Companies

Essar Oilfields buying 6 rigs for methane drilling

Amit Mitra Hyderabad | Updated on March 12, 2018 Published on May 27, 2013

New coal bed methane biz offers opportunities

Essar Oilfields Services is buying six specialised on-shore drilling rigs at a cost of about $36 million for coal bed methane (CBM) drilling contracts in India.

A wholly owned subsidiary of Ruias-controlled Essar Shipping, the company sees significant opportunities in the CBM exploration sector, as new blocks are set to launch exploration in the coming months.

“While two of them have arrived, the rest are scheduled for delivery from the US during the year. These rigs have greater mobility as required in CBM drilling, as they have to be quickly moved from one well to another,” Ankur Gupta, CEO, told Business Line over telephone from Mumbai.

Lesser hire rates

Compared to onshore oil and gas drilling rigs, these rigs earn 10-15 per cent less daily hire charges, but the asset cost is made up by the volume of work available.

On an average, the CBM rigs today earn about $10,000 a day, while the earnings of the other rigs vary from $9,000 a day for a 750-hp asset to $40,000 for a 2000-hp rig.

Gupta said at least 500 CBM wells could be taken up for drilling by different operators, including group company Essar Oil, ONGC and Reliance, this year. Essar Oil alone has got four blocks for CBM exploration, with plans to take up 300 wells this year.

“Currently, we have deployed the new rigs for CBM drilling contracts in West Bengal,” he said.

With 500 new wells to be taken up for CBM exploration, it is estimated that India would required at least 25 rigs to meet the demand, given than each well would need a minimum 10-day drilling.

New jack-up rigs

Essar Oilfields, which owns a fleet of 15 rigs, is also buying two new jack-up rigs at about $250 million each. These are being constructed by ABG Shipyard and will be delivered early next fiscal.

The company has reported a 44 per cent increase in its revenues to Rs 678 crore for the fiscal, with a 70 per cent jump in net profit to Rs 85.39 crore.

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Published on May 27, 2013
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