Essar Oil’s recoverable coal-bed methane (CBM) reserve at Raniganj block in West Bangal has been pegged at 1 trillion cubic feet (tcf), 43 per cent higher than the earlier estimate of 700 billion cubic feet (bcf). The basin has 3.5 tcf reserves, a third of which are recoverable.
Essar, which was looking to commence production by March 2010, would raise its production to a peak of 4 million standard cubic metres a day (mscmd) in two years, said sources in the know. The 4 mscmd CBM production would add about Rs 1,200 crore to the company’s annual revenue, added sources.
The revised peak production is much higher than the earlier expectation of 2.5 mscmd, said IDFC-SSKI in its recent report. The recoverable reserve at 1 tcf has been certified by Texas-based consultant Netherland, Sewell and Associates. Earlier, the Director General of Hydrocarbons (DGH) had certified that the Raniganj block holds 700 bcf of CBM gas.
Essar is planning to commence its CBM commercial production at 60,000 standard cubic meters a day (scmd). It expects to maintain plateau production for 14-15 years, after which production is estimated to decline gradually till financial year 2042. The company’s capital expenditure on the block would be Rs 2,500 crore, while operational expenditure would be Rs 15 for each unit of gas produced.
The company believes that the industrial belt between Durgapur and Kolkata would be the potential market for its CBM gas. It has completed a minimum work commitment on the block and has sent the full development plan to DGH for approval, which it expects to secure shortly.
“Reservoir parameters on this block are comparable to some of the best CBM assets in North America, which is a leading producer of CBM gas (150 mscmd in CY08),” said the IDFC-SSKI report. The Raniganj asset compares favorably to basins such as San Juan, Black Warrior and Raton, which are some of the largest producing CBM basins in the US, it added.
The Raniganj asset covers an area of about 500 sq km, of which EOL is concentrating on 180 sq km. Essar has drilled 15 test wells, which are producing 2,500 scmd gas there. The company aims to achieve peak production through drilling of 500 wells over the next seven years.