Deep says can drill CBM wells cheaper than rivals

Vol 13, PW 11 (05 Nov 09) Exploration & Production

Ahmedabad-based Deep Industries has dismissed criticism over its ability to drill close to 230 coreholes and more than 250 test wells across seven CBM blocks won in the just concluded licensing round.

Rival CBM operators tell PETROWATCH that Deep won’t be able to meet its ambitious Minimum Work Programme (MWP) because of the huge investments involved and the limited two-year timeframe. But Paras Savla, chairman of the small company that is today India’s biggest CBM player, says Deep can overcome all obstacles.

How “We have our own rigs,â€‌ says Savla. “Hiring rigs is the most expensive component of drilling; and we can eliminate this cost.

â€‌ Some believe Deep will need Rs250cr ($52m) to fund its corehole drilling campaign across the seven blocks and at least Rs750cr ($158m) to drill more than 250 test wells. The cost of drilling a 1000-metre corehole, according to industry estimates, is around Rs1.4cr ($295,300) if you include logging.

But Savla believes Deep can drill a 1000 metre corehole for less than a third at between Rs35 to Rs40 lakh ($73,800-$84,400). Drilling a test well costs around Rs3cr ($632,800), according to the same estimates.

But again, Savla believes Deep can drill each test well for less: between Rs70 lakh and Rs80 lakh ($147,600-$168,800). Savla also questions the need to drill separate coreholes and test wells.

“Why can’t I convert a corehole into a test well if the seam sample tests positiveâ€‌ queries Savla, “I would have already spent 30% or 40% on the cost of drilling the corehole and would need to spend the remaining 60% only.â€‌ But rivals say Deep is ignoring another significant cost: testing corehole samples.

These cost around $633 each if collected using the â€کdesorption’ method and between $2500 and $3000 each if collected through the â€کadsorption’ method. What is Savla’s response “We can get it done cheaper!â€‌