RIL to invest Rs 5000 cr in methane production

To drill 1,000 CBM wells before 2009.

Reliance Industries Ltd (RIL) will invest over Rs 5,000 crore to start commercial gas production from coal bed methane (CBM) blocks by mid-2008.

The company is planning to drill 1,000 CBM wells before 2009 and set up compressor terminals near the sedimentary basins to store and supply methane gas.

CBM, an alternate source of clean and unconventional energy, is primarily methane gas in its natural state in coal or lignite bed seams.

Terminals for CBM production include pumps, separators, compressor stations and pipelines. A single compressor station may process gas from 200 wells. The cost of one CBM terminal could be almost Rs 1,000 crore.

"Reliance has five CBM blocks covering an area of about 4,000 sq kms spanning Madhya Pradesh, Chattisgarh and Rajasthan. Plans are afoot to produce commercial CBM for the first time by the middle of 2008," said a company official. But he refused to comment on the investment for commercial production.

"Compared to the oil and gas wells, drlling of CBM wells are inexpensive. If the well is about 1,000 ft deep, the expense will be $35,000-40,000. Drilling and completion costs of deeper CBM wells average about $80,000-1,20,000," said industry analysts.

Oil majors such as Oil and Natural Gas Corporation, Gas Authority of India Ltd and Oil India Ltd are planning to begin CBM production by 2010. With coal reserves of 400 billion tonne in the country, the CBM resource potential is estimated to be to the tune of 35 to 40 tcf.

Recently, RIL has informed the government of the gas discovery in Sohagpur west and east blocks of Madhya Pradesh.