Essar Oil & Gas to spend $1 bn in Raniganj for shale gas

Financial Express

Essar Oil & Gas Exploration and Production (EOGEPL) will invest $1 billion for shale gas extraction at its Raniganj block in West Bengal from where the company currently produces 1 mmscmd of coal bed methane (CBM).

The company is ready with the proposal and it is awaiting policy clearance from the ministry, said Vilas Tawde, chief executive officer, EOGEPL.

The company holds the largest CBM acreage in the country with five blocks having an estimated 10 trillion cubic feet (tcf) of CBM spread across 2,700 sq km across five states — Jharkhand, Chhattisgarh, Madhya Pradesh, West Bengal and Odisha.

Tawde said the company expects shale gas policy to be announced by the end of this quarter. CBM and shale gas production requires huge quantities of water and the water used for CBM production can be recycled to be used for shale gas production, added Tawde. However, while 80% of the shale gas reserves are recovered in the first two years, only 10% of CBM can be extracted in the first two years.

CBM at present contributes 3% to the total natural gas requirement of the country, but Tawde believes it can go up to 10% by 2021. On Wednesday, the Cabinet Committee on Economic Affairs simplified CBM rules and granted relaxation to Coal India (CIL) along with its subsidiaries from applying for grant of license for extracting CBM under their coal bearing areas. Tawde said prognosis shows that eastern India, a coal-rich region, holds 48 tcf of the gas. While EoGEPL plan to expedite its well drilling plans post monsoon, it is also interested to offer its expertise to CIL for CBM extraction.

Other companies engaged in CBM extraction include Great Eastern Energy Corporation, ONGC and Reliance Industries.

EOGEPL will have ready market for supply of gas. While there are three revived fertiliser plants—Barauni, Sindri and Gorakhpur—in the vicinity which requires gas, the region also has many steel plants. The government’s pipeline infrastructure under the Urja Ganga programme will help the company transport the fuel. In addition, the focus to have city gas distribution (CGD) in eastern cities is an added advantage.

Petroleum minister Dharmendra Pradhan on Thursday, while addressing the media at the conslusion of the 16th Internation Energy Forum, said that by the end of this year almost half of the country will be assigned to various agencies to provide CGD.