Essar Oil starts gas production from Raniganj CBM block

Essar Oil today said it has started gas production from its Raniganj CBM block in West Bengal and will achieve peak output in 2-3 years.

"Essar has begin production and sale of CBM gas," Essar Oil COO Prem Sawhney said, speaking at the 9th Petro India conference here.

The company is producing 90,000-100,000 million standard cubic meters per day (mmscmd) of gas from below coal seams (coal bed methane) in the Raniganj block in West Bengal.

The Raniganj coal bed methane (CBM) block will touch a peak output of over 3 mmscmd in 2-3 years, he said, adding production from the block will last 15 years.

Essar Oil is investing $300 million for CBM gas production.

Sawhney said the company plans to drill 500 wells over 2-3 years.

The gas is sold to a local fertiliser plant at $4.2 per million British thermal units.

The company had last year signed production sharing contracts (PSCs) for four CBM blocks it had won under the recently concluded fourth round of auction. It now has five CBM blocks to produce gas from below coal seams.

The Raniganj block in West Bengal has in-place resources of 4.6 trillion cubic feet (tcf) and recoverable resources of around 1 tcf. In the Rajmahal block, one of the four areas for which Essar signed a PSC last year, the in-place resources have been e stimated at 9.5 tcf, with recoverable resources of 4.7 tcf.

Sawhney said currently five CBM blocks (with different companies) in the country -- Raniganj East, Raniganj South, Jharia, Sohagpur West and Sohagpur East, are currently producing 0.15 mmsmcd and output is expected to reach 7.4 mmscmd by 2013.

So far, government has awarded 32 CBM blocks, holding 62 tcf of gas reserves, to different companies.