Essar all set to become India’s first shale fracking company, awaits government guidelines

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Essar Oil can’t wait to become the first company in the country to produce shale gas, and its coal bed methane block at Ranigunj in Bengal is all set for the task. The company has done all the preparations and is waiting for the government guidelines.

Ranigunj is spread over 500 square kilometre area, where Essar Oil began explorations in April 2009. “We have been preparing ourselves in anticipation that regulations would allow us so that there is minimum gestation period,” Essar exploration and production CEO Manish Maheswari said.

The government notified the Hydrocarbons Exploration Licencing Policy in March 2016. Before that, shale gas was in the exclusive domain of public sector oil companies. But under the new regulation, a block operator can explore and extract both conventional as well as non-conventional resource from the same acerage. “While policy has been notified, Directorate General of Hydrocarbons is formulating the guidelines. We need to see whether we would be allowed to extract shale from our block but we believe the government recognises the complementarity of producing CBM as well as shale gas,” Maheswari said.

To illustrate, CBM extraction gives out water while shale fracking needs water. Again, CBM production can only be ramped up gradually after de-watering while in case of shale, production is high in the initial years. “So, we can front-end shale production and back-end CBM production, thereby achieving an optimum utilisation of infrastructure. Also, while we need to drill separate wells, there would be better utilisation of land footprint,” he said.

Essar’s Raniganj (East) Block in Bengal recently became India’s first CBM asset to cross 1 million standard cubic metres per day (scmd) production milestone. Besides Ranigunj, Essar has CBM blocks at Rajmahal in Bengal, Sohagpur in Madhya Pradesh, and Talcher & IB in Orissa.

While the CBM gas in place is estimated at 4.14 trillion cubic feet, the shale gas-initial-in-place is almost double at 8 tcf. In Essar’s CB-ON/03 block at Mehsana, there is 0.7 tcf of CBM and 2.6 tcf of shale reserve.

In Ranigunj, 300 wells have been drilled of which 192 are gas producing.

It has laid 60 kilometres of gas evacuation pipeline with 30 kilometers dedicated to Matrix Fertilizer. Essar has targeted to produce CBM at the rate of 2 million scm per day by FY16-17 and 3 million scm per day by mid FY2017-18 from Raniganj. Cumulative investments of Rs 3,300 crores have been made in the block till date and another Rs 1,000 crore investment is expected.