Essar targets December CBM sales from Raniganj East

Vol 13, PW 5 (13 Aug 09) Exploration & Production

Essar Oil will begin CBM sales starting this December from its Raniganj East block in West Bengal.

Each of the 15 test wells that were drilled on the block by May this year ought to produce a minimum of 5000 cm/d methane, rising to 7500 cm/d within 18 months. “Sales will be to small and medium scale industries in and around Raniganj,â€‌ an Essar source tells us.

However, these sales will be of â€کtest gas’ rather than commercial production and Essar needs permission from the oil ministry first. Commercial production should start in 2011 by when a development plan should be approved by the DGH on the basis of 75 wells Essar plans to drill from October.

Essar is looking at two routes for the sale of its test CBM from December: as CNG and through a pipeline to customers within a 25-km radius. Sales of CBM as CNG will be to industrial customers, not vehicles.

“Our idea is to have three or four committed customers that each take between 25,000 and 50,000 cm/d,â€‌ adds Essar. “CBM will be compressed to CNG and transported in â€کcascades’ (cylinders stacked horizontally on pick-up trucks) to the consumer’s location.

We don’t plan to sell CNG through petrol pumps as we won’t get large volumes that way.â€‌ Essar has invited tenders for cascades, civil and mechanical works, and compressors to sell CBM as CNG.

“Contracts should be awarded by the middle of this month (August),â€‌ we are told. “We are installing a compression capacity of 75,000 cm/d.

â€‌ CBM sales through pipeline are expected to begin from March or April next year. “A route survey has been done for the pipeline,â€‌ says Essar.

Typical customers for CBM are those who currently use fuel oil and other liquid fuels. “Customers that switch to CBM benefit from zero inventory and lower maintenance costs compared with liquid fuels,â€‌ says a source, “CBM is much cleaner as well.

â€‌ Essar believes customers will happily buy CBM at a rate 5% to 10% cheaper than liquid fuels.