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Magurchhara Gas Field Blowout

Environment loss claim forgotten for 17 years

Sharier Khan with Mintu Deshwara tn Moulvibazar
The Ministry of Environment has apparently forgotten to collect its claim of Tk 600 crore for the environmental loss caused by the Magurchhara gas field blowout 17 years ago.
On the night of June 14, 1997, a massive blowout rocked the Magurchhara gas field in Kamalganj upazila due to faulty drilling operation by American oil company Occidental, which was drilling the well under a production sharing contract (PSC) for blocks 12 and 13.
A PSC gives Petrobangla a free share of gas, in case of discovery, which is typically 55 percent to 70 percent of the production. The oil company gets the remaining share in addition to recovering its investment on a priority basis. After the blowout that was brought under control in the following months, different government authorities made damage assessments and asked Occidental for compensation.
The compensation claims were made over damage caused to a gas reservoir worth several hundred crore taka that also included an amount of Tk 600 crore for environmental damage.
The following year, Occidental's PSC was facing termination over its failure to fulfil its contractual obligation of successfully drilling at least one well. In this situation, Occidental agreed to pay all compensation except the environment ministry's claim in exchange of extension of the PSC.
It said the environment ministry's claim was not realistic and wan ted a third party survey to assess the environmental damage. The government agreed to tit at idea.
The government in late 1999 extended Occidental's PSC with a provision of extra 5 percent more free share of gas for Petrobangla if gas was found in the same geological structure there. This extra share, according to Occidental, was the compensation for loss of gas.
However, Occidental later sold out its Bangladesh operation to another LIS company, Unocal, which was later acquired by Chevron worldwide.
All the while, after 2000, the issue of environmental damage compensation has remained shelved.
On this issue, Chevron had earlier told The Daily Star that it had done its assessment of the damage through a third party and was in a dialogue with the environment ministry. But there seems to have been no real initiative from the government side in the last 14 years.
Local people in Magurchhara have meanwhile been very disappointed with the government's role. They said they had expected compensation for the loss of their livelihood. That expectation now appears to have been in vain.
According to them, the Lawachhara
Reserve Forest close to the exploded gas well was massively damaged. A decades-old shegun timber garden along with a bamboo orchard and a strip of plantation was extensively damaged by the fire.
About 96 acres of the Lawachhara forest were completely burned down. Fifty percent of the forest resources on 111.15 acres of land and 30 percent resources on 106.21 acres of land of the reserve forest were also damaged. A variety of organisms and animals, for which the forest was a safe habitat, were also extensively harmed. Experts said the loss was irrecoverable.
Two committees formed in mid-1997
assessed the environmental and resources damage, including damage to communities, tea gardens, rail lines and electricity systems.
The reports of the committees said the damage done to the ecology would be impossible to recover in thenext50 years.
The oil company has, meanwhile, again begun to develop the damaged gas field and from March 2005, Ghevron started producing 62 million cubic feet of gas per day (mmcfd). Known as Moulvibazar gas field, this structure has around 350 billion cubic feet gas (bcf), which is rather a small discovery.
As Chevron has recovered the cost of its investment from this field, Petrobangla now gets around 70 percent