Essar Exploration and Production is going to drill two wells during this year in a step towards the development and production of shale gas from its Ranigunj field in Bengal.

A team of technocrats from the company is now working in Houston, Texas, to finalise the plan to explore the field which is estimated to have a recoverable reserve of 1.6 trillion cubic feet (TCF) of shale gas.

Essar, owned by the Ruia family, has mining leases over a 500 square kilometre area in Ranigunj. The company is now producing 0.9 mmscmd (million standard cubic metre per day) coal bed methane gas from the field, accounting for nearly two-third of India’s CBM production.

“We have tied up with technology partners who have experience working in China and the US, to extract more out of the shale gas and CBM reserves in the best possible ways. Our teams are now working on the next phase of development with them,” Pankaj Kalra, CEO of Essar Exploration and Production Ltd, said.

While the exploration wells for shale gas will provide an estimate of investment required to recover the green fuel, the company has finalised a Rs 1,500-crore plan to take CBM production to 3mmscmd. Compared to shale gas reserves, the recoverable reserve of CBM is estimated to be 1 TCF.

The gas resource comes handy for the state of Bengal in two ways. It helps the local economy to transition towards cleaner fuel and combat climate change. Moreover, the company contributes about Rs 100 crore in royalty (10 per cent of the revenue) and Rs 50 crore in value added tax to the Bengal government annually. With production set to go up, the contribution to the exchequer is expected to multiply.

Essar has drilled 350 wells after starting work in 2011 and invested Rs 5,000 crore, Kalra said. The management believes that it would be able to extract 1.4 mmscmd CBM from the existing wells by multiple technology interventions such as refracking. “With these initiatives, we believe the existing wells will progressively reach a higher level of production.”

Moreover, the company is planning to drill additional 230 odd wells which will give another 1.6mmscmd of gas. Out of this, about 200 wells will be drilled within a 130 square kilometre area which is already under production.

Another 30 wells will be drilled in an unexplored area where CBM is estimated to be trapped in deeper levels (1500 meters). Essar plans to drill both vertical and horizontal wells, as being done in China. This phase will carry on for the next 18-24 months.

Essar sells its entire production to GAIL, which markets the gas to the end consumers here. In the nine months ended December 31, 2022, it reported Rs 696 crore of revenue, up 113 per cent year-on-year and Rs 284 crore of net profit compared with Rs 11 crore of loss a year ago.