The Hindu Business Line : ONGC enters 1st gas sales pact for coal-bed methane

ONGC operations
Operates in 5 CBM blocks in Jharkhand, 1 in Bengal
Develops a portion of Jharia block to establish commercial viability of resources
Planning fresh programme for development in 3 pilot wells in Ranigunj

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Kolkata, July 11 Oil and Natural Gas Corp Ltd has entered into a firm pact for supply of gas to Calcutta Compressor and Liquifaction Ltd (CC&L) from its Jharia coal-bed methane field in Jharkhand. The supply will begin in end 2008.

The agreement marks the beginning of the commercialisation of coal-bed methane resources by the oil and gas major.

“We have entered into the first ever gas sales agreement for coal-bed methane on July 10. According to the agreement we will initially supply 5,000 standard cubic metre of gas a day to CC&L,” Mr A.K. Mandal, National Head (coal-bed methane) of ONGC, told Business Line. Supplies may be increased up to 50,000 scmd in due course.

According to him, CC&L plans to use the gas for supply of compressed natural gas, which is a clean auto-fuel, to the towns and cities of Bengal and Jharkhand.

Though Mr Mandal did not divulge the price at which gas would be sold to CC&L, sources said that the company was presently charging a break-even price to promote use of the gas.

ONGC has been operating in five coal-bed methane blocks in Jharkhand and one block in West Bengal. The company is currently developing a 6 sq km area out of a total of 84 sq km in the Jharia block on the pilot scale to establish the commercial viability of the resources.

In addition to its ongoing $200-million exploratory and development campaign, the company is planning to launch a fresh programme for the development of the Ranigunj block in West Bengal.

The energy major is currently drilling three pilot wells in Ranigunj and would enter into full-fledged development of the block depending on the results of pilot drilling.

Both the Jharia and Ranigunj blocks were acquired in pre-CBM Policy days and are held jointly with Coal India Ltd. The latter has participatory stakes in the blocks.