Monday, January 10th, 2000
8. Assessment Of Damage
Committee tried to assess the direct and indirect losses that occurred due to gas blow out at about 1.45 AM of 15th June, 1997 at Moulavi Bazar gas field (M.B.I). It was not possible to identify the extent of the damage of drilling equipments and other related items and consumable those were burnt at that field. Committee had to depend on the list of materials equipment supplied by Occidental Dhaka Office for assessment of damage. Occidental considered the records of Drilling company and Third party services form where they listed out the equipment and materials the companies made available at the well site (List of the assets damaged are attached).
So far the assessment of damage of the resource is con concerned it was not possible to exactly quantify the gas burnt after the blow out, but it has been attemptd to assess and identify the damage to the formation and other structures as far as practicable within the limitation of data, information’s and time available for this.
As regards assessment of loss of other resources like damage of property, land & life, Tea Estate, Forestry, Railway, Road etc. Committee had to depend on the documents and information’s supplied by the District Administration of Moulavi Bazar. District Administration compiled the related damage report after obtaining the same from different agencies (Appendix-F).
Petrobangla’s own Environmental Department made a spot survey and submitted a small report on the possible impact on environment due to explosion and fire. Committee in addition to its own assessment considered that report.
Assessment of damage due to blowout had been made under the following heads.
8.1 Rig/Drilling Contractor’s Damage
8.2 Damage of Third Party Services
8.3 Consumable and Non-Consumable Materials Damages
8.4 Resources Damage
8.4.1 Gas Field & Associated Reservoirs
8.4.2 Moulavi Bazar Structure
8.4.3 Estimated Gas Reserve of Upper Gas Zone
8.4.4 Effect of Blow-out on Well Location
8.4.5 Loss of Gas and Effect on Formation
8.4.6 Damage of Water Horizon of Tipam Sand
8.5 Damage of Other Properties
8.5.1 Tea Estate & Forestry
8.5.2 Damage of Railway
8.5.3 Damage of Road
8.5.4 Gas Pipeline Road
8.5.5 Damage of Power Line
8.6 Environmental Damage
A brief on the item wise damage is appended below:
8.1 Rig/Drilling Contractor’s Damage
It has been presumed that all of he equipment belonging to Deutag Drilling Company’s Rig-T.64 were destroyed in the fire with the exception of some small items that were positioned at an area approximately one kilometer from the rig site. The main camp located away from the drilling location escaped complete destruction, but two building were damaged. The ware-house was completely destroyed which was within the fenced area of the drill site.
The estimated value, as of June 28, 1997, of the drilling rig and other Deutag equipments either damaged or destroyed is $ 17,387,300.
8.2 Damage of Third Party Services
As no equipments at the drilling site belonging to services companies under contract to Occidental could be traced or salvaged it has been presumed that all the related equipments have been destroyed in fire.
The estimated value, as of June 28, 1997, of the varied equipment either damaged or destroyed is $ 7,952,900.00
8.3 Consumable and Non-Consumable Materials Damages
Since no consumable and non-consumable material could be salvaged after the incident it has been presumed that all of the supplies at the drilling site that were purchased by, or on consignment to Occidental were destroyed in the fire.
The estimated value, as of June 28, 1997, of the various supplies either damage or destroyed is $ 4,130,200.
8.4 Resources Damage
8.4.1 Gas Field and Associated Reservoirs
The Moulavi Bazar anticline is situated in the Southern Surma Basin and is a part of the NW Indo Burma Folded Belt. Moulavi Bazar is the northern plunging nose of the huge Atamura anticlinal trend extending from Tripura/India into Bangladesh, forming here a separate saddled culmination. The Moulavi Bazar anticline is accompanied by deep synclines in the East (Dhala Trough), North (Srimangal East Trough), and west (Sri8mangal Trough). The Separation towards the south from the Atamura anticline is by a slight saddle as primarily hinted by landsatphotos and proven by the N-S running seismic crest line PK-MB-4.
Moulavi Bazari is one of the most uplifted anticlines in the Surma Basin, about 400 msec. higher as compared to Fenchugonj and about 500 msec. higher as compared to the Rashidpur anticline.
8.4.2 Moulavi Bazar Structure:
The structural mapping of the over-thrusted Moulavi Bazar anticline is based on the interpretation of nearly 150 km digital seismic lines performed by Petrobangla’ Prakla seismos during the dry season 1981/82. Seismic horizon (between lower and Upper Dupi Tila) is outcropping at the crestal part of the entire anticline. Seismic horizon of Upper Marine Shales, Upper most Miocene, has been mapped. Considering the then time Vs depth curve, the structural countour map was drown and according to that map, the top of Upper Gas Sand is about little less than 800m. Below the 850m sec. marker horizon, no distinct seismic marker can be mapped continuously over the entire structure. But according to the Occidental PK-SU-14 new line, the top of ‘B2’ sand and top of lower gas sand (BH 30) is clearly reflected and marked. As per Petrobangla/Prakla Seismic, the upper gas mapped horizons indicate the northern part of a N-S trending anticline which has in the territory of Bangladesh a length of more than 35 km and a width of as much as 10 km. The eastern flank of the Moulavi Bazar structure shows a far steeper dip than the western flank due to an axis parallel thrust fault, steeply inclined to the west. There is also a small oblique graven fault zone passing NE/SW through the central area, thus forming two fault closures. The southern block is down thrown for about 30m. This structural feature is valid for an interval down to about 1.6 sec. TWT. Below a gentle dip-closure appears the structural shape of the entire Miocene and this feature might be valid for further deeper. However seismic profile PK-SU-15 shows clearly that the crestal part of the Moulavi Bazar structure below about 2 sec. TWT, about 3000m is inflicted by several faults, Uppermost Miocene. The main uplifting and shaping of the Moulavi Bazar-Atamura anticlinal trend took place after early Dupi Tila time, early Pliocene. It could appear that the structure is presently still growing. Since there are no hydrocarbon seepages along the outcropping fault planes and the faults are very young, it could be concluded that the faults hold tight laterally. Presently Occidental has carried some new seismic lines. Comments on the structure adding those seismic lines could not be given as those line could not be supplied to the committee during the enquiry.
