Essar Oil has made a discovery of 8 trillion cubic feet (tcf) of original in-place shale gas resources underneath its coal-bed methane (CBM) reserves in Raniganj (East) block in West Bengal.

The finding is a result of a study undertaken by an independent US firm Invenire, with the support of US Trade and Development Agency, which made a preliminary assessment of the in-place shale gas resources.

“These are the prognosticated resources made by an independent third party, which means that this is an estimate of gas initially in place is to the order of 8 tcf of shale,” said Manish Maheshwari, CEO, Exploration and Production, Essar Oil. “Going by the present trend of roughly 20-25 per cent recovery factor, one can be looking at 1.6-1.7 tcf of recoverable resources,” he added.

Maheshwari said that both the CBM and shale resources can be tapped concurrently, but the company is awaiting government guidelines on exploring unconventional resources under the new Hydrocarbon Exploration Licensing Policy.

Production target

At the Raniganj, Essar Oil just crossed the 1 million scmd (standard cubic metres a day) production mark from its CBM block, making it the largest CBM and unconventional gas producer in the country. Maheswari said the company hopes to treble production to 3 mscmd by FY18 and has made a total investment of ₹ 3,300 crore here. It needs further investment of ₹500 crore, he said, in order to meet targeted production.

As per a 2016 NSAI (Netherland Sewell & Associates, Inc) report, the possible gross CBM reserves in the Raniganj (East) Block is estimated at 1.09 tcf (trillion cubic feet), the company said. The block is assessed to have additional resources in the ‘contingent’ category of around 270 bcf (billion cubic feet). Essar supplies 150,000 scmd to Matix Fertilisers for its pre-commissioning activities and to other industrial consumers in the catchments area of Durgapur, at the government formula price of $3.06 per million British thermal unit.

Last month, the Petroleum and Natural Gas Minister Dharmendra Pradhan met with CBM producers in order to encourage the unconventional resource. He said that he wanted to make natural gas from coal bed methane contribute five per cent of national gas production by 2017. Coal bed methane refers to a reserve of natural gas stored in coal seams.

With India having the fourth largest proven reserves of coal globally, according to the Directorate General of Hydrocarbons, the country holds significant prospects for exploration and production of CBM, which is also seen as a clean energy source. Currently, Great Eastern Energy Corporation and Essar Oil are the only two CBM-gas producing blocks in the country, both from separate reserves in Raniganj, West Bengal. Reliance Industries has begun test production from its two blocks in Madhya Pradesh. India’s natural gas production stood at 90 mscmd in FY16.

Essar Oil has five CBM blocks in total, estimated to have more than 10 tcf of reserves with total acreage of 2,700 sq km.

Of this, the Rajmahal block in Jharkhand is likely to be next to produce within the next five years. Essar Oil’s capital expenditure plan for FY17 in the exploration and production segment is ₹500 crore.

Maheshwari said the funds for which will be raised from internal accruals and from debt sourced locally and from abroad.

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