Essar under watch over ‘illegal’ CBM extraction
Essar Oil & Gas Exploration and Production (EOGEPL), India’s largest coal-bed methane (CBM) producer, is under the government’s scanner for allegedly drawing gas outside its licensed area at Raniganj in West Bengal.
According to sources close to the development, the Ministry of Coal and the Ministry of Petroleum and Natural Gas (MoPNG) are looking at a complaint against the company. The complaint states the company has drilled 40-50 wells outside the licensed area.
A local contractor complained about this to the Directorate General of Hydrocarbons (DGH) and the MoPNG. Later, it was forwarded to the Ministry of Coal.
“The government is looking into the issue and necessary actions, including a possible investigation, would be taken,” said a person close to the development.
The issue is similar to a dispute between Oil and Natural Gas Corporation and Reliance Industries over the latter drawing gas from the state-run company’s block. In Essar’s case, the adjoining area is not licensed for CBM extraction to anyone.
The DGH has asked the company to provide the coordinates of the wells drilled in the area.
An Essar spokesperson, however, denied the allegation. “All wells drilled at EOGEPL’s Raniganj East (CBM) block are in accordance with the sanctioned field development plan (FDP),” the spokesperson said in an email response. The company’s sanctioned area is around 500 square km.
At present, Essar owns CBM rights to five blocks — Raniganj; Talcher and the Ib Valley in Odisha; Sohagpur in Madhya Pradesh; and Rajmahal in Jharkhand. In Raniganj, EOGEPL has invested more than ~40 billion in setting up supply infrastructure and drilling wells.
The complaint has been filed by PM Enterprise, a civil contractor, which alleged there was a “deliberate violation of safety and environmental laws” in villages like Nachan Dam, Banshia, Balijuri, Madhaiganj, and Khatgaria through “illegal” drilling.
Another official said, “For the area under question, Essar Oil has also applied for an extension in accordance with the provisions of the contract. This is currently under consideration.”
When contacted, an executive of PM Enterprise said it stood by its complaint. He said the matter was reported to the Ministry of Petroleum and the director of mines, Sitarampur division, when it noticed the illegal activity. The complaint stated in the case of some deviated wells, whose surface locations were within the lease boundary, the end point exceeded the designated area.
It also states the deviated wells were drilled with an inclination of 45 degrees at an average depth of 1,350 metres.
Once the new DGH takes charge, there is likely to be a formal investigation into the matter. The company produces CBM of around 1.5 million metric standard cubic metres of gas per day (mmscmd) and is looking to produce at least 2.5 mmscmd by March 2021.
Of the 500 wells mandated under the FDP in the Raniganj block, Essar has so far drilled around 348.
CBM is natural gas stored in coal seams. The data available with the DGH says India has the fifth-largest proven coal reserves in the world. In 2016-17, India produced 564.6 million standard cubic metres (mscm) of CBM, up 43 per cent over the 392.9 mscm India produced in the previous financial year.