8.4.3 Estimated Gas Reserve of Upper Gas Zone:
Two sandstones with excellent reservoir properties and good cap rocks have been encountered in the Rashidpur wells below the Upper Marine Shalcs and in the Upper Bhuban. Also in Habigonj the most potential gas zone in below the Upper Marine Shale with excellent reservoir properties. In general in the entire Surma Basin area, the upper gas zone is just below the Upper Marine shale and in all structure this gas zone is a potential zone. For this Surma Basin area marginal gas source rocks can be expected within the Miocene Shales. The Middle Oligocene Jenam & kopili Shales could be the most favorable Hydrocarbon source rock. In the Moulavi Bazar anticline the Jenam shales are supposed to be at a depth of around 5000m and could be within the main oil generating phase present. The Miocene Shales are might be immature for generating hydrocarbon, except the lower most part which might be in an early oil generating stage. In the Dhala syncline to the East and in the flanks of the deeper subsided Srimangal Syncline, source rocks of both Lower Miocene and Upper Oligocene are expected to have presently reached all hydrocarbon generating phases of maturity. In the central part of Srimangal syncline the Baril is likely to be over cooked with respect to oil generation. Kopili Shales, Upper Kocene, have already passed through the oil window when the Atamura-Moulavi Bazar anticlinal trend commenced to be shaped. In the Moulavi Bazar area, no hydrocarbon seepages have been observed. Direct hydrocarbon indications cannot be seen in the seismic profile. But a bright spot is observed just below the Upper Marine Shale. In early Pliocene time, uplifting of Moulavi Bazar – Atamura Trend commenced. In Surma Basin this structural trend had a huge drainage area consisting of the eastern part of the Srimangal trough and the Western parts of the Hakaluki and Dhala troughs. Post early Pliocene, the emerging Moulavi Bazar high was situated on the migration path towards Atamura for emanating hydrocarbons. Later the oblique fault system might have acted as a migration barrier at least for the Boka Bil and upper most Bhuban Sequence.
For estimation of reserves many different attempts were taken at different times, out of which 2 reserve estimation explained below:-
a) Case 1 – Based on actual lithology & estimated GWC.
On the basis of the following parameters, an attempt has been made to estimate the gas resource in related sand.
– Upper gas sand minimum pay area, according to the bright spot shown by Oxy is 1020 acres.
– Upper gas sand pay area, according to the immediate outer closer of the bright spot area is 1700 acres.
– Top of Upper gas sand (actual), 805m MD.
– Mud wt. at 840m prior to gas blow-out, 9.1 ppg
– Gas gradient (assumed)- 0.08 psi./ft.
– Estimated GWC 922m; estimated gross thickness of gas sand=117m.
– Net to gross ratio (assume); 75%
– Water saturation, 33%
– Porosity 25%
– Temperature gradient 10F/100 ft.
– Recover efficiency, 60%
– Estimated formation expansion factor, 114.75
Using above parameters and considering the area of bright spot, the estimated initial gas in place comes to 245.8 BCF and estimated initial recoverable reserve could be 147.50 BCF.
Using above same parameters and considering the area of immediate outer closer of the bright spot area, the estimated initial gas in place becomes 409.78 BCF and estimated initial recoverable reserve could be 245.86 BCF.
b) Case – 2 Based on proposed lithology of Oxy.
After conducting some new seismic lines and reprocessing of all previous seismic lines by Occidental Co., a new structural map has been drawn by them, where they have shown a bright spot area of 1020 acres. According to their lithological prognosis they have shown the reservoir bed thickness as 73m. Considering the above area, net thickness (75% of gross thickness), porosity of 25% and water saturation 33%, the estimated initial gas in place becomes 163.6 BCF and at 60% recovery factor, the estimated initial recoverable reserve could be 98.16 BCF.
Using the same parameters and considering the area of immediate outer closer of the bright spot area is 1700 acres, the estimated initial gas in place becomes 272.72 BCF and at 60% recovery factor, the recoverable reserve becomes 153.63 BCF.
8.4.4 Effect of Blowout on Well Location:
Based on prospectivity of Mulavi Bazar structure, a well was proposed on a location having
Lat : 24.331675
Long : 91.8033339
and with a target depth of 3375m TVD. Deutag, a drilling company, sub-contractor pf Occidental, started the drilling with the above mentioned target and in the process of drilling at a depth of 840m, the well encountered blowout. Consequent to the blowout there was an initial fire of over 600 ft. high flame.
Due to the blowout the entire Rig, Rig Base and equipments of all third party services i.e. Wire line logging, Cementation, Mud Logging, Testing Completion & Mud Engineering Services were either damaged or destroyed into the crater formed in the surface location. As a result the well and the surrounding surface formations has completely been damaged. In future no well location can be placed within the damaged area.
8.4.5 Loss of Gas and Effect on Formation:
In Surma Basin area one of the most potential gas zone is the Upper gas zone, which is just below the Upper Marine shale. In Habigonj gas field, this zone is the single largest gas bearing zone in the country. Petrophysical propertics of this gas zone is very good. Cap rock of this gas zone is a prominent marker bed, called upper Marine shale, distributed through out the entire Surma Basin. Porosities & Permeabilities is also quite high, pressure is good. On top of every thing the depth is very low considering the other producing gas zones in Bangladesh.
MB- 1 blew out through 17 ½ drillhole plus various new surface passages that had developed around the cellar and well site. The initial height of the flame was estimated at over 600 ft. meaning, the gas rate must have been several hundred MMCFD. The bottom of the Upper Marine Shale was found in the well at 805m i.e. the top of gas zone and the well depth was840m. As a result 35m thickness were penetrated through sand stone of upper gas zone. Due to blow out the gas bed was unprotected and the gas was blown out with a huge draw down in the sand formation. Due to this draw down, the internal sand incursion may have occurred, resulting in the substantial damage of the reservoir. The mobility of gas is faster than water. Therefore, the pressure differencial effect likely had also acted on gas zone. This will have an effect of additional draw down on gas bed. Thus the major part of the gas bed may have been damaged. Likewise permeability of the mentioned gas bed may have also been damaged. If it is so then the recoverable gas reserve may have been substantially lost. The gas emission/fire has reduced over the two weeks period after the blowout probably due to severe reservoir depletion, extensive reservoir damages and mud sloughing. The extent of resource loss or damages, therefore, cannot be estimated with certainty under the present condition and unknown parameters.
