The Hindu Business Line : Phillips Carbon to shift to CBM as feedstock

Requirement
PCBL had agreed to lift a minimum of 60,000 standard cubic meters of gas a day from Essar by March 2010.
To reduce the company’s requirement of liquid feedstock by nearly 10 per cent.

Pratim Ranjan Bose

Durgapur, Nov. 6 Phillips Carbon Black Ltd, an RPG Group company, proposes to use coal bed methane (CBM) at its local plant partially replacing the liquid feedstock carbon black feed stock (CBFS) being used in the plant, according to sources.

It recently entered into an understanding with Essar Exploration and Production Ltd (Essar E&P) to lift on long-term basis Essar E&P’s entire initial production of CBM from Ranigunj (East) block.

When contacted, a Phillips Carbon Black official told Business Line that the company was “in advanced stage of negotiation with Essar for use of CBM as an alternative source of feedstock.” The official, however, did not comment on the advantage of replacing CBFS by gas.

Industry sources, however, said that Phillips Carbon had agreed to lift a minimum of 60,000 standard cubic meters of gas a day from Essar by March 2010.This was expected to reduce the company’s requirement of liquid feedstock by nearly 10 per cent.

Being a petro-product CBFS’s prices are linked to crude oil prices. Sources believe that the use of term gas would partly safeguard Phillips Carbon from the volatility in CBFS prices. Phillips Carbon produces carbon black, a major raw material for the tyre sector.

Essar E&P is a wholly-owned subsidiary of Essar Oil. Named after Ranigunj coal reserves, the epicentre of the present activity in the block is in the outskirts of the industrial city of Durgapur with the landfill point of the gas in close proximity to the Phillips Carbon’s facility.

Essar has projected an initial production capacity up to 1,00,000 standard cubic metre a day (scmd) of CBM from the existing 15 wells by the January-March 2010 quarter. In the absence of any buyer, the company is currently flaring the gas.

Road show

The E&P company on Friday held a road show here to create awareness among the local industries about the availability of CBM and its potential usage. The conference was attended by all the leading industries in the city including Steel Authority of India Ltd (SAIL), Mecon, Graphite India and Phillips Carbon.

Addressing the conference, Mr Prem Sawhney, Chief Operating Officer of clean coal business of Essar E&P, said that the company proposed to drill 500 wells in the field by 2012-13 to ramp up CBM production to 2.5-3 million standard cubic metre a day (mscmd). It is in this direction, the company would begin its next phase of drilling of 150 wells in November or December.

The group was also procuring three new rigs for the purpose capable to drill using air-mist technology instead of the conventional mud-drilling technology, he said. The drilling is expected to be over in 2010-11.

In a recent analysts meet, Essar Oil said that the project to ramp up production up to 3 mscmd would cost $400 million (approximately Rs 2,000 crore). The company hopes to tie-up funds for the project this month.

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