Essar Oil and Gas to submit shale gas exploration proposal: MD

The company would also enter into an agreement with state-owned GAIL in the middle of March this year for selling its entire production of CBM to the PSU.

"We will submit a proposal detailing on the potential of share gas exploration to the steering committee set up by the ministry for the Raniganj CBM block in March," MD and CEO of EOGPL Vilas Tawde told reporters here today.

He said that the potential reserves of shale gas at the Raniganj block was approximately 1.5 trillion cubic feet (tcf), adding that it would be done under the simultaneous exploitation policy under single licensing system for conventional and unconventional energy of the government.

"Both shale gas and CBM are complimentary in nature. So, it makes perfect synergy to go for exploitation of shale gas along with the present production of CBM at Raniganj," he said.

The company had obtained licenses for exploration of CBM at Raniganj, in addition to four other blocks in Jharkhand, Chhattisgarh and Odisha. Raniganj was the only producing block.

Tawde said that currently, the company was producing nearly one million standard cubic metres of gas per day (mscmd) at Raniganj, out of which 0.5 mscmd was supplied to local customers, and the balance was being flared up owing to non-supply to Mattix fertiliser plant at Panagarh in East Burdwan, due to its closure.

He said the company had lost Rs 400 crore due to flaring of gas. "It is criminal to flare up a single molecule of gas," Tawde added.

"The company will enter into an agreement with GAIL for supplying the entire production of CBM to the PSU from March this year. The price arrived at is USD 8.08 per mmbtu based on the Rasgas formula. It will supply at this price to GAIL for a period of 15 years," he said.

GAIL would find customers for selling the gas, he said.

So far, EOGPL had invested Rs 4,000 crore for drilling 350 wells at Raniganj block out a total of 500.

"Our target is to ramp up production to 2.3 mscmd in the next two to three years," he said. Till the GAIL pipeline to Durgapur was complete under Urja Ganga Gas Grid, the PSU would utilise the infrastructure already set up by the company for distribution of gas.

By the end of fiscal 2019, the company was expecting a revenue of Rs 600 crore from Raniganj operations.