8.4.6 Damage of Water Horizon of Tipam Sand
Lithologialy in the Surma Basin area from surface to the Upper Marine Shale, the formations are mostly very unconsolidated, loose with high porosity sands called Tipam sand. These porosities (void space) are occupied by fresh water, which has got a strong effect on the surface plantation. There is a salinity difference between Tipam Sand bed and the lower sand zone of Upper Marine Shale. In general in Surma Basin area, water of Tipam sand is fresh and the water of lower sand of Upper Marine Shale is saline. With the blow out effect the high saline water together with the gas will have came out from the gas zone during blowout process and thus the saline water may have infiltrated into the Tipam sand. Thus it may act adversely on the surface plantation and also on sub surface drinking water source. This could put a long term negative impact on the environment. However, this needed to be studied in further detail by a separate group of expert.
4.5 Damage of Other Properties
8.5.1 Tea Estate and Forestry
The Moulavi Bazar Well is located amidst Srimangal Tea Valley. Blowout of the well severely affected the tea gardens. In order to assess the extent of damage, Bangladesh Tea Board constituted a 6 (six) member assessment committee which subsequenly assessed the direct and indirect damage of as many as 39 (thirty nine) tea gardens (Appendix – F). Tea extent of damage as calimed by the Bangaldesh Tea Board is as follows:
(Amount in Crore Taka)
A. Duncan Brothers (BD) Ltd. 6.28
B. National Tea Co. Ltd. 2.72
C. James Finlay PLC 2.27
D. Bangladesh Tea Board 0.61
E. M.M. Ispahani Ltd. 0.51
F. Others 33.67
Total (A+………….+F) 46.06
Thermal impacts of blowout caused desiccation of plants and soils of a large surrounding area of Lana Chhara National Park. That resulted into immediate loss of forestry and potential long term loss of fertility of soil. Severe soil desiccation took place due to steam and dense water vapor emanating from the exposed ground surface near the fire. Loss of soil moisture will reduce soil fertility. Uncontrolled discharge of contaminated run off would have impact on erosion and sedimentation in downstream water courses with further impacts to adjacent forestry. These some of the observations made by the Forest Department and received through Moulavi Bazar district administration.
Committee could not assess the loss of the forestry independently. Committee had to consider the loss of the forestry as assessed and reported by the Forest Department of Sylhet.
Forest Department of sylhet has estimated the immediate and long-term loss caused due to blow out. Forest Department estimated the direct loss of plants and fuel wood to the tune of taka 33.61 crores.
As forest Department’s assessment loss to growing stock and soil properties would taka 50 to 50 years time to start forestation afresh. Moreover, after reforestation in made to restore environmental linkage effect, that is to recover the Bio-type of the national park though naral process, it would further take about 50 to 60 year. In other words the whole restoration process would taka about 110 years. Considering 100% loss of plants to the totally destroyed area and 50% loss to the partially destroyed area, total affected plants comes to about 25,650 no comprising 69.5 hector of forest. Yearly loss on account of environmental degradation and environmental linkage effect, loss has been estimated as Taka 80.30 crores per year. for 110 years the total loss would come to Taka 8839 crores.
Moreover considering 8,100 Plants and 22.50 hectares of land in the partially affected area and considering 20 years as recoverable years total loss comes to taka 507.12 crores. Further forest department has also identified some area of the forest what they consider as probable afford area. The probable affected area is 40 hectares and total number of plants therein is 15.50 numbers considering total restoration period as 10 years, cost of such restoration cores about to taka 484.58 crores.
So of all the afore mentioned costs come to as follows:
a) Loss of plants Tk. 36.61crores
b) Loss of severely affected environment Tk 8,833.00 ”
c) Partial loss of environment Tk 507.12 ”
d) Probable loss of environment Tk 484.58 ”
Tk 9,858.31 ”
On the estimationof the total loss of forest as worked out above by the forest Department, the committee could not make any comment as to the reasonableness or otherwise of the same enough justification of basis for the assessment of damage/loss was not given by the
Since the well site is located within the vicinity of the road, Roads and Highway Department is considering to build up a new alignment of road of about 10 k.m long with a cost about another 20 crores of Taka.
8.5.4 Gas Pipa Line Damage
As a result of blow out of Moulavibazar well 6” dia gas transmission line of Jalalabad gas T&D co. Which was 60 feet way from the well site was damaged. Construction of 2 miles by-pass line had been done recently …by Oxy at OXY’s cost and gas supply, in the mean time, has been restored.
In addition to the disruption of supply, the consequential revenue loss to Jalalabed gas on account of non-supply of gas to 12 tea gardens, 500 domestic and 4 commercial customers is about taka one lac per day. Gas supplies were restored on June 28. The estimated consequential loss of Jalalabed gas for thirteen days is about thirteen lacs taka.
8.5.5 Damage to Power Line
Both Power Development board and Rural electrification board incurred loss after being affected by gas blow out. 33 KV Power line of PDB which runs through srimangal- Shamshernager-Kulaura- Baralekha- Bianibazar, 14 numbers of tower/ poles along with wires and related fittings were damaged. Heat generated from the gas flame also affected current transmission capability of the conductors within 5 k.m from both the sides. loss incurred thereby is estimated by power development board for Taka 29,89,057.
Power Development Board is also considering to shift the 33 KV power line from the affected area. Total length of the new line is 10k.m The cost estimated by PDB for the new line is Taka 1,05,20,129
Total loss to power Development Board is estimated to be Taka 1,35,09,186
Forest Department. Consequently committee was not convinced about the total amount of damage/loss as estimated. Committee felt the estimate in respect of loss of plants amounting Tk.33.61 crores may be reasonably considered as the real loss at this time. Regarding other losses as claimed by the forest department, further detailed and expert study need to be undertaken.
8.5.2 Damage to Railway
Due to gas field blow out a section of the srimangal –Vanugach Rail line was severely affected. The well was at a very short distance from the railway tract. Thermal effect of the flame after the blow out caused total destruction of about 2000 feet Railway Track.
