Essar Oil's commercial CBM production by April

Essar Oil will commence commercial production of coal bed methane (CBM) from its block at Ranigunj in West Bengal by March-April 2010. The energy major's exploration and production arm has already sunk 15 production wells there, and will install 5-7 rigs over the next couple of months.

“We are taking the CBM project to the next level and will start producing between 50,000 and one lakh cubic meter of gas per day around March. This will go up to 3 million cubic meter per day of gas by 2012,” Essar Exploration & Production, Chief Operating Officer (Clean Coal Business) Prem Sawhney said on the sidelines of a CII event here on Thursday.

The gas will be transported to consumers in the region through about 40 km of pipelines, which are expected to be in place when commercial production begins. Essar's production units in Ranigunj is in the vicinity of a number of steel and power plants. The Asansol-Durgapur industrial belt also lies in close proximity.

“We have already signed one consumer and are in talks with 3-4 others. Commercial users are trying to replace liquid fuels by using gas,” Sawhney said.

Of the total project cost of $400 million, the firm would have invested about $50 million by March. The company has also started with environmental and feasibility studies for a pipeline from the production site to Kolkata, which could receive about 3-5 million cubic meter per day.

Once Essar begins production, it will become the second CBM producer in West Bengal. In 2007, Great Eastern Energy Corporation Ltd (GEECL) had become the first commercial CBM producer in West Bengal, and last year had opened the country's first CBM pipeline to cater to industrial customers in the Raniganj coal belt.