Reliance looks at viability of CBM-fired power station

Vol 12, PW 17 (29 Jan 09) Exploration & Production

Reliance is gearing up to begin commercial CBM production from its Sohagpur East and Sohagpur West blocks in the Shahdol district of Madhya Pradesh.

No firm date has yet been flagged to the DGH but PETROWATCH learns first production will be between 100,000 and 200,000 cm/d, rising to the DGH approved figure of 5m cm/d by 2012-13. Production is expected to remain stable during a plateau period of eight to 11 years.

Still unclear is how Reliance will use the gas. “They have two or three options,â€‌ says a source.

“Either use it as CNG or sell it to industries within a 300-km radius; or use it to fuel a power station. Selling to individual factories is fine, but laying a pipeline to each buyer is time-consuming and will need so many approvals.

â€‌ Eventually, we are told, “Reliance might opt to set up its own power station using CBM from the two blocks as fuel.â€‌ Under active consideration is a captive 1000-MW power station adjacent to the two blocks.

“Reliance has progressed well in this direction,â€‌ says a source. “Some orders have already been placed.

â€‌ With a power station, Reliance believes it could sell electricity directly into the electricity grid and be paid by a single buyer, in this case the Madhya Pradesh State Electricity Board, instead of dealing with several buyers if it sold CNG as fuel or piped gas to industrial users. On location Reliance has so far drilled 28 pilot wells at Sohagpur East and 10 at Sohagpur West during the first year of a five-year development phase across both blocks, which will see around 450 wells drilled.

Over the 20-year production phase the company is expected to drill 1000 wells across both blocks. Should the two fields be profitable, and there’s no reason to doubt they will, Reliance has an option under its PSC to extend the 20-year production phase by five years.