Committee could not assess the cost of the damage by itself. Committee depended on the assessment of loss made by the Bangladesh Railway. Loss assessment report has been received through the district administration of Moulavibazar.
Bangladesh Railway estimated their loss taking into consideration of the restoration/ replacement cost. Railway did not consider in their estimate the revenue loss that took place from the date of damage till the date rail communication was restored. Property loss estimated by Bangladesh Railway is taka 81,54,395.
8.5.2 Damage to Road
A metallic road of Roads & Highways runs very near the site. After the blow out the adjacent road was submerged with sand and subsequently by water. about 2 kilometer road was affected and road communication was disrupted. Roads and highways Department, Moulavibazar estimated their loss to Taka 1.00 crores.
Rural Electrification board also estimated the loss incured by them due to blow out of the gas field. Initial estimation of loss incurred by REB is taka 1,81,286. This consists of value of pole, transform, wire line and related accessories.
Committee depended on power development board and rural electrification board to assess loss to power which in total comes to taka 1,36,90,472. These information have received through the district administration of Moulvibazar.
8.5.6 Others Damages
220.127.116.11 Loss To Bus Owners
Consequent at the damage a portion of srimangal-Vanugach road and the road becoming non-motor able no bus, mini-bus or any vehicle can pass though the affected area, Srimangal –Shamshernager – Brahman Bazar. Bus, Mini bus owners association has lodged this claim for loss that they have been incurred since the day of blowout for stopping of vehicular movement in the srimangal- Shamshernager route.
As per the statement of the association as many as 26 Bus, Mini Buses ply through the said route. The Association claimed that their daily loss is about Taka 47,750.
Committee had to record this loss since the association had submitted their claim to the District Administration, Moulavibazar.
18.104.22.168 Loss To Khasia ‘Pan Punjee’
District administration, Moulavibazar reported that due to blow out Magurchhara Khasia punjee was badly affected. Specially the betel leaves of the pan punjee was badly burnt Moreover 5 nos. of thatched houses belonging to the people of kahasia “Pan Punjee” were burnt. The total loss of this “Pan Punjee” is about Taka 17,85,000.00 as stated by the district administration. However, committee could not assess the damage independently.
22.214.171.124 Human Loss
No human casualty was reported by district administration, Police administration, Occidental or by any news midea.
8.6 Environmental Damages:
Environmental Division personnel of petrobangla along with an environmental expatriate expert visited the affected area of Moulavibazar on 18-6-97 to assess the environmental damage and submitted their report. En…vironmental impacts due o blow out has been focused on (a) thermal effects to nearby native vegetation and soil fertility, (b) uncontrolled discharge of water-born contaminants in surface runoff to sensitive downstream areas and (c) destruction of intact native forest and wild life inhabitat.
Thermal impacts include desiccation of plants and soil, resulting in immediate loss of forest and wild life inhabitat and long term loss of soil fertility and/ or morbidity of essential soil microbes, nematodes and other biota, However, the duration of these effects could not be estimated with the available information.
Uncontrolled discharge of contaminated run-off resulted into possible erosion and secondary impacts to aquatic organism and riparian habitats.
Such effect on environment including ecological imbalance and quantification and valuation thereof needs to be determined by an expert group with more time and in-depth analysis.
9.0 Relevancy To PSC Contract
9.1 Relevancy To PSC Contract:
The committee examined the provisions of the production sharing contract with regard to the responsibility and obligation of the contractor for carrying out exploration, Developme…nt, production and others, the specific relevance relative to the incident and in accordance with the contractual stipulations. The Committee observed that the introductory recitals of the contract states-
“…………. The contractor has assured (Petrobangla/GOB) that it has the financial ability and technical competence necessary for carrying out exploration, Development production and other petroleum operations”
Based on the above recitals and mutual covenants the contract further assures in article 2.1 that-
“…….. The object of (the contract) is the exploration, development and production of petroleum in the contract area at contractor’s sole risk and expense”
Pursuant to the above covenants and sole risk of the contractor, the contract also stipulates that the contractor shall, in addition to other provisions of the contract, be obliged to:
Under article 10.4
“Conduct all petroleum operations in a diligent, conscientious and workman like manner, in accordance with the applicable, this contract and generally accepted standards of the international petroleum and to maximise the ultimate economic recovery of petroleum from the contract area”
Under article 10.6
“While conducting petroleum operations (contractor to) take necessary measures for conservation, protection of property, crops, fishing and fisheries, navigation and the environment, prevention of pollution and safety of life and health of personnel……”
Under article 10.6.4
“………taking all reasonable precaution to prevent damage of any petroleum and water bearing formation and other natural resources”
Under article 10.6.6
“……..taking all reasonable precaution to prevent pollution of all damage to the environment”
Under article 10.6.10
“……. providing safety and fire fighting equipment in each work area”
Under article 10.6.11
“……….. complying with all environmental, health and safety laws of the people’s Republic of Bangladesh, applicable to the petroleum industry in the people’s republic of Bangladesh.
