Essar plans Sohagpur drilling

Reliance's success at its Sohagpur West block has encouraged rival Essar to get moving with development of its own Sohagpur (NE) CBM block SP(NE)-CBM-2008-IV.

"We aim to begin drilling within the next six months," reports an Essar source. He explains it will first begin drilling the 25 coreholes committed at the time of bidding and then three test or pilot wells.

Cynics will remember that Essar has been talking about Sohagpur drilling since it received the PEL from the Madhya Pradesh government in July 2014. But our source explains Essar's management is encouraged by the gas price of $7.14/mmbtu it received from GAIL under a contract signed in February (last month) for CBM from its Raniganj (East) block.

"The increased gas price from Raniganj has motivated everyone in the company," we are told. "After Sohagpur, we will also begin exploration drilling at our Rajmahal (RM(E)-CBM-2008/IV in Jharkhand) block." Reliance is producing 1m cm/d from Sohagpur West.

"Soon they plan to double production," adds Essar. "It makes sense to start drilling at our block in the same area."