State-owned ONGC will commence production from two coal-bed methane (CBM) blocks — Bokaro and North Karanpura — by as early as the first half of next financial year. This would expand the explorer’s portfolio, which is now restricted to conventional oil and gas.
Under its plan, ONGC would spend Rs 2,000-2,500 crore to monetise its CBM assets and reach an output level of 1.58 million metric standard cubic meter per day (mmscmd) over the next three years.
The ONGC board is likely to give the go-ahead to its final field development plan for the Bokaro block in its next meeting. Post-approval, it would require two-three months to hire rigs and services to put on ground. The output from the block is likely to hover at 0.5-0.6 mmscmd initially, while the peak output is envisaged at 0.74 mmscmd, which could be achieved in three years, a senior official privy to the project told FE. ONGC would spent about Rs 1,100 crore to bring the Bokaro block into production. Nearly, 70-80 wells are to be drilled in three years in the block. Of this, 25-30 wells would be drilled in the first year. The PSU explorer has planned the projects with 14% return on investment, which is viable at a gas price of $4.6/million British thermal units (mBtu). However, the domestic natural gas in the country would be $4.24/mBtu starting October 1.
Talking about fall in domestic prices, the official said, “The exploration projects are of longer duration. As we go ahead, ONGC would improve efficiency, which would cut down on cost of operations. Moreover, new technologies have been developed that brings down the cost.”
For the North Karanpura block, ONGC is awaiting government’s nod to transfer 25% stake to Prabha Energy. The block was initially held by ONGC (80%) and Coal India (20%). ONGC decided to hive off 25% stake to the private firm, which would be the operator of the block. The block is likely to produce 0.3 mmscmd of gas. “We are expecting the go-ahead from the ministry in few days. This would also come to production by next financial year,” the official added.
Meanwhile, ONGC is carrying out exploration at another CBM block — Jharia, while it has encountered a deadlock at Raniganj block. The Jharia block would also be put into production shortly with an output of 0.5-0.6 mmscmd. An airport has been developed in the vicinity of Raniganj block, preventing CBM exploration. The firm is contemplating if the block needs to be relinquished.