Essar to double CBM gas production to 1 mmscmd

ET Energy World

This would be the highest production of coal-seam gas or coal-bed methane from any block in the country

New Delhi: Mumbai’s Ruia family-owned Essar plans to double production of coal-seam gas from its Raniganj east block in West Bengal as a vital Urja-Ganga gas pipeline connecting users in eastern India gets commissioned by year-end, a company official said on Wednesday. Essar Oil and Gas Exploration and Production (EOGEPL) currently produces about 0.45 million standard cubic metres per day due to constraints of pipelines that could take the gas to consumers.

The company plans to ramp up the production to more than 1 mmscmd, the official, who did not wish to be named, said.

This would be the highest production of coal-seam gas or coal-bed methane (CBM) from any block in the country.

The firm has already invested Rs 4,000 crore in the project, which encompassed drilling of 348 wells, setting up the supply infrastructure, and laying pipelines to Durgapur and nearby industrial areas.

The current production from the Raniganj east CBM block is significantly lower than its capacity with the company having to throttle the output at about 0.45 mmscmd because of lack of a pipeline to take the gas to consumers.

“We have already produced 1 mmscmd gas from this block, which is the highest by any player in the sector. However, sustaining production at that level is unfeasible without the GAIL pipeline being commissioned. This is why we are producing far lower quantities of gas than we are capable of,” the official said.

The Pradhan Mantri Urja Ganga natural gas pipeline transverses from Jagdishpur in Uttar Pradesh to Haldia in West Bengal and Bokaro in Jharkhand and Dhamra in Odisha. The pipeline is being commissioned in phases and the last leg is scheduled for completion by December 2019.

This will help gas supplies to reach four fertiliser plants in Gorakhpur, Sindri, Barauni and Panagarh, besides more than two dozen towns where city gas distribution rights have been awarded recently. The total demand in the region is envisaged at about 20 mmscmd.

CBM is natural gas stored or absorbed in coal seams and contains 90-95 per cent methane. According to the Directorate General of Hydrocarbons, India has the fifth-largest proven coal reserves in the world and, therefore, holds significant prospects for exploration and exploitation of CBM.

Raniganj east block is India’s most prolific CBM block, holding 1 trillion cubic feet of recoverable reserves.

The official said EOGEPL is also planning to drill additional wells in accordance with the approved field development plan for the block.

The additional wells will enable the company to ramp up production to a peak of 2.3 mmscmd in the next few years, he said.

In August 2018, EOGEPL signed a gas sale and purchase agreement with GAIL, to formalise a 15-year gas supply contract between the two companies. The GSPA allows EOGEPL to monetise its entire CBM production at a globally competitive price.

EOGEPL is a wholly-owned subsidiary of Essar Exploration and Production Ltd Mauritius (EEPLM). EEPLM is an early stage developer, focussed primarily on oil and gas exploration.

Its global portfolio includes conventional acreages with a net resource of 1 billion barrels of oil equivalent (bboe), as well as unconventional hydrocarbon acreages that have a resource base of 15 Tcf (2.5 bboe) of gas. It has invested USD 1.1 billion in various acreages across the world.

These investments include unconventional hydrocarbon acreages in India through EOGEPL, a joint venture with Eni in Vietnam and investments in an exclusive block OPL 226 in Nigeria.

“EEPLM seeks to utilise its experience as a pioneer and leader in unconventional CBM gas development in India to explore and monetise its other acreages towards enhancing the country’s energy security. With a certified shale gas resource base, it is also poised to become a pioneer in this emerging energy frontier,” the official said.

Source: ET Energy World