Great Eastern Energy Corporation Ltd
is a pioneer in exploration and development of coalbed
methane (CBM) in India. Prashant Modi
President & Chief Operating Officer, GEECL
that it is difficult to provide long
term CBM production projection at initial stages.
The government's policy on coal-bed methane is simple,
straightforward and encouraging. Are more initiatives needed to
accelerate the pace of CBM?
The current government policy is fine; it is based on royalty contract. But
some of the current policies that are applicable to CBM are the same as
conventional oil and gas; they are theoretical. If we take some of the
practices followed all over the world, be it USA or Canada or Australia which
are the three largest producing CBM countries, then it would help in terms of
facilitating some more growth.
Overall, we are happy with the government's policies and push for CBM, a
clean source of energy. Once CBM is done, it will become safer for mining
because it de-methanises the mines. In China, thousands of people die due
to mine explosions which are caused due to methane gas.
If you extract methane first and then mining happens, there are two benefits.
First, there are no explosions, so people don't die. Second, methane gas
escapes in the atmosphere and if methane is vented in its raw form, it is 21
times more damaging than carbon dioxide. But if methane is used as a fuel,
it is very clean. Therefore, once methane gas is extracted and if you
undertake mining, there will be no accidents (explosions) and
Many coal-bed methane blocks are not producing at the moment.
As all of them become active, how do you see the overall CBM
Currently only our block is commercially producing and selling while none
of the other blocks have come on line. If all blocks come on line, then CBM
production can be about eight to 10 million cubic metres.
CBM blocks take a long time to come on line; it is not like conventional
blocks. Conventional blocks produce slowly, then stabilise for four to five
years and then start decreasing. On the other hand, CBM is a game of
patience and takes a while to develop.
A lot of arbitrage is involved in selling CBM and the price depends
from customer to customer.
The price is between the customer and us (producer); it is market determined prices. Whatever the customer is willing to pay; otherwise they
will not buy. The contracts go from short term to long term while some
depend on customer to customer.
The government is expected to come out with a shale gas policy.
We don't know how the policy will be. We have to wait and see if they will model
it on NELP (New Exploration Licensing Policy) or CBM. We always believed that
the royalty contracts are much simpler, straightforward and transparent.
The government needs to remember that for shale gas the blocks need to be
near some distribution infrastructure because shale gas is an
unconventional fuel. The production starts very high and in the first six
months to one year the majority of production comes through.
If there is no pipeline and someone has to build the pipeline, then by the time
the pipeline is built it will be very late.
What are the current challenges in gas distribution infrastructure?
As far as we are concerned, the right policies are needed. In PSCs
(production sharing contracts), the pipelines can be built within and outside
the contract area. In our case in West Bengal, we have built our own pipelines
of around 77 km. Right now it is being run on low capacity because full
production will only come in next eight to 10 years.
In CBM, the gas starts slowly and gets built up in five to six years. Once we
determine what type of gas we will get then we develop the infrastructure.
This will always remain a challenge unless the national grid the government
is talking about comes up.
Going forward, how do you see the pipeline distribution infrastructure
In our case, we have two blocks, Mannargudi and Raniganj. At Raniganj, we
already have our integrated pipeline network in place. At Mannargudi, there is
currently a government pipeline that runs near the block; we will tap into that and
pay the tariff fee to whoever's pipeline it is. GAIL is getting aggressive in building
pipelines and we are hopeful that it will ultimately benefit everyone.
What is the current status of the Mannargudi block under CBM-IV?
We have received the approval for petroleum exploration license (PEL) and
currently as per PSC the environmental clearance is under process. As soon as
that is received, we will start our programme.
What is GEECL's future strategy?
We will remain in this phase of unconventional and don't want to venture
into conventional or offshore etc. Our expertise is in unconventional and
remains in this segment while expanding. Currently, we have two assets
and if there are any other economically viable blocks available, then we
will continue to pursue them.
There are many blocks which might be available but may not be
economically viable according to us because the royalties that operators
had put forward were extremely unviable. We will grow in this field and
make it a huge CBM company.
GEECL is currently producing 0.16 mmscmd of gas from Raniganj
block. Do you have plans to raise its capacity?
Our current production is around 0.21 mmscmd which is increasing
continuously. We should be at 0.5 mmscmd by March of next year. By
September (next year), we should be at 0.70 or 0.75 mmscmd.
In CBM, it is very difficult to give a long-term production projection in
initial stages. This is because in India we don't have a production
history of CBM since we are the first ones. Secondly, gas flow starts
very slowly and then ramp-up happens. As more and more production
data happens, stimulation becomes stronger since our software (US
purchased) makes more accurate projections based on more data
being fed into it. As more data goes into the software, it makes more
accurate future projections.
Eventually, once our entire 300 wells are completed and everything is
done, we will be at about close to 3 million cubic metres. In six months
we will be able to come out with better projections based on more and