Under article 10.16
“……. be always mindful, in the conduct of petroleum operation, of the rights and interests of the people’s republic of Bangladesh”
Under article 10.18
“Bear responsibility in accordance with the applicable law for any loss or damage to third parties caused by contractor or contractor’s employees of sub contractors of sub contractors employees negligent acts and omissions, and indemnify petrobangla and the Government against all claims and liabilities in respect thereof”
After detail analysis of the approved drilling program (which includes well design, mud engineering, mud logging, cementation programme) and different reports like mud engineering, mud logging, casing and cementat…ion, daily drilling and geological reports, Oxy’s incident report and the committee’s interaction with the well site people (Drilling Supervisor, Driller, Well site Geologist, Mud Engineer, Third Party Service personnel etc.), The committee are as follows:
10.1: No casing was planned for the claystone in the depth interval of 527-795m for the drilling of Moulavibazar well No.1 Based on the lithology of the Tipam Sand a casing could have been planned for the above depth interval. Further, no casing was run in the depth intereval of 527-795m following actual knowledge of the lithology which could have reduced the possibility for a surface blowout (Refer to section-7.1)
10.2: A 17 ½ holewas drilled from the depth 20 casing shoe at 155m to the KOP at depth 840m. It was then planned to drill a 12 ¼” pilot hole from the KOP to the 13 3/8” Casing point at 1997m. Instead, The 12 ¼” pilot hole could have been drilled beginning from the depth of the 20” casing shoe to have more control over the drilling of a wildcat well and particularly through the long section of = 500m of lose Tipam sand as prognoses. [Refer to section-7.1]
10.3: The cementation job for both 30” conductor and 20” casing was unsatisfactory and poor. The planned slurry design (both lead & tail) for 20” casing could not be maintained due to problems with the cementation equipments. i.e. hopper and associated equipments. Oversizing of The hole in 20” casing depth was observed and subsequently top job had to be carried out. [Refer to section-7.2]
10.4: The planned KOP at the depth of 840m in gas saturated reservoir sands could have been changed to a suitable deeper depth considering the actual encountered litho logical sequences in relation to the prognoses litho logy. But no such consideration was given even after observing 43% gas saturation. [Refer to section-7.1]
10.5: The mud weight during from the 20” casing shoe (155m) upto 840m was found to be varying from 8.6 ppg to 9.0 ppg. There is no evidence proving that the mud weight was balanced to control the well. Problem with the solid control equipments was observed as per statements recorded which led to the changes of the mud properties giving wrong signal of the mud weighty situation. [Refer to section-7.3]
10.6: The Mud Engineer was not aware about the changes of mud weight, properties and gas shows period. He was in the laboratory for an inordinate length of time (2 hrs). rather than monitoring mud properties and communicating with other drilling personnel during the last critical part of the drilling and bottom up circulation. [Refer to section-7.3]
10.7: During drilling several breaks were observed at depths of 527-560, 560-650,650-700,700-740,740-805,805-840m with ROP ranging from 03 m/hr to 58m/hr. While drilling from 805m to 840m in gas saturated sands (43%) The ROP was about 40m/hr and there is evidence that drilling did not stop to observe the well condition. [Refer to section-7.4]
10.8: During POOH from a depth of 840m, gas bubbles were observed at the top of the well. When the first stand was pulled out a pit gain was detected. The loss of ECD from termination of circulation may have allowed further influx of gas. The observance of bubble, pit gain and ECD effect have caused and aggravated the swabbing effect on the hydrostatic head contributing to a gas blowout.
10.9: There was apparent confusion in connection with lining up of the trip tank which might have further aggravated the situation of imbalancing of the well and not detecting the gas kick. [Refer to section-7.4]
10.10: There was time and opportunity to avert the blowout. But failure to latch the Kelly either by using the air tagger or manually and subsequent non-restoration of the mud circulation in the well due to the inefficiency of inexperienced drilling crews contributed to the blowout incident. [Refer to section-7.4]
10.11: A change of original driller and continuing drilling operation by the night tool pusher as driller and drilling superintendent as night tool pusher in the night of the incident night have aggravated the situation of man-management at the floor of the rig and have adversely affected the process of understanding between the driller and the tool pusher, a prime factor during drilling. [Refer to section-7.4]
10.12: During the drilling at the night of the 14th June, 1997 there were lack of supervision co-ordination and communication among Drilling Supervisor, Mud engineer, Mud logger, drilling crews which led to a negative impact on the decision making process and well control situation when the well was approaching a critical stage of gas blowout.
(Refer to section-7.4 & 7.5)
10.13: The Drilling supervisor, the wellsite Geologist, the driller, the tool pusher, the mud engineer and the mud logger did not fully discharge some of their respectively assigned responsibilities as laid down in Oxy’s approved drilling programme and geological procedures. [Refer to section-7.5]
10.14: An accumulation of lapses by responsible personnel at the well site led to the blowout incident. [Refer to section-7.5]
10.15: The communication system between wellsite and Oxy’s Dhaka office was apparently poor. Consequently wellsite data transfer could not be done properly. [Refer to section-7.5]
10.16 Due to the blowout an extensive sand inflow from the formation has taken place and the permeability of the reservoir has been adversely affected. Consequently the available gas resources have been substantially damaged. [Refer to section-8.4.5]
10.17: Due to the gas blowout ground water table, perhaps, has been polluted due to infiltration of saline water coming out from the Bokabil sands. Since the blowout, deep tublewells of the surrounding area have been automatically pumping out of the ground water and causing ground water loss. The salinity and ground water loss will have a negative impact on the sub-surface and surface environment. [Refer to section-8.4.6]
10.18: The blowout and subsequent huge fire emitting heat and burning forestry has adversely affected the surrounding which may have long drawn impact on the environment.
[Refer to section-8.6]
10.19: Assessment of Damage
Consequent to the blowout both the subsoil properties consisting of gas reserve & water resource and properties on the surface including environment have been damaged. Committee received damage/loss statement from different agencies/bodies at the time of enquiry which are given below. however, for some items damage/loss could not yet been assessed.
Summary of the losses is appended below:
A. Damages for which assessment has been made.
1. Damages to Oxy’s Equipment & Materials as stated by oxy.
…(i) Rig/Drilling Contractors Damage …. USS 17,387,300
(ii) Third party service …. USS 7,952,900
(iii) Consumable & Non-consumable ….. USS 4,130,200
Total (1) USS 29,470,400…. Tk, 129,66,97,600
2. Damages other than Oxy assets.
i) Tea Gardens …. Tk 46,06,84,830 (Note-1)
ii) Forestry …..Tk 33,61,00,000 (Note-2)
iii) Power Lines …. Tk 1,36,90,472 (Note-3)
iv) Road …..Tk 1,00,00,000 (Note-4)
v) Betel Leaf garden …..Tk 17,85,000
vi) Railway …..Tk 81,54,395 (Note-5)
vii) Gas Pipe line (Revenue loss)Tk 13,00,000 (Note-6)
viii) Loss to Bus Owners …..Tk 12,21,500 (Note-7)
Total (2) …..Tk 83,28,36,830
Grand Total (1)+(2) …..Tk 212,95,33,797
B. Damages for which assessment could not yet been made.
i) Gas Reserve loss ….. (Note-8)
ii) Ground water Resource….. (Note-9)
iii) Environmental Damage….. (Note-10)
Note (1) Bangladesh Tea Board has submitted their claim as follows
A. Duncan Brothers (BD) Ltd. 6.28 Crore Tk.
B. National Tea Co. Ltd. 2.72 ”
C. James Finlay PLC 2.72 ”
D. Bangladesh Tea Board 0.61 ”
E. M.M. Ispahani Ltd 0.51 ”
F. Others 33.67 ”
Total (A+……….+F) Tk. 46.06 ”
Note (2) Forest Department of Sylhet submitted their claim under the following heads:
a) Loss of plants 33.6 Crores
b) Loss of severely affected environmental 8,893.00 ”
c) Partial loss of environment 507.12 ”
d) Probable loss of environment 488.58 ”
Tk. 46.06 ”
Committee took the figure of loss of plants worth Tk. 33.61 crores only. The basis of calculation of environmental loss are not convincing to the committee, which needs more professional analysis. (Refer to section-8.5.1 of the forestry)
Note (3) Power line:
This loss does not include revenue loss to PDB and REB.
