Ruais-promoted Essar Energy is ramping up production from its CBM asset in Durgapur in time for the 1.3 million-tonne Matix Fertilisers, eastern India’s first urea making facility at Panagarh, beginning operations next quarter.

Essar is the first CBM producer in India to have touched one million standard cubic metre a day (mscmd) production at its Raniganj block last month. Production has now reached 1.2 mscmd.

By next quarter, they will have enough gas to meet half of the 2.4-mscmd demand of Matix. This is after meeting nearly 0.4 mscmd demand of SAIL and some other local industries.

“Our production will touch 2 mscmd in March 2017,” Manish Maheswari, CEO – E&P, Essar, told newspersons on Wednesday in Durgapur.

He expects to complete the field development phase with 300 production wells and 2.8 mscmd production by middle of FY-18 (meeting the entire 2.4 mscmd requirement of Matix) at a “shade lower” than the estimated cost of ₹4,000 crore.

Interestingly, costs were curbed, despite nearly 25 per cent depreciation of rupee against dollar from the planning stage some four years ago.

CBM exploration needs fracking and the country is yet to have the requisite service providers making E&P companies dependent on dollar-denominated contracts.

Shale exploration But some smart renegotiation of fracking contracts and standardisation of equipment saw Essar arresting costs below original estimates, thereby, adding project viability at the gas price of $3.4 mmBtu (lower than $4.2 and above when the project was conceived).

Meanwhile, the company is looking forward to the declaration of guidelines for unified licence to tap the shale gas potential in the Raniganj block and add to the profitability. Maheswari says the block has a prognostic shale reserve of 8 trillion cubic feet.

He plans to recover it by utilising existing infra at low fixed cost spend.

Since shale wells are deeper, the same CBM well pad can be used for shale wells.

While CBM wells take a long time to dewater and come on production mode, shale wells reach peak production in two-three years. It means the same gas evacuation infra can be put to common use.

“We have started preparatory work for shale exploration (in anticipation of government clarification),” Maheswari said. Essar is also planning to bid for small discovered fields put on the block.

But for operational synergy they will focus on assets near their existing fields in East and West India. The bidding round will close in October.