Essar Oil increases CBM production at West Bengal unit

For 2016-17, the company aims to generate 1.8 scmd CBM from its Raniganj block

Essar Oil and Gas, India's largest coal based methane (CBM) player seems to be getting aggressive in its roadmap of increasing production.

Setting a target to generate three million scmd (standard cubic metres per day) production by 2017-18 from its Raniganj (East) Block in West Bengal, the company recently upped the production capacity to touch one million scmd from the previous 0.85 scmd capacity.

For 2016-17, the company aims to generate 1.8 scmd CBM from this block.

Until recently, of the nearly 300 wells in this block, 266 have been fracked, 247 have been completed and 175 have been on the active de-absorption cycle.

Although the company owns CBM mining rights in coalfields in Raniganj in West Bengal, Sohagpur in Madhya Pradesh-Chhattisgarh, Rajmahal in Jharkhand and Talcher and Ib Valley in Odisha, the Raniganj facility is the only operating asset of the company.

"We have received the necessary approvals for the Sohagpur project which is likely to be commissioned in the last fiscal quarter of 2016-17 and others will also start production in due time," Manish Maheshwari, CEO-E&P of Essar Oil and Gas told Business Standard.

As per a Netherland Sewell & Associates' report, the proven, probable and possible gross CBM reserves in the block in West Bengal is estimated at 1.09 tcf (trillion cubic feet) while it is assessed to have additional resources in the contingent category of around 270 bcf (billion cubic feet).

"In the last 12 months, the average well productivity has more than doubled, the gas break-out time in new wells has reduced to days instead of months, and the work-over cycle has reduced to a fifth", the official said.

Having a revenue-sharing contract with the government for the 260-acre Raniganj CBM project, the company has already pumped in Rs 3,300 crore and another Rs 500 crore is being pumped in to ramp up capacity in this project.

Asked about the proposed investments in the other projects, Maheshwari said the investment plan as well the overall production roadmap will become clearer towards the end of the current fiscal year.

Stepping up its CBM production capacity in the West Bengal unit is crucial as it has a 20-years contract with Matix Fertilisers to supply 2.8 million scmd of CBM.

"We have already commenced supply to Matix Fertilisers for its pre-commissioning activities at the rate of 150,000 scmd. Besides this, the CBM gas is being supplied to industrial consumers in the catchment area of Durgapur", Maheshwari said.