Great Eastern forced to flare 50,000 cm/d CBM gas

Vol 11, PW 23 (15 May 08) Midstream & Downstream

CBM producer Great Eastern Energy is unable to pipe supplies of CBM from its Raniganj field in West Bengal because state-owned Indian Iron and Steel Company (IISCO) is not permitting a 3.5-km gas transmission pipeline to pass through its township to the Great Eastern receiving station in Asansol.

Great Eastern commissioned its group gathering station on schedule in March at well No.12 and connections have been provided to five industrial customers in Asansol for a total 30,000 cm/d.

But supplies cannot flow unless IISCO gives permission to link both ends through its land. Several meetings have been held between Great Eastern and the steel company but no solution is in sight.

“IISCO is saying neither â€کyes’ nor â€کno’,â€‌ says a source. Another source suspects IISCO wants to cut a deal for gas at rock-bottom prices.

“IISCO is asking Great Eastern to sign a contract to supply CBM at between Rs2 and Rs3/cubic metre so that it can replace the LPG and furnace oil it uses now,â€‌ we hear. “This price is unheard of in India.

There’s nothing in writing but they make this demand verbally during meetings.â€‌ Great Eastern is offering CBM to IISCO at a discount to the price of LPG and furnace oil, but has been rebuffed and talks are deadlocked.

More, IISCO wants supplies only in two to three years from now. As a result Great Eastern is forced to flare almost 50,000 cm/d of precious CBM-derived gas.

“It’s criminal,â€‌ exclaims a source, “that so much gas has to be flared when India is importing spot LNG at nearly $18/mmbtu.â€‌ London’s AIM-listed Great Eastern currently produces 60,000 cm/d from 18 wells at Raniganj but without a pipeline it can sell only 8000 cm/d.

This is supplied in cylinders to local industries and CNG stations. Bypassing IISCO’s township would entail a detour of almost 20-km and the pipeline would have to pass under several railway crossings.