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Essar claims Indian CSG crown

INDIAN petroleum producer Essar Oil has identified an eight trillion cubic feet shale resource below its CSG production in a block once part-owned by pioneering Queensland CSG concern Arrow Energy and its spin-out Dart Energy.

Haydn Black

While the Dart experiment ended with failure, Essar has since attempted to replicate the Queensland CSG experience and has developed into India’s leading unconventional oiler, both for CSG production and what could be an emerging shale gas play.

Essar says that its Raniganj (East) Block in West Bengal has become India’s first CSG project to cross the one million cubic metre per day threshold, and it is aiming to hit 3MMcfpd by 2018.

Essar has commenced supply to Matix Fertilisers for its pre-commissioning activities at the rate of 150,000cmpd.

Besides Matix, gas is being supplied to industrial consumers in the catchment area of Durgapur.

The gas is being sold at a government-set price of $US3.06 per million British thermal unit.

Over the past 12 months Essar has been able to double well productivity and reduce the gas break-out time in the wells from months to days, while the workover time needed is down 80%.

Netherland Sewell & Associates this year calculated that 3P CSG reserves in the block could be one trillion cubic feet with additional contingent resources of around 270Bcf, but it is the underlying shale gas play that has the company excited.

A study, which was undertaken with the support of US Trade & Development Agency, by an independent US firm that has expertise in shale has made a preliminary assessment of original in-place shale gas resources of around 8Tcf of gas-in-place.

“These are the prognosticated resources made by an independent third party, which means that this is an estimate of gas initially in place is to the order of 8Tcf of shale,” Essar’s exploration and production CEO Manish Maheshwari said in a statement.

“Going by the present trend of roughly 20-25% recovery factor, one can be looking at 1.6-1.7Tcf of recoverable resources,” he added.

Maheshwari said that both the CSG and shale resources can be tapped concurrently, but the company is awaiting government guidelines on exploring unconventional resources under the new Hydrocarbon Exploration Licensing Policy that was announced by the Indian government in March.

The new HELP aims to make CSG responsible for 5% of Indian gas production by 2017.

Besides Raniganj (East), Essar’s CSG portfolio includes more than 2700sq.km of acreage where it estimates a potential for 10Tcf.

India’s government says the nation has the fourth largest proven reserves of coal globally, however Essar and former Dart partner Great Eastern Energy Corporation are the only two companies that have successfully started CSG production, both in the Raniganj area, since exploration began for CSG less than a decade ago.

Reliance Industries has also begun test production from its two blocks in Madhya Pradesh.

India’s natural gas production is at 90MMscmd.

Established within Arrow in 2006, Dart had at least 50 CBD and shale gas assets in India, Australia, China, Indonesia, the UK, Poland, Germany and Belgium at one stage, but it found itself over-extended and lacking in funds after Arrow was taken over by Shell and PetroChina.

In 2010 it secured a 10% interest in the Raniganj block from state-run explorer Oil and Natural Gas Corporation alongside larger stakes in the Jharia, North Karanpura and Bokaro blocks in Jharkhand.

It also held 80% of a block in Madhya Pradesh, with Tata Power (20%), and 60% of a block in Assam with Indian Oil.

Dart sold out of India several years ago in a bid to focus on its European assets, and what remained was taken over by UK chemical firm Ineos in 2014.

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