ONGC to sell test Jharia CBM at $5.10/mmbtu

Vol 13, PW 14 (17 Dec 09) Midstream & Downstream

ONGC will finally start selling CBM within the next few days from its 85-sq km Jharia field in Jharkand after nearly 12 years of on-off work on the ground.

PETROWATCH learns from ONGC that the oil ministry has approved â€کpilot’ or â€کtest’ CBM sales at $5.10/mmbtu from four wells that were drilled at Jharia between 1997 and 2000. A source also tells us that commercial supplies are still some time away, as ONGC is still in the exploration stage at Jharia.

“This $5.10/mmbtu price is for pilot CBM,â€‌ says our source, “but the price for commercial Jharia supplies could be different and would also have to be approved by the oil ministry.â€‌ Jharia CBM sales to sole customer Calcutta Compressions and Liquefaction Engineering (CC&L), since bought by Mumbai-based cylinder manufacturer Everest Kanto, have so far been delayed due to technical problems with setting up and commissioning compression facilities.

ONGC has plans to start directly selling CBM to customers at a later date, but for now it is letting CC&L take care of compressing CBM and selling it in cylinders to small factories around Jharia. Initial supplies from ONGC will be 5000 cm/d rising to 15,000 cm/d within six months, we hear, depending on demand from CC&L’s customers.

Our source describes the delivery of first CBM supplies from Jharia as a historic event. “We have been struggling for nearly 12 years trying to produce CBM from Jharia,â€‌ we are told.

“We would like to break the jinx.â€‌ ONGC is also in talks with large factories around Jharia for bulk, long-term CBM supplies.

“But we face an uphill task,â€‌ we hear, “trying to convince users to change their mindsets after decades of using cheap, easily available coal. Potential bulk customers are waiting to see if we keep our delivery commitments.

â€‌ Customers are also waiting to see if there are actual price benefits in shifting from coal to CBM.