(LiveMint)
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.RIL’s 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.