Note (4) Road:
Roads and Highways department assessed loss of roadway worth Tk. 1.00 crore. They mentioned that for the safety of the road way the Department is planning to construct a by-pass road of 10 k.m. which would cost of Tk. 20.00 crores.
Note (5) Railway
Property loss to Railway is Tk. 81,54,394. It does not include revenue loss.
Note (6) Gas Pipe Line:
Gas pipe line of Jalalabad stated their revenue loss at Tk. 13.00 lacs.
Shamshernagar- Brahmanbazar Bus, Mini Bus owners association lodged their claim for daily loss of Tk. 47,750. Loss up to the date of submission of the reports (10th July) is Tk. 12,21,500.
This may increase till the route in restored.
Note (8) Gas Reserve Loss.
Based on actual and litho logy and estimated GWC of the bright spot, estimated gas in place has been worked out to 245.8 BCF and estimated recoverable reserve of the upper sand would come 147.50 BCF (60% recovery rate). Committee consider that major portion of the reservoir has been damaged, but Committee could not assess the extent of loss on the basis of currently available data. However, such loss can be assessed after having drilled another well in the same sand to obtain necessary data.
Note (9) Ground water Resource:
Explanation to such loss of ground water has been given in section 8.4.6 of the report. Quantification and valuation of such loss could not be assessed by the committee. It needs further analysis to make valuation of such loss.
Note (10) Environmental Damage:
Environmental damage has been explained in Para 8.6 of the report. Some assessment has been made by the forest department. Committee could not take cognisance of that valuation. Committee suggested that it should be further studied by a professional team to arrive at a realistic figure of loss.
Based on the observations and analyses, the recommendations of the committee are as follows:
i) Overall Responsibility: Drilling operation was not conducted in a fully diligent and workman like manner in accordance with… the generally accepted standards and in an efficient and secured way, consequently blowout of Maulavibazar # I well took place.
ii) Drilling Procedure: The approved instructions and guidelines in any drilling program and well site geological procedures should be strictly followed, allowing for the fact that changes in well conditions may necessity a change from the original approved plan.
iii) Casing Design: The Casing programme should be designed based on regional experience for all exploratory, appraisal and development drilling programs, in the surma basin and similar to the Moulavibazar structure where shallow gas is likely to be encountered, a protective casing string be set into the upper marine shale’s, the regional cap.
iv) Pilot Hole: for better control of the well, during of a pilot hole should be considered especially in the Surma Basin area where the shallow gas sands are expected.
v) Kick off point: For drilling of a directional hole, selection of Kick off point in a highly gas saturated sand should be avoided if other options are possible.
vi) Pulling out of the hole: When pooh in sand sequences containing good gas shows, the procedures included in the approved drilling programme and geological procedures should be followed more carefully and as well conditions dictate.
vii) Mud Parameters: Mud parameters must be maintained and closely monitored in accordance with the approved mud program as the mud system plays a key role for a safe and economic drilling operation. However change in the mud properties may be made after having very careful technical consideration depending on the hole condition.
Viii)Cementation: During cementation, the approved slurry design should be maintained with minimal variance and within accepted industry practice.
ix) Well Location: The location of a well should be selected with the assistance and concurrence of the local administration. The proximity of habitations, rail, highways and other important installations should be considered. so that the location is a sufficient distance away as far as practical, to reduce the risk of damage and improve safety.
x) Communication: The Service companies working at the well site must have standard communication system (e.g. TV monitor, junction box, intercom, etc.) as practiced in the industry.
xi) Co-ordination: Good co-ordination within the service companies, between the service companies & the operator and, operator & local administration should be maintained.
xii) Data Transfer and Preservation: Data acquire during drilling operation should have regularly scheduled backups and storage off-site in a safe place, as practical.
xiii)Change of Personnel: Changing of skilled personnel engaged in drilling operations should be minimized. Replacements for the skilled professionals should have similar backgrounds to those whom they replace.
xiv)A separate study should be conducted by a professional team to reassess the environmental loss including the damage/loss to the forestry.
xv) Contamination and loss to the ground water due to the blowout should be assessed by the concerned authority.
xvi)A separate study should be conducted by a professional team to assess the loss of gas from the reservoir. In order to assess the actual gas loss and gas in place reserve, the required reservoir parameters should be obtained from the upper gas sand after having drilled another well at Moulvibazar structure in an around MB#1.
8.6 Environmental Damage
TO : Petrobangla- ESD/Project File DATE: June 23, 1997
…FROM : Ken Pitchford, MIES-ESMS Team leader.
FILE : Dhaka P/F SS
Subject : Field trip notes- Occidental well no. 1 Blow- out and fire (Magurchhara Gas field, Srimangal)
This Memorandum describes general site environmental conditions observed by Petrobangla- ESD and MARTECH- MIES during a preliminary inspection of The above-referenced incident, The principal purposes of the site visit were to (1) observe and record possible environmental impacts resulting from the fire, (2) collect baseline environmental information in adjacent areas not currently affected by the fire or emergency response activities and (3) assess potential environmental impacts to the site and surrounding area resulting from future emergency response activities, A secondary purpose of the field visit was to document initial emergency response actions at the site and gather preliminary information regarding potential causes of the incident.
