In an interaction with EnergyInfraPost.com Mr. Vilas Tawde, Director & CEO, Essar Oil & Gas Exploration and Production. spoke on the corporate developments of EOGEPL and also will shed light on current industry scenario and policy framework.
1. How the idea of producing CBM gas was conceived and how it all started?
The need for an alternative to fossil fuel has been on the anvil for quite some time. In view of India’s continued commitment to contain GHG emissions and reaffirm Essar Oil & Gas Exploration and Production Ltd (EOGEPL)’s stand on climate action, increase of natural gas in the country’s energy mix is crucial.
Exploring and exploiting the CBM potential dates back to 1992 when Essar, in what was a pioneering effort, drilled and successfully test produced CBM gas from three wells in the Mehsana area of the Northern Cambay Basin (Gujarat). That was the beginning of our pursuit for Unconventional resources. Based on the above results, the Government of India focused on CBM resources and allotted CBM blocks to several operators like Essar, ONGC, Reliance, GEECL, to name a few.
We strongly believe that unconventional Natural Gas resources like Coal Bed Methane (CBM), Shale Gas and Gas Hydrates will be a key contributor to augmenting the share of natural gas in India’s energy basket. We aim to leverage our extensive unconventional experience and expertise to develop unconventional gas resources in India. This would be the best possible alternative to India’s depleting conventional resources and help reduce our dependence on LNG imports.
2. Brief us about company’s operations.
EOGEPL has established itself as a leader in CBM gas by successfully developing the Raniganj East CBM asset, which is now a showcase for the Indian CBM industry. We have the largest CBM acreage in India, with five blocks and an estimated 10 trillion cubic feet (TCF) of CBM spread across 2,700 sq km in the states of West Bengal, Jharkhand, Chhattisgarh, Madhya Pradesh and Odisha.
As of now the country has a CBM production in the range of 2.5 mmscmd out of which the largest share is of Essar (in the range of 1.00 mmscmd from our Raniganj block). Thus in the Durgapur region, about 1.5 mmscmd of CBM gas is supplied to various industries—primarily the steel industry that was using other alternate fuels like coke oven gas, etc. This has had an unqualifiedly positive environmental impact in Durgapur. Likewise, we are certain that our four additional CBM blocks in the other states will also contribute to clean energy requirement in due course.
We are also looking expand the CBM activity in these four CBM blocks. An independent expert study of the shale potential that we conducted for EOGEPL’s CBM blocks has pointed to encouraging shale prospects across these acreages. The Raniganj block, for instance, has the potential of 7.7 TCF of shale gas, of which 1.5 TCF is recoverable.
3. How much the company has invested in assetcreations and what is the way forward?
So far, EOGPL has invested Rs 5,000 crore in its Unconventional and Conventional assets, which are located both in India and overseas. Out of this, the major chunk has been our Raniganj asset, where we have invested Rs 4,000 crore on exploration and development. We have drilled 348 wells and set-up a state-of-art gas processing and evacuation network comprising five Gas Gathering Stations, Master Compressor Station and more than 300 km of infield and supply pipelines. We plan to drill another 152 wells over the next 2-3 years, which would require an additional Rs 900 crore. We plan to ramp up the production to a saleable volume of 2.3 mmscmd in due course.
4. How potential are the CBM blocks in India?
As indicated earlier, EOGEPL’s CBM assets include five blocks that hold an estimated 10 TCF of gas spread across 2,700 sq. km in West Bengal, Jharkhand, Chhattisgarh, Madhya Pradesh and Odisha. The Raniganj block in West Bengal is producing 1.0 mmscmd of CBM. In addition, Raniganj also has an upside potential of 1.5 TCF of shale gas. The Raniganj CBM production has established that Unconventional resources can be a viable alternative to LNG imports. We are now keen to develop the other CBM blocks with an additional 5.2 TCF of resources estimated for in the Rajmahal and Sohagpur blocks. So for EOGEPL, these are the other growth opportunities in CBM sector.
5. How the current policy framework is helping development of CBM and shale gas in India?
Operators in CBM and shale gas segment are required to work in tandem with government policies, which are certainly proactive. On the policy front, the industry needed marketing freedom. The Government has announced the Early Monetisation Policy for CBM blocks whereby CBM contractors will get the desired marketing and pricing freedom to set an arm’s length price in the domestic market.
The Open Acreage Licensing Policy (OALP) and Discovered Small Field Round (DSF) are also notable initiatives to boost the upstream industry. Further, developing distribution infrastructure will eventually help the players to reach end users quickly without flaring loss. The key developments taking place under the Urja Ganga Gas Grid across states like West Bengal, Odisha, Bihar, Uttar Pradesh, Chhattisgarh and Jharkhand are likely to change the entire picture. Soon, we will find CBM gas being used in multiple applications. The Urja Ganga pipeline work that is in progress envisages 2,655 km coverage with an estimated investment of Rs 20,000 crore. This will fuel Industrial growth in Eastern India.
There is synergy between CBM and Shale Gas in terms of transitional technology, usage of water, evacuation options, etc. Hence, a policy providing shale exploration rights to CBM operators is crucial, particularly in producing CBM blocks like Raniganj.
6. What is your view on global market for CBM gas?
According to industry estimates, the global CBM market is expected to reach $17,956 million by 2023, registering a CAGR of 9% between 2017 and 2023. Further, we are of the view that demand for fossil fuels will continue to witness an uptick until 2035 after which renewables will take the charge. Until that happens, we have lots of ground to cover as far as natural sources of energy are concerned. This offers a great opportunity to grow in the natural gas segment globally. We are expecting that with positive fiscal terms for Unconventional exploration, the Far East countries will emerge as an interesting market where we can replicate the success we have had in India.
In India, Unconventional gas has the potential to account for 10%-12% of total natural gas production, primarily from CBM. This will be enhanced further when Unconventional plays, like shale, also show progress. In fact, it will be a game changer for the eastern part of the country.
7. Shed light on workforce, training and cutting edge technology at EOGEPL.
Our workforce at our CBM blocks are our core strength across functions like well planning, drilling, marketing, distribution and gas price discovery. Now that we have produced from the field over the last five years, we have gained good experience in reservoir management as well. It is a complex structure for sure. And, we are blessed with the most efficient and dedicated workforce who is orientated to adopt path-breaking technologies and optimising production costs.
The Raniganj model has a unique assembly line approach—from drilling to final gas production and customer supply. Today, we have reduced our costs substantially, making us more competitive with successful CBM plays in other parts of the globe. Other key enablers have been a maximisation of local hands, prompt implementation of mid-course corrections and regular training and technology made available to the technical teams.
We currently employ more than 350 employees at the Raniganj block and provide indirect employment to over 1,200. Foreseeing the high potential, we aim to provide direct employment to over 1,200 personnel and indirect employment to nearly 7,000 individuals adjacent to our blocks.
8. Which were the major developments in past five years brought a sea change in Indian energy sector?
There was scant awareness until recently about the CBM and shale gas potential. Further, absence of adequate technology infrastructure was considered a major roadblock. However, India has evolved over the years and has proven its prowess in the natural gas sector. We firmly believe that there is a lot to do and achieve in the CBM and shale gas sectors. While we are facing a decline in natural gas production, proactive government policies should become the catalyst for the birth of a new era in these sectors.
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