(FE)
State-run ONGC has decided to hire an integrated service provider to produce coal-bed methane (CBM) from its Raniganj block as the explorer is finding it difficult to cut production cost which in turn means the break-even cost of gas from the block will be $8.77 per mmBtu, far more than the same for the company’s other three CBM blocks in Jharkhand. The break-even CBM gas prices of ONGC from its Bokaro block is $5.56 per mmBtu, $5.68 per mmBtu for Jharia block and $6.24 per mmBtu for North Karanpura block. According to sources, the estimated cost of developing the Raniganj CBM block is Rs 2,213 crore and the company expects the integrated service provider to bring down the cost to around `1,400 crore, making the project commercially viable.
Usually, explorers hire separate third-parties for services such as sub-surface (enhanced oil recovery/improved oil recovery techniques), development plan, construction of wells, reservoir management, surface facilities development and production optimisation techniques. However, an integrated developer provides all these services under one tender by optimising cost.
While the government has allowed marketing freedom for gas produced from CBM blocks unlike regulated price offered for gas produced from conventional fields, a cost of $8.77 per mmBtu is way more compared with prices that other CBM blocks have fetched. While it is reported that ONGC has struck deals to sell gas from its other three blocks at $5.56-6.17 per mmBtu, Reliance Industires’ Sohagpur CBM block in Madhya Pradesh sells gas for more than $7.15 per mmBtu, the highest till date.
