The BL Interview. Shift to assembly line approach in striking CBM has paid off: Manish Maheswari

By all means, Manish Maheswari, the CEO of exploration and production wing of the Mumbai-headquartered Essar Oil, rewrote the history of coal-bed methane production in India. In November 2014, when Maheswari assumed office, Essar was producing 0.19 million standard cubic metre gas a day (mscmd) from Ranigunj (East) block in West Bengal. After 20 years of commercial exploration in 33 blocks, the national production was a mere 0.5 mscmd by four companies. Jump cut to July 2016, India’s CBM production is anywhere between 1.6-1.7 mscmd, courtesy the 1.2-mscmd contribution from Essar. The company is aiming to touch 2.8 mscmd from the same block, next year. In an exclusive interview to BusinessLine, Maheswari reveals his clue to success and the way forward.

Until recently, CBM was considered a lost case with foreign companies winding up operations from India and many CEOs privately expressing hopelessness. Essar was struggling and, consumers like Matix Fertilisers were waiting for at least two years for commencement of supply. How did you change the rules of the game?

It was going back to the basics starting from reservoir characterisation, spotting the sweetest spot for drilling and taking an integrated approach in project management. We got our concepts and models challenged by independent industry experts to avoid mistakes.

But in today’s world everybody has access to technology and apparently, striking CBM is not as complex as in conventional oil and gas. Yet, there was little success. Where was the difference in approach?

The nature of oil and gas and CBM (or shale) production is different. While 10-15 wells could be sufficient in a conventional setting, here we are drilling nearly 400 wells to produce nearly 3 mscmd of gas.

We, therefore, shifted from E&P workflow (wherein each well is customised), to an assembly line approach. We identified a simple model for well completion that can be replicated quickly to save time and money.

The fracking (the process of fracturing coal seam to release gas particles) contracts were revisited. From the conventional time-charter model, we moved on to performance-based contracts. This ensured both timely delivery and cost-savings.

A 2009 report said Essar will need 700 wells to reach 2.8 mscmd production. Did you shift from the original plan?

We revisited the plan. From one well in every well pad (the strip of land), we now have a cluster of five to 13 wells (one vertical and the rest directional) in each pad with common associated facilities. The geographic spread is reduced by clustering the pads. The project is now more compact.

This helped us cut expenses on associated infrastructure like gas gathering stations (GGS), pipelines etc. We now have four GGS as against seven planned. It also brought us major operational efficiency.

Taking advantage of compact designing, we are now finalising a simultaneous operation system, that will allow us to drill new wells or frack from the same pad that has producing wells, without compromising safety. This will help us achieve greater efficiency.

Thirteen wells from the same pad? Is that a counter to land acquisition hurdles?

Socio-economics has a role in project designing. India is a populous country and you cannot expect to operate in the same manner as in the US. We not only maximised use of well pad but we also reduced the average land requirement for each pad from two acres to 1.2 acres.

You have recently expressed intention to explore shale gas from the same field, subject to availability of unified licence announced recently. Shouldn’t it attract environmental concerns?

Ranigunj area is rich in shale. Preliminary assessment says it has more shale reserve than CBM.

The government is yet to announce guidelines for unified licence under HELP. But the industry is hopeful it will be extended to the existing fields.

As regards environmental issues, first the shale reserve here is very deep (3,000 metres under the surface) unlike the shallow reserves in Europe where fracking attracted opposition. This reduces the negative impacts of fracking, if any.

Secondly, we prefer to use the existing infrastructure for shale exploration through simultaneous operations.

Shale wells being three times deeper should not affect CBM operations, meanwhile, the water pumped out of CBM wells can be re-used in (water-intensive) shale operations.

We think this will help develop a viable gas economy in the Eastern region.

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