The Hindu Business Line : ONGC coal bed methane project faces further delay

The reasons
Electrosteel Castings has secured the permission to carry out captive mining in a part of block resulting in the withdrawal of CBM activity from a part of the block.
Technical snag has come in the way of bringing well No. 4 into production.

Pratim Ranjan Bose

Kolkata, Jan. 4 ONGC’s $200-million CBM development project at Jharkhand and Bengal seems to have faced fresh stumbling blocks, according to sources.

While some of the company’s old wells are being closed down due to overlapping captive coal mining, technical problems have come in the way of bringing the newly drilled high capacity fish bone wells into production.

ONGC had drilled four development wells at Parbatpur near Jharia before initiating the $200 million (approximately Rs 970 crore at the current exchange rate) turnkey CBM development programme two years ago.

All the wells were capped and ready for production of up to 15,000-20,000 standard cubic metre of gas a day as soon as firm gas purchase orders were in place.

In addition, the company was drilling a number of high capacity wells in line with the turnkey contract. Popularly referred to as fish-bone wells, each of these production wells can cover a much larger coal-bearing zone, resulting in an estimated production of 20,000 scmd each.

Overall, the campaign aimed to produce up to 3.5 lakh scmd of CBM in three years. Production was expected to touch approximately 70,000 scmd by the end 2008 or early 2009.

ONGC also entered into a preliminary agreement (term-sheet) with a Kolkata-based company to sell 5,000-50,000 scmd of gas at $5.1 per million British thermal unit by the end 2008 or early 2009.

Captive mining

While the State is set to begin commercial production, ONGC is now facing fresh troubles on two counts. First, Electrosteel Castings has secured the permission to carry out captive mining in a part of block resulting in the withdrawal of CBM activity from a part of the block.

Of the four existing production wells, the company is now closing down the well No.1. Technical snag has come in the way of bringing well No. 4 into production.

Though the drilling of one high capacity fish bone well was completed several months ago, according to sources, gas is yet to start flowing from the same due to technical constraints.

Drilling of the second fishbone well is stalled for more than a month due to breakdown of the rig.

“As things stand now, the CBM development project is facing fresh delays and ONGC is not in a position to produce 5,000-10,000 scmd of CBM, thereby just fulfilling the minimum requirement underlined in the term sheet for gas sales agreement,” a company source told Business Line.

The source, however, added that ONGC’s CBM reserve accretion in three blocks Jharia, Bokaro and South Karanpura in Jharkhand has, in the meantime, doubled from nine to 18 billion cubic metres.

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ONGC plans to relinquish Barmer-Sanchor CBM block
ONGC enters 1st gas sales pact for coal-bed methane
ONGC to review CBM development strategy
ONGC may give up 2 CBM blocks in western region

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