The subject blow-out and fire are reported in recent newspaper accounts to have originated in the early hours of Sunday, June 14,1997, local time, Media reports indicate the incident occurred as a result of an unexpected “kick” in formation pressure encountered above the anticipated depth of the target gas reservoir, investigations to determine the cause(s) of the incident are currently in progress.
Petrobangla- ESD and MARTECH- MIES mobilized a field response team from Dhaka, at the direction of GM-ESD, in the early morning hours of Wednesday, June 18, the team consisted of Mr. Rehan and Mr. Rahman of Petrobangla- ESD and Mr. Ken pitch ford of MARTECH- MIES (Team Leader of the Current environment and safety management System project in Petrobangla). The team arrived at the incident scene at approximately 1400 hours on June 18, team members initially secured the project truck in a safe location on the access road leading to the well site and conducted a brief interview with the occidental petroleum official in charge of site security, Permission to enter the active fire area was obtained from the on-site occidental security official. Team members then walked several hundred meters to the well site to conduct a general site reconnaissance and begin a visual inspection of the incident area and take photographs of the fire and environmental conditions in the surrounding hills and forest. at the time of the site visit, the fire had been burning out of control or suppression work had been implemented at the scene. Emergency response activities at the incident scence were limited to setting up a security perimeter to control public access to the fire, staging heavy earthmoving equipment near the fire, and initial construction of temporary fire water ponds and/or runoff control channels and impoundments immediately adjacent to the active fire area.
Documentation produced by the Petrobangla- ESD/ MARTECH- MIES incident response team includes this technical Memorandum and a set of color print photographs showing site conditions at the time of the inspection.
DESCRIPTION OF THE WELL SITE AND FIRE
The well site consists of a graded earthen surface encompassing approximately 10 acres, in a roughly rectangular shape, constructed equipment storage areas, and access roads were present inside the prepared drill pad area. Little or no equipment or materials were observed in the active fire area.
Observed from a distance of approximately 150 to 200 meters, the base of the fire was noted to be emanating from a localized area about 10 meters in diameter immediately surrounding the well casing or spud. Intense radiant heart from the flame prevented closer access. At the distance from which the fire was observed, it was surface drilling equipment was apparently removed from the fire area after the blow-out occurred.
The size of the flame varied from about 30 to 50 meters in height and about 10 to 20 meters in diameter, The fire was accompanied by a hissing sound of escaping gas and discharge of a small amount of formation sand.
DESCRIPTION OF GENERAL ENVIRONMENTLY CONDITIONS
The incident scene is located in an area of native rain forest within a protected national park of reserve. The local terrain is hilly, having an elevation relief of approximately 30 to 40 mete…rs. The drill pad area is entirely grubbed, with no vegetation present surrounding hills are densely vegetated with tall forest trees and undergrowth. The drill pad area is situated in an elevated valley that appears to be on or near a ridgeline above the local surrounding hills, While drill pad area immediately adjoined by several hills rising above the elevation of the pad, its possible location near a ridgeline is such that only minor storm runon would be expected to enter the site, and runoff originating in the site would be expected to flow in a generally radial pattern from the pad area, The exact drainage pattern in the site area would have to be confirmed by detailed topographic analysis However, it is clear at this time that substantial runoff from the site area would flow generally westward and roughly parallel to the access road from Srimangal, The topographic expression in the site area will be critical in estimating potential downstream environmental impacts resulting from discharge of surface water from the area of the fire.
DESCRIPTION OF OBSERVED ENVIRONMENTLY IMPACTS
The primary causes of environmental damage created by the fire and future fire control activities , based on the Petrobangla- ESD/MARTECH- MIES response team’s preliminary observation. Would be (1) Thermal effects to nearby native vegetation and soil fertility, (2) uncontrolled discharge of water-borne contaminants in surface runoff to sensitive downstream areas, and (3) destruction of intact native forest for installation of a proposed gas relief well near the incident scene.
Thermal impacts would include desiccation of plants and soil, resulting in immediate loss of native forest and wildlife habitat and potential long-term loss of soil fertility due to mortality and/ or morbidity of essential soil microbes, nematodes, and other biota. The response team observed severe vegetative stress in native plants up to several hundred meters from the fire, most affected were smaller plant species of the undergrowth community including bamboo, ferns, and grasses, larger plants, including tall forest species, were less affected except in close proximity to the fire, with respect to soil impacts, severe soil desiccation was observed in the form of steam and dense water vapor emanating from the exposed ground surface near the fire, the effects of this condition are not yet known, but it may be expected that the activity of essential soil biota and loss of available soil moisture will reduce oil fertility, the duration of these effects cannot be estimated at this time with existing information.
Uncontrolled discharge of contaminated runoff could result from inadequate drainage control or improper treatment of effluent containing fire-fighting chemicals or hydrocarbons. additional impacts could include erosion and sedimentation in downstream water courses and secondary impacts to aquatic organisms and riparian habitats. surface water observed in the site area at the time of this inspection was moderately turbid and contained no hydrocarbon sheen, discoloration, unusual odors, or other indication of contamination, the condition of surface water draining from the fire scene should be monitored periodically for indications of contamination.
Destruction of native forest and wildlife habitat resulting from installation and operation of a proposed gas relief well and other fire control activities cannot be estimated at this time, The nature of these potential impacts will be directly related to the surface area required for the relief well and the site selected to erect the well, it is recommended that this activity be closely monitored with respect to baseline environmental conditions and implementation of the relief well project.
IN THE SUPREME COURT OF BANGLADESH
HIGH COURT DIVISION
(SPECLAL ORIGINAL JURISDICTION)
…WRIT PETITION NO. ………….. OF 2003
INTHE MATTER OF:
An application under article 102 of the Constitution of the People’s Republic of Bangladesh.
INTHE MATTER OF:
Articles 13,21,23,31,32,42 and 143 of the Constitution the Bangladesh petroleum act 1974 (Act LXIX of 1974); the Bangladesh. Oil, Gas and Mincral Corporation Ordinance. 1985 (Act XXI of 1985); and the Bangladesh Environment Conservation 1995 (Act No. I of 1995).
INTHE MATTER OF:
Supplemental Agreement dated 25 November, 1998 made between Respondent Nos. 1.2 and 4 (Annexure F)
Direction to be given upon the Respondent Nos. 1.2 and 3 to ensure realization of compensation for the resources lost and the environment and ecological damage caused at Magurchora Blowout, in the light of the enquiry report dated 30 July, 1997 from the respondent No.4.
