The Ruias-controlled Essar Oil plans to invest about Rs 4,000 crore in the next three years for developing its three coal bed methane (CBM) blocks in Jharkhand, Gujarat and West Bengal, having recoverable gas reserve of close to seven trillion cubic feet (tcf).
“The existing recoverable gas would be valued about $4 billion at the current contract prices. With the commencement of CBM production in three blocks, Essar’s exploration and production (E&P) will be poised for a significant growth and the additional cash flow will help the company pay off the debts,” said an industry source.
According to sources, the company has already spent Rs 150 crore for exploration at these CBM blocks.
According to the latest Competent Person Report (CPR) of two US-based consultant firms, Netherlands Sewell & Associates Inc and Advanced Resources Inc, Essar’s recoverable resource at Rajmahal block in Jharkhand stood at 4.7 tcf, against the earlier estimate of 1.3 tcf. Also, the company has found 0.75 tcf CBM gas reserve at its Mehsana block in Gujarat. Directorate General of Hydrocarbons (DGH) had earlier approved recoverable reserves of 1 tcf at the company’s Raniganj block in West Bengal.
“As certified by internationally recognised reserve consultants in the latest CPR, the estimate for recoverable resources and reserves at our CBM blocks has more than doubled to seven tcf,” said Shishir Agrawal, chief executive officer — Exploration & Production, Essar Oil.
“Essar Oil’s E&P business owns rights in some strategic oil and gas blocks across the world, with significant production potential. In India particularly, we are emerging as a dominant player in gas. We have a highly skilled and competent project execution team that has employed several cost-effective technologies, to keep our risks and operating expenditure low.”
Gas flow from Raniganj has already started, and sales are likely to commence by early April. In the CBM IV Round, Essar was announced as the provisional winner of Block Rajmahal in Jharkhand. As per CPR, the recoverable resource is estimated at 4.7 tcf, compared to the earlier estimate of 1.30 tcf. Earlier, DGH estimate indicated Rajmahal to be a very good CBM potential with 3.2 tcf of gas, which is now estimated at 9.50 tcf in the CPRs.