New Delhi, Oct. 9: State-owned explorer Oil India plans to undertake 20 development drilling wells in Jaisalmer district of Rajasthan at an estimated cost of Rs 220 crore.

The company has also received an environment clearance for the project. It plans to develop the Baghewala field, situated in west Rajasthan, as the technology for extracting oil at a competitive price is now available.

"Based on the expert appraisal committee's recommendation, the ministry has accorded an environment clearance to Oil India to drill 20 wells in Jaisalmer," a senior government official said.

Officials said the oil giant had discovered heavy oil at the Baghewala field during the 1991-94 drilling. During the initial exploration period, production testing was carried out for a very short duration. It had to be discontinued because of high viscosity and poor inflow of oil to the well bore. However, to establish the wells' production potential, Oil India plans to undertake the development drilling.

Of the five wells that were tested, two wells - Baghewala well 1 & 4 - appeared as good producers of heavy oil.

Oil India had also discovered natural gas in Jaisalmer sub-basin of Tanot fields and heavy oil in the Bikaner-Nagaur sub-basin in the early nineties.

Last month, the company had received an environment clearance to drill 20 wells in Dandewala, Bagitibba and Tanot mining lease blocks in Tanot village in Jaisalmer at an estimated cost of Rs 96 crore. The depth of drilling varies between 1,200 metres and 2,200 meters.

About one million metric standard cubic meter per day of gas is expected to be produced from these blocks, which will be processed at the Dandewala gas processing complex.

Oil India has over one lakh sq km of petroleum exploration licence or mining lease areas, most of which is in the northeastern part of the country.

Rajasthan is the other major gas producing area, contributing to 10 per cent of its total production.