All of a sudden CBM becomes attractive again

Vol 20, PW 13 (23 Mar 17) People & Policy

Reliance, ONGC, Essar, and Great Eastern Energy have been spurred into action after the government granted gas marketing freedom to CBM producers on March 15.

"Pricing freedom will accelerate investment," says a DGH source. "The oil ministry has made the right move.

With pricing freedom operators can quickly begin production." ONGC for instance is gearing up to begin drilling 77 production wells at its 84.55-sq km Jharia CBM block after receiving environment ministry clearance on February 6. In focus is a Rs1136cr ($171m) campaign that includes five new Gas Collecting Stations and an interconnected pipeline network to handle 250,000 cm/d CBM gas production.

Later this year (2017) ONGC is also expected to begin producing from its North Karanpura and Bokaro CBM blocks in Jharkhand. At Bokaro it has begun floating service tenders.

In Jharkhand ONGC is planning 350 new wells with a view to hitting peak production of 3.2m cm/d by 2020-21. ONGC also holds the Raniganj block in West Bengal and has so far spent Rs510cr ($78m) on its four blocks.

With luck the new CBM policy will also end the trend of operators relinquishing CBM blocks. Of 33 blocks awarded so far only four are producing.

Eighteen have either been relinquished or are being relinquished. "Any operator needs to recover and earn something on investment," says an industry source.

"But at the earlier rate of $2.5/mmbtu it made no sense."

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