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Initial output is likely to be one million standard cubic meters per day of gas.

A
peak production of 3.5 mmscmd is envisaged from the two Sohagpur blocks in the
state.
RIL holds 3 CBM blocks 495 square kilometer Sohagpur (East) and 500 sq km
Sohagpur (West) in Madhya Pradesh and Sonhat in Chhattisgarh.
Test gas production from Phase I facilities of Sohagpur West Block has
commenced from GGS 11 (Gas Gathering Station) and 107 well-sites, RIL said.
GGS 12 is also nearing completion and is likely to be ready for start-up by 3Q
FY17.
It however did not give a date for start of commercial production.
Phase-1 development envisages drilling and completion of 229 wells and
installation of 2 gas gathering stations (GGS).
RIL, through its subsidiary Reliance Gas Pipelines Ltd, is laying a 312-km pipeline
to transport coal gas (CBM) produced from Shahdol in Madhya Pradesh to Phulpur
near Allahabad in Uttar Pradesh.
Testing, pre-commissioning and commissioning activities are in progress for
Shahdol-Phulpur pipeline, RIL said.
The pipeline will have a capacity to transport 4.3 million standard cubic metres per
day (mmscmd) of gas, including 0.875 mmscmd capacity that will be available for
any third party for open access on non-discriminatory basis.
The pipeline will travel from Shahdol to Jaysing Nagar- Beohari-Gurh and
culminate at Phulpur.
At Phulpur, the pipeline may be hooked into state-owned gas utility GAIL India
Ltds main Hazira-Vijaypur-Jagdishpur trunk gas pipeline. Connection with HVJ
would enable gas to flow to any consumer.
RIL had won the twin Sohagpur blocks in the first round of CBM auctions in 2001.
It will be the third company in the country to begin gas production from below
coal-seams, called CBM. Great Eastern Energy Ltd (GEECL) and Essar Oil Ltd
are already selling CBM gas.
Coal-bed methane (CBM) is natural gas stored or absorbed in coal seams.
RIL said natural gas production from its eastern offshore KG-D6 block fell 23 per
cent in April-June to 8.7 mmscmd.
Continuing production decline due to natural decline in the fields, it said.

Mumbai: Reliance Industries Ltd (RIL) has begun commercial production of


coal bed methane (CBM) gas from two blocks in Madhya Pradesh, two people
familiar with the development said.

RILs move comes after the government approved pricing and marketing
freedom for producers of natural gas from CBM on 15 March. The company
has deferred production for a while due to lack of clarity over pricing CBM gas.
The two blocks are located in Sohagpur East and West.

RIL has commenced commercial production from 24 March 2017 and expects
sales to third party customers from May. RIL has appointed Crisil to help in
price discovery process based on CCEA (cabinet committee on economic
affairs) approval dated 15 March 2017. We are currently in ramp-up phase and
expect to reach around 0.4 mmscmd of production by June 2017. The ramp-
up phase will continue further for 15-18 months till we reach plateau
production in CBM, a RIL spokesperson said in response to a Mint query.

RIL had begun test production from the block last April. But wells had been
shut as RIL wanted clarity on gas pricing. In CBM production, you need to de-
water many small wells. And the de-watering sometimes takes nearly three
years. Thus, RIL may take two-three years to reach peak production, said the
second of the two people mentioned above. RIL was awarded the CBM blocks
in 2001, in the first round of CBM auctions.

With this, RIL has become the third company in India to begin CBM gas
production. Great Eastern Energy Corp. Ltd (GEECL) and Essar Oil Ltd are
the two existing players selling CBM gas in the market. RIL holds another
CBM block in Sonhat, Chhattisgarh.

CBM is natural gas stored or absorbed in coal seams. India, with the worlds
fourth largest proven coal reserves, holds significant potential for CBM
exploration and production. CBM gas is similar to natural gas, containing 90-
95% methane.
Reliance Gas Pipeline Ltd (RGPL), an RIL subsidiary, has laid around 312km
of pipeline to carry natural gas from Shahdol in Madhya Pradesh close to its
CBM blocks to Phulpur in Uttar Pradesh.

An RIL executive, one of the two mentioned earlier, added that initial gas
output from RIL block could be around 0.4 million metric standard cubic
metres per day(mmscmd). Peak output, however, is envisaged at 2.5-3
mmscmd.

RIL is best placed to sell its CBM gas as its blocks are centrally located and
there will be good demand by industries nearby. Also, the cost of production
for RIL may be around $3 per million British thermal unit (mBtu) and even if
RIL sells the gas at around $7-8 per mBtu, it would be in a good spot, said an
oil and gas analyst with a domestic broking firm, asking not to be identified.