Its consultants recently estimated recoverable reserves of 1,689.3 billion cubic feet of shale gas, currently valued at around $5.8 billion.
Prashant Modi, managing director and chief executive officer, GEECL, said the company expected to start initial shale gas exploration by drilling core wells in the first half of next year.
After analysing the details of results from the core wells, the company will drill pilot wells. “Based on the further results obtained and analysed from the pilot production wells, the investment envisaged for the development of share resources in our block could in the region of $2 billion,” the company said in a press statement.
Prashant Modi said the investment could span over 10 years.
Currently, the company is looking for a technology partner for the shale business. “Shale is a developed industry. There are several companies offering services,” he told Business Standard.
He said the company would be funding the investment through its internal resources and would take a call on raising funds through debt and equity once the results of pilot wells were known.
He said the company would drill 144 more wells for coal bed methane. It has drilled 153 wells in addition to three pilot wells in its initial phase of CBM operations in the Raniganj area, West Bengal.
GEECL is producing CBM gas in the Raniganj (South) block, which covers 210 square metres with 9.25 trillion cubic feet of original gas in place (OGIP). The company’s second licence is for the Mannargudi block in Tamil Nadu with 0.98 tcf OGIP. “When we listed on the London Stock Exchange in December 2005, the OGIP for the Raniganj (South) block was 1.39 tcf, and now it has significantly increased to up to 9.25 tcf. Furthermore, with an undiscounted value of $13.78 billion and a discounted value of $4.31 billion, it is truly phenomenal,” said Prashant Modi.
The company also announced a 21 per cent increase in sales in the first half of 2018-19 at 11.56 million standard cubic feet a day over the same period last year. Due to the devaluation of the rupee during that period, its price realisation was, however, flat at $10.60 a million British thermal units.
Its production during April-September 2018 was 18.27 mmscfd (million standard cubic feet a day), lower than the 19.61 mmscfd last year, due to lower pump downtime.
The company said it had entered into an initial understanding with GAIL India for either a gas offtake agreement or a gas transmission agreement through the latter’s upcoming Jagshidpur-Haldia and Bokaro-Dhamra pipeline. The pipeline is expected to be operational by 2020 and could give the company access to areas inside and around Kolkata.