Essar to accelerate CBM plans; to increase production to 5 mmscmd within 3-4 years
Essar Oil and Gas Exploration & Production Ltd is accelerating investment plans for the exploration and production of unconventional hydrocarbons that will help increase gas production in its flagship block from less than 1 mmscmd now to about 5 million standard cubic meters per day, its CEO said.
EOGEPL is India’s largest producer of Coal-Bed Methane (CBM), which like conventional gas can be used as CNG in cars or as a feedstock in industry.
Buoyed by investor-friendly upstream policy reforms in recent years, including providing marketing and pricing freedom for CBM, the company is drilling more wells, including horizontal ones, that will help tap broader resources lying beneath the coal seam in its Raniganj East block in West. Bengal, EOGEPL CEO Pankaj Kalra told reporters on the sidelines of India Energy Week.
The company currently produces 0.9 mmscmd of gas or 1 percent of India’s total gas production. “Our drilling campaign will increase production to 2.3-2.4 mmscmd over the next 14 to 15 months,” he said.
EOGEPL was split by the owners of Essar Group after promoters sold Essar Oil – which mainly included downstream oil refineries and fuel retailing operations – to a consortium of Rosneft, Trafigura and United Capital Partners for $12.9 billion.
The company’s drilling campaign has primarily focused on 120 square kilometers of the company’s 500 square kilometer block. To tap into previously untouched areas, the company plans to drill well vertically from the Earth’s surface and then, after reaching a certain depth, drill horizontally for about a kilometer.
Several such wells are planned which would help tap a larger area, he said. “We hope to reach 5 mmcmd production within three to four years and this peak production can be sustained for seven to eight years.”
Horizontal wells are five times more efficient than vertical wells and have been a reason for the substantial production of CBM gas in Australia and China.
The company, which has already invested around Rs 5,000 crore in developing the Raniganj block, is looking to invest another Rs 2,000 crore.
The block also has shale gas reserves and the company is currently studying its potential, he said.
While the bloc has reserves of 4 trillion cubic feet of CBM, shale gas could be double that. But the recovery factor in shale gas is low compared to CBM, he said.
The company is looking to explore shale gas reserves after the government revised its exploration policy, giving operators the freedom to explore both conventional and non-conventional resources such as CBM and shale reserves within the exploration area.
Increased production of both CBM and shale gas will contribute to India’s vision of becoming a gas-based economy, which aims to increase the share of gas in the energy mix from 6.2 percent to 15 percent by 2030.
Kalra said the company has drilled more than 350 wells in the first campaign and has another 200 wells in the pipeline to boost production.
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First print: February 8, 2024 | 10:33 am IST