India's Essar Oil Plans to Double CBM Output

Essar Oil is looking to double coal bed methane (CBM) output in India to 1.8 million standard cubic metres per day (scmd) by end of current fiscal (Apr 1, 2016-Mar 31, 2017).

The company wants to boost production to 2.5 million scmd during fiscal 2017-18.

Essar plans to achieve this target by increasing the number of wells in the Raniganj East block from around 300 to 363 this year.

“We’ll increase the well count by March 2017. Of the nearly 300 wells, 266 have been fracked, 247 have been completed and 175 have been on the active de-absorption cycle,” company’s CEO for exploration and production, Manish Maheshwari, told Business Standard, a financial daily

Essar owns rights to explore for CBM in Raniganj block in West Bengal, Sohagpur in Madhya Pradesh-Chhattisgarh, Rajmahal in Jharkhand and Talcher and Ib Valley in Odisha. Currently, production is taking place only at Raniganj block.  

Further drilling at Raniganj block is expected to begin later this month. Greka Drilling will commence drilling as it has got mobilisation order for two drilling rigs from Essar.

Greka and Essar signed the contract in January this year. Essar had previously engaged Greka Drilling in late 2013 to provide drilling services on Raniganj East block and this contract was concluded in 2015 with a total of 16 wells being drilled.  The current contract is for a period of one year and has an estimated value of around $8 million.

The Indian government is looking to aggressively exploit country’s coal bed methane reserves to augment domestic gas supplies. Despite lot of talks and discussions about the sector, there has not been much progress. Private sector players say that large scale exploration is not economically viable at prevailing domestic prices.

The government, however, has expressed willingness to talk to the companies about the pricing issue.