INTHE MATTER OF:
Engr, M. Shamsul Alam, Ph. D, Professor and head of the Department of Electrical and Electronic Engineering, and coordinator, Center for Energy Technology.
Bangladesh Institute of Technology (BIT).
1. Bangladesh, represented by the secretary, Energy and Mineral Resources Division, Ministry of Power, Energy and Mineral Resources, Bangladesh Secretariat, P.S- Ramna, Dhaka.
2. Bangladesh Oil, Gas and mineral Development Corporation (Petrobangla), Represented by its Chairman, 3 Nawran Bazar Commercial area, Dhaka 1215.
3. The Director General, Department of Environment, Paribesh Bhaban, E-16, Agargaon, Sher-e- Bangla nagar, Dhaka.
4. The Occidental of Bangladesh Ltd, now represented by the UNOCAL of Bangladesh Ltd, Lake View, House #
12. Road # 137, Gulshan, Dhaka 1212.
Mr. Justice Moinur Reza Chowdhury, The Hon’ble Chief Justice of Bangladesh and his companion Justice of the said Hon’ble Court.
The humble petition of the petitioner
above named most respectfully-
S H E W E T H:
1. That it is stated that your petitioner is a professor & Head of the Department of Electrical and Electronic Engineering of Bangladesh Institute of Technology (Herein after referred to as BIT) Chittagong and Coordinator of center of energy Technology of the said Institute and a conscious citizen of the country, having interest to protect the national interest and also to protect the environment, ecology and the natural resources of the country, He is also an expert and renowned researcher in the field of energy and environment. There are more than 30 numbers of in the same for recovery of compensation from the respondent No. 4 caused by the said Blowout. and accordingly entering into the Supplemental Agreement pending the aforesaid writ petition and without settling the enquiry for blowout is malafide. illegal, without lawful authority and of no legal effect.
VIII. for that in view of the fect the contracting third party i.e respondent no.4 having exhibited utter negligence and in efficiency in managing the previous country in exploring our gas field in the past, the Executive of the Republic being in trust to protect our national interest in taking a decision in extending the benefit to ??????? party after the expire of it’s original contract and thus have acted illegally causing serious loss and injury to the National interest.
IX. For that the Executive of the Republic acted malafide by extending the expired contract with the disqualified contractor although the “Enquiry Report on Moulvibazar Well# 1 Blowout on 15 June, 1997” was submitted on 30.7.1997 whereby disqualification of the contractor has been established and assessment of damage by blowout has been made resulting to invite the disqualified contractor to take benefit over the National resources and as such action of the respondent No.4 is liable to be declared to have been made without lawful authority and of no legal effect.
X. for that in view of the facts:
a) That according to the article 10.6,10.12 of the inquiry Report on the Blowout dated 30.7.1997, blowout occurred due to utter negligence and in efficiency of the respondent no. 4, during the drilling at the night of 14th June, 1997, there were lack of supervision, co-ordination, supervisor, Mud Engineer, Mud logger and drilling crews of the respondent no.4, an accumulation of lapses by responsible personal, personal at the well site led to the blowout incident.
b) That at that time of execution of the production sharing contract (Parent Contract) The 3rd party Contractor i.e. respondent no.4 had no Environmental Clearance Certificate as required by law of your country and after blowout the respondent No. 4 was asked to apply for the said Certificate by the respondent no.3 by his memo, dated 24.6.1997 and hence the supplementary agreement was executed and made with an inherent by disqualified party.
c) That at the time of execution of the impugned the supplementary agreement the respondent no. 4 had no Environmental Certificate and till today he has not procured the said certificate and continuing his work without the environmental clearance certificate.
d) That without settling the enquiry report on the blowout the respondent nos. I and 2 entered into the supplementary Agreement with the respondent no.4 and thereby ignored the National Interest and damage caused by utter negligence and in efficiency of the respondent no.4.
e) That in view of the enquiry report, blowout caused due to negligence and inefficiency and disqualification of the respondent no. 4 and assessment of damage has been specifically mentioned in the said report but the executive of the Republic i.e. respondent no I and 2 in utter disregard to the National interest extended the expired contract without inserting any clause for recovery of the compensation from the respondent no.4 with malafide intention in the supplemental agreement.
f) That production sharing contract expired on 12 January 1998 and after 10 months of the expiry of the contract the same has been extended by the supplemental agreement thereby inviting the disqualified contractor to mishandle our National Resources.
XI. For that since that national resources has been lost and environment and ecology has been damaged by the respondent no.4 due to negligence, want of measurable precaution to prevent damage and lose of national resources and environment and ecology of magurchara gas well being block no. 14 the respondent no. 1,2 and 3 are required to take appropriate steps to realize proper compensation from respondent No.4 and accordingly they shall be directed to do their lawful duty to take proper steps for realization of compensation.
XII. For the Petitioner is seeking appropriate order and direction from this Hon’ble Court to protect the public property and environment and ecology of the country. Country and to uphold public interest, and for public duty under the law and the constitution.
Wherefore, it is humbly prayed that your lordships would graciously be pleased
a) To issue Rule nisi calling upon the respondents to show cause as to why the impugned supplemental agreement dated
25.11.1998 made between the respondent Nos. 1,2 and 4 (Annexure-F) shall not be declared to have been made and executed with…out lawful authority and to be of no legal effect and why a direction shall not be issued upon them to cancel and rescind the supplemental agreement. (Annexure-F)
b) To show cause as to why the respondent No.4 be not directed to stop exploration before ????? compensation from the resource?? lost at Magurchora gas field.
In the light of the
Enquiry Report dated 30 July, 1997;
c) To direct respondent no 1-2 not to make any further contract or agreement and any financial transaction with respondent
No.4 till disposal of the rule
d) To direct the respondent No.1 and 4 to certify and transmit the the records of the case including records regarding insurance to this Hon’ble court to be dealt with in accordance with law,
e) To award the cost and incidental thereto in favour of the petitioner by the Respondents:
f) After hearing the cause or cause if shown any make the rule absolute.
g) To pass such other or Further order or orders as to your lordships many seem fit or proper.