ONGC Ltd plans to start commercial production of its coal bed methane (CBM) blocks next fiscal, when it hopes the gas prices would be high enough to meet its exploration cost.
"At present, the gas prices are very low. We hope by the last quarter of the next fiscal the prices would be high enough to meet the exploration cost, which works out to about $5.5 per mBtu," Ved Prakash Mahawar, director onshore of ONGC, said.
ONGC has four blocks - Jharia, Bokaro and North Karanpura in Jharkhand and Raniganj North in Bengal. It had planned to relinquish Raniganj (north) as the block fell in the vicinity of an airport. The Raniganj (east) block, held by Essar Oil, and GEECL's Raniganj (south) are the only two blocks in the country that are under production.
"Essar has offered their facilities to be used for the exploration of the CBM block. We have had discussions on this aspect and will soon finalise the understanding," Mahawar said.
CBM is natural gas trapped within coal formations and commercially unviable for mining. It is extracted by drilling holes into the seams.
ONGC is the operator of the Bokaro block as well as the North Karanpur blocks with 80 per cent interest. Indian Oil holds the remaining 20 per cent. It is also the operator of the Raniganj (north) block with a 74 per cent stake, while Coal India holds the rest. In Jharia, ONGC holds 90 per cent and Coal India the remaining 10 per cent.
The Jharia block is estimated to hold 85 billion cubic metres (bcm) of gas reserves, North Karanpura 62 bcm, Bokaro 45 bcm and Raniganj North 43 bcm.
Output target
The petroleum ministry earlier this month reviewed the CBM output in the country that is still lagging way behind targets with the output being a meagre one million standard cubic metres per day (mmscmd).
Mukesh Ambani-promoted RIL had pressed the government to roll out the policy for marginal fields that extended marketing and pricing freedom to the CBM blocks.
RIL plans to start production of CBM from its Sohagpur (west) block in Madhya Pradesh in the coming months.
The firms informed the ministry that they were planning to invest about Rs 9,000 crore in 2016-17 and 2017-18. This would help to ramp up the output to about 2.4-2.6 mmscmd from 1 mmscmd now.
Of this, RIL has proposed to invest about Rs 3,000 crore in Madhya Pradesh. ONGC plans to invest about Rs 1,600 crore in its blocks and Essar Oil has committed to spend nearly Rs 2,600 crore to pump out more gas from its CBM blocks in Bengal.
India has so far offered 33 CBM blocks. However, 17 of them, or 50 per cent of the blocks, have been relinquished. Though two other firms producing CBM - Essar Oil and GEECL - have a pre-approved price for their gas, RIL and ONGC would have to follow the natural gas pricing formula put in place by the government in October 2014.
"At present, the gas prices are very low. We hope by the last quarter of the next fiscal the prices would be high enough to meet the exploration cost, which works out to about $5.5 per mBtu," Ved Prakash Mahawar, director onshore of ONGC, said.
ONGC has four blocks - Jharia, Bokaro and North Karanpura in Jharkhand and Raniganj North in Bengal. It had planned to relinquish Raniganj (north) as the block fell in the vicinity of an airport. The Raniganj (east) block, held by Essar Oil, and GEECL's Raniganj (south) are the only two blocks in the country that are under production.
"Essar has offered their facilities to be used for the exploration of the CBM block. We have had discussions on this aspect and will soon finalise the understanding," Mahawar said.
CBM is natural gas trapped within coal formations and commercially unviable for mining. It is extracted by drilling holes into the seams.
ONGC is the operator of the Bokaro block as well as the North Karanpur blocks with 80 per cent interest. Indian Oil holds the remaining 20 per cent. It is also the operator of the Raniganj (north) block with a 74 per cent stake, while Coal India holds the rest. In Jharia, ONGC holds 90 per cent and Coal India the remaining 10 per cent.
The Jharia block is estimated to hold 85 billion cubic metres (bcm) of gas reserves, North Karanpura 62 bcm, Bokaro 45 bcm and Raniganj North 43 bcm.
Output target
The petroleum ministry earlier this month reviewed the CBM output in the country that is still lagging way behind targets with the output being a meagre one million standard cubic metres per day (mmscmd).
Mukesh Ambani-promoted RIL had pressed the government to roll out the policy for marginal fields that extended marketing and pricing freedom to the CBM blocks.
RIL plans to start production of CBM from its Sohagpur (west) block in Madhya Pradesh in the coming months.
The firms informed the ministry that they were planning to invest about Rs 9,000 crore in 2016-17 and 2017-18. This would help to ramp up the output to about 2.4-2.6 mmscmd from 1 mmscmd now.
Of this, RIL has proposed to invest about Rs 3,000 crore in Madhya Pradesh. ONGC plans to invest about Rs 1,600 crore in its blocks and Essar Oil has committed to spend nearly Rs 2,600 crore to pump out more gas from its CBM blocks in Bengal.
India has so far offered 33 CBM blocks. However, 17 of them, or 50 per cent of the blocks, have been relinquished. Though two other firms producing CBM - Essar Oil and GEECL - have a pre-approved price for their gas, RIL and ONGC would have to follow the natural gas pricing formula put in place by the government in October 2014.
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