IOC to liquefy and market gas from marginal fields

Vol 12, PW 1 (29 May 08) Midstream & Downstream

Indian Oil is set to replicate the success of its pioneering effort to transport LNG by road by embarking on a similar project to liquefy gas from hundreds of marginal fields scattered across India.

ONGC has hundreds of marginal gasfields throughout India. Most were discovered years ago but lie dormant, either because they are far from pipelines and markets or because low gas prices make development unprofitable.

But rising gas prices have opened up a new opportunity for IOC, which wants to liquefy gas at the wellhead and transport it direct to customers. Advanced talks are underway with ONGC for a pilot project at a marginal field in Rajasthan or a CBM block in Jharkhand.

IOC is also in talks with Indian company Deep Industries with whom it has a MoU to jointly develop marginal gasfields and CBM blocks. Deep has a service contract with ONGC for three marginal fields in Rajasthan and operates two CBM blocks.

CBM is ideal for this project. “In India most CBM blocks can’t produce more than 1m cm/d,â€‌ we hear.

“It might not be economical to lay pipelines to transport this quantity. It is also easier to liquefy CBM because the only impurities are carbon dioxide and water, the rest is methane gas.

â€‌ IOC initially expects to liquefy and transport about 1m cm/d gas, though it’s not yet entirely clear from where. An industry source tells us IOC will have “a definite agreement with ONGCâ€‌ by the end of 2008.

One downside of any gas from Rajasthan marginal fields is the high nitrogen content of up to 60%. “This will have to be eliminated if this gas can be used,â€‌ reveals a source.

“But technology is available.â€‌ IOC hopes to work with US companies Chart Industries and Praxair.

Chart already supplies the kit for IOC’s LNG-by-road business. “IOC will identify the gasfields,â€‌ adds a source.

“Praxair will build and operate the liquefaction facility at the wellheads, while Chart will supply the cryogenic storage and distribution equipment. IOC will sell the LNG.