Great Eastern, Essar seek Bengal govt's approval for shale plans

London-listed Great Eastern Energy Corporation and Essar Oil and Gas Exploration and Production have approached the West Bengal government for amendments in their existing mining leases (MLs), to enable shale production from their blocks in the Raniganj area.

The two are major coal-bed methane (CBM) producers.  The development comes after the central government eased the rules on exploration of unconventional hydrocarbons. That was done in August last year, when the Union Cabinet cleared a policy in this regard. An operator can now explore shale, CBM, hydrates and all such unconventional hydrofules in existing fields.

“For shale, we are awaiting final clearances from the state government. Based on the policy, we will have to get the ML (ML) amended. Once it is in place, we expect to start the initial shale gas exploration work, by drilling core wells. The total investment might be in the range of $2 billion (Rs 14,200 crore) for shale over a period of 10 years,” said Prashant Modi, managing director of Great Eastern.  The company’s estimated gas reserve is 9.25 trillion cubic ft — 6.63 tcf of shale and 2.62 tcf of CBM — at its Raniganj (South) block.

Essar is expected to have shale gas potential of around 1.6 tcf, for which the company could invest around Rs 7,000 crore. Essar is reportedly producing around 0.45 million standard cubic metres a day (mscmd) of CBM from its Raniganj East block. 

According to industry officials, as compared to conventional players, CBM producers will be having more synergy in shale production on water requirement, gas evacuation and handling facilities. 

Modi says upcoming pipelines in Bengal would be key for his company's production increase plans. Even after a year, conventional producers are going slow on shale plans, owing to the lack of clarity in the pricing here.

Based on studies conducted by the American government's Energy Information Administration, India has an estimated reserve of 584 tcf in shale gas and 87 billion barrels of shale oil in four basins — Cambay Onland, Damodar, Krishna-Godavari Onland and Cauvery Onland. Potential reserves from other basins are expected to boost these numbers.

CBM blocks were offered through international competitive bidding for exploration and production for the first time in May 2001. So far, 33 CBM contracts have been signed. Based on industry estimates, current production in the country is around 3 mscmd. According to the ministry of petroleum and natural gas, this could touch 9.4 mscmd by 2021-22, owing to increased production from Reliance Industries and state-run Oil and Natural Gas Corporation.