Raniganj is Essar Oil's Flagship CBM Block

Iftikhar Nasir
CEO - E & P, Essar Energy Plc,
Iftikhar Nasir, CEO - E & P, Essar Energy Plc, brings forward the CBM scenario in the country, with particular focus on Raniganj CBM block, which he says is "Essar Oil's flagship CBM block". It's the only producing block at present, the other four CBM blocks of the company being in the preliminary exploration stage.

What is the potential of CBM in India?
The total coal resource of India is about 248 BT of which the Indian Gondwana Basins contribute about 99 per cent. Further, the Damodar Valley Coalfields of Eastern India contribute 50 per cent of this resource. The estimated India CBM resource is about 1.5 TCM (DGH). The CBM Policy in India was formulated in 1997. Accordingly, MoP & NG became the administrative ministry and DGH the implementing agency. So far, three rounds of bidding have been completed and 33 CBM blocks have been awarded with a net resource of about 62 TCF.

Kindly brief us about your progress in CBM production from the Rajniganj block. What is the current production from the block? Also brief us on the company's other CBM blocks and the productions from each of these.
Raniganj is Essar Oil's flagship CBM block and has certified recoverable resource of 558 billion cubic feet (bcf ) of gas. The block is located in the Damodar Valley coal field in West Bengal. It has current test production of around 25,000 scm/d of gas from 20-22 wells. We expect to achieve a plateau production of ~3 million scm/day. Raniganj is our producing CBM block; however we also have four more CBM blocks- Rajmahal, Sohagpur, Ib Valley and Talchir which are currently in preliminary exploration stage. We own 100 percent interest in all these blocks.

The development of Essar's CBM gas operations at Raniganj brings its own challenges. Kindly detail the same.
Being a new form of energy, there are multiple challenges in the CBM arena. Operational challenges being optimal spacing for extraction of CBM, implementation of directional and horizontal drilling technologies suited for the region, treatment and disposal of excess water and corresponding reject, partial vs full hydro-fracturing; marketing challenges in the form of multimodal transportation of gas to nearby markets, and some regulatory challenges in the form of clearances and pricing policies. However, no business is without challenges and we work towards de-risking the same from the various projects.

What is the progress on your obtaining required environmental clearances and government approval for the gas price for timely completion of the project for production of gas from CBM in the region? Are you also looking out to renegotiate contractual terms as is applicable under Gas Supply and Purchase Agreement?
We have obtained the requisite environmental approvals for the time being and have applied for relevant EC for the next phase which we are confident to receive and not have any untoward impact on our project. We have obtained test sales gas price approval for sale of incidentally produced gas and have completed the due price discovery process. We are awaiting government decision on the price approval.

Please brief us on the exploration and production activities of oil and gas that the company is carrying out, both in India and abroad.
Essar Energy holds O & G blocks in Mehsana (Producing block), Assam and Mumbai Offshore (Exploration blocks) in India and overseas blocks in Nigeria, Vietnam, Indonesia and Madagascar. All international blocks are in exploration stage.

Are you also looking out to develop shale gas assets? Countries like the US, etc have made signifi cant progress in the development of Shale Gas. However, another school of thought is against this because of its having detrimental impact on the environment. Please detail your views.
Shale gas is a new technology and we are open to it. However we are not in position to share any plans.

How does Essar plan to move ahead with expanding the CBM resource base? Tell us about your future plans.
As stated above, Essar has 5 CBM blocks in India. Raniganj is in advance stage of development while in the other four blocks we are still at an early stage and would be exploring more. We plan to invest about USD 500 million in the next two year in the CBM space in India.