Essar Group eyes Rs 600-cr turnover from CBM in FY19

Economic Times

The Essar Group expects turnover from coal bed methane (CBM) to touch Rs 600 crore in 2018-19 and double that in the subsequent two years, according to Vilas Tawde, chief executive officer of Essar Oil and Gas Exploration and Production.

The group’s CBM assets include five blocks that hold an estimated 10 trillion cubic feet of coal bed methane spread over 2,700 sq km across West Bengal, Jharkhand, Chhattisgarh, Madhya Pradesh and Odisha. Of these, the one in West Bengal is operational.

The company has already invested about Rs 4,000 crore in setting up supply infrastructure and drilling 348 wells. Plans include drilling another 152 wells over the next two years, which would require about Rs 900 crore more.

According to Tawde, Matix Fertilisers in Durgapur will purchase its full capacity production of 2.2 million standard cubic meters per day as and when the fertiliser company scales up production.

“Matix has commenced production at its facility and we have started supplying them around 1 million standard cubic meters per day of CBM. This will gradually be scaled up to 2.2 million standard cubic when Matix attains full production,” Tawde told ET.

On methane gas pricing, Tawde said: “The process of gas price discovery is under process and we hope to get a much better price than we have been receiving in the recent past. This will help the project achieve a Rs 600-crore turnover, which would double to Rs 1,200 crore as production rises.”

Essar also plans to start shale gas production at the Bengal block and is waiting for policy announcement on simultaneous production of CBM and shale gas from one block. “Production of CBM results in a lot of water being released, which can be used for extracting shale gas that requires lots of water for extraction,” said Tadwe.

A study undertaken with the support of US Trade & Development Agency (USTDA) has indicated a reserve of 8 trillion cubic feet of shale gas underneath the coal bed methane reserve in the Raniganj block. The report says recoverable resource could be to the tune 1.5 trillion cubic feet.