Surplus Heramec gas for sale from Kanawara gasfield

Vol 13, PW 6 (27 Aug 09) Midstream & Downstream

Small it might be, but 8000 cm/d of “surplusâ€‌ gas production might be enough to persuade a small to medium sized company to invest in a factory near a producing gasfield.

In Gujarat, three companies have done just that, a fourth is about to follow, and by May next year Hyderabad-based oil and gas producer Heramec hopes to have persuaded a fifth, when it starts producing more gas from Kanawara, the biggest of four marginal gasfields in the Cambay Basin where it is operator (30%) with GSPC (70%). “By May 2010 we will have 7000 to 8000 cm/d surplus gas that doesn’t have a buyer yet,â€‌ Heramec confirms.

“By that time we think we can get a price of around $9/mmbtu at the well-head, which is still cheaper than LPG.â€‌ Heramec believes the “good calorific valueâ€‌ of its â€کassociated’ gas from Kanawara gives it an advantage over LPG, which is the most widely available, if most expensive, fuel for ceramics, glass and chemical manufacturers in fast-industrialising Gujarat.

Two sodium silicate manufacturers and one ceramic manufacturer in particular would no doubt agree! Today, Kanawara produces 14,500 cm/d gas which is supplied to Volvo Tiles, Ricasil Industries and Shayona Industries, three small companies that set up their factories in the vicinity of the 6.3-sq km field expressly to benefit from well-head gas at $7/mmbtu. One of the GSAs is due for renewal in December this year, two others in 2012.

This month Heramec signed a GSA with a fourth (undisclosed) company, which has been promised up to 20,000 cm/d, when production ramps up after a well-testing programme underway now. Later this year Heramec predicts gas production will more than double from the present 14,500 cm/d to 30,000 cm/d before hitting a peak of 42,000 cm/d by May next year.

Heramec says this level of production can be sustained for at least seven years.