BSN Network / Mumbai
Monday, March 08, 2010

Here is some good news that will open several avenues of shipping. The Ruias-led energy major Essar Oil said its coal-bed methane blocks actually contain about seven trillion cubic feet (tcf) of recoverable gas, over twice than earlier estimates, which industry values at over $4 billion.

“Essar’s exploration and production business is set to become a major wealth creator for Essar Oil. Based on the draft reports, we have recoverable resources of seven trillion cubic feet,” the company said.

The company had engaged international consultants to assess reserves in the oil and gas fields it holds, which were previously estimated to hold recoverable gas resources of about three trillion cubic feet.

According to the new estimates, Essar Oil’s Raniganj finds in West Bengal has about one trillion cubic feet of coal-based methane gas, while its Rajmahal block in Jharkhand has about 4.7 trillion cubic feet.

Additionally, the company’s offshore block in Nigeria holds an estimated 200 million barrels of oil equivalent resource, while its Ratna and R-Series fields in Mumbai High hold 160 million barrels of oil equivalent.

However, the deal for the Mumbai High finds has not been signed yet, the company said.

Essar also said it will start commercial production of gas from its Raniganj block in West Bengal by the second quarter. Peak production of 3.5 million cubic meters a day would be reached in mid-2013 and will last 20 years.

“The company has signed long term (gas sale) contract with two large industrial customers.”

According to the latest Competent Person Report (CPR) of two US-based consultant firms, Netherlands Sewell & Associates Inc and Advanced Resources Inc, Essar’s recoverable resource at Rajmahal block in Jharkhand stood at 4.7 tcf, against the earlier estimate of 1.3 tcf. Also, the company has found 0.75 tcf CBM gas reserve at its Mehsana block in Gujarat. Directorate General of Hydrocarbons (DGH) had earlier approved recoverable reserves of 1 tcf at the company’s Raniganj block in West Bengal.

This oil prospects will propel the demand of offshore vessels and other shipping related businesses.