Business Standard

Essar under watch over ‘illegal’ CBM extraction

- SHINE JACOB

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.

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