield at Badarpur where it drilled 63 wells and produced 321,000 tonnes of oil before abandoning it due to excessive water in the production. Elsewhere in the Valley, six wells in Masimpur and 100 geological information borings gave dismal results, except for gas prospects in Tripura.

In 1921, BOC moved in and took over the technical and financial management of AOC properties. Thus 1921 witnessed the rebirth of the Digboi Field.

Seeds of reservoir engineering

After the takeover, BOC embarked on a systematic mapping and review of the field. Production from the 24 sands of the area increased from 350 barrels per day (bpd) to 4,500 bpd. Electrical well logging pioneered in France in 1938 was used in Digboi Well No. 289 in 1933. In exploration surveys also such technology transfer was swift. Alongside field development, BOC continued to use the worn-out refinery built by AR&T in 1899. This caught fire and a new refinery was commissioned in 1923. A wax extraction plant was erected in 1928 to handle the three types of crude oil produced: low wax (0-3 per cent), medium wax (5 per cent) and high wax (19 per cent and more). An Edeleaneau plant was built in 1933 for kerosene and a bitumen plant in 1938 for roads. Through these various developments, Digboi Refinery came to be regarded as a nursery for the growth of petroleum refining technology and the skills to manage such growth.

During the war years, and particularly after Japan entered the fray, Digboi became the easternmost operational refinery. The field production of 5,500 bpd of oil during this period, often peaking at 7,000 bpd, was much above the peace-time level defined by experience and scientific studies. Irreversible and swift production decline was the natural consequence of this profligacy. In 1946, the refinery could achieve only five per cent of the target in kerosene and 11 per cent in petrol. Around the time of Independence there were about 760 drilled wells in the field and two wells were drilling in the Makum lease. Six to seven rigs were operating. Production was of the order of 5,000 bpd.

Emerging oil map

Here, it’s important to mention that two significant events would have altered the petroleum scenario had they not been interrupted by the war. The first was the 1937 session of the Indian National Congress (INC) which broadly stated the economic philosophy to be followed in free India. This was firmed up at the 60th session of the INC in 1948 whereby the commanding heights of economy, including oil, would come under the public sector.

The second was the discovery of the giant Nahorkatiya Field on the banks of the Dihing River, southwest of Digboi. Coming as it did after 216 unproductive wells were drilled by AOC/BOC (excluding those drilled in the Digboi and Badarpur Mining Lease areas) this was an outstanding example of tenacity. The discovery prompted a paradigm shift in our perceptions of oil occurrence and opened up a vista of regional possibilities. Shortly after the Nahorkatiya discovery, K.D Malaviya, the then Union Deputy Minister for Natural Resources and Scientific Research, visited Nahorkatiya. What he saw convinced him that Indians and India could manage the oil business. To this conviction we owe the beginnings of the national oil industry.

Choosing Russia as the role model for oil exploration and development and in discussion with Russian experts, the seeds were sown in 1954-55 for what ultimately blossomed into one of the world’s largest and fully integrated organisations, the Oil & Natural Gas Corporation Ltd.

The author, a former general manager of Oil India Ltd, has written three books on petroleum industry in India.