Kolkata: Essar Oil and Gas Exploration and Production Ltd will soon submit a proposal to start extracting shale gas from the Raniganj block in West Bengal, from which it is currently extracting coal-bed methane (CBM) gas.

The Raniganj block has a shale gas potential of 7.7 trillion cubic feet (tcf), according to the chief executive officer of Essar Oil Vilas Tawde. CBM and shale gas are “complementary in nature", Tawde said.

Through a March 2016 policy tweak, the government has paved the way for exploration and production of all forms of hydrocarbons by a licenced operator.

Tawde said water was available in abundance and that the company will not have to draw water from the nearby Damodar river to extract shale gas from the Raniganj block through fracking.

Essar Oil has taken an in-principle decision to sell its entire CBM output to Gail India Ltd after the state-owned enterprise emerged the successful bidder. A 15-year agreement for sale of CBM to Gail is expected to be concluded this month, Tawde said.

To scale up CBM output, the company will drill 150 new wells at an estimated cost of Rs900 crore. Over the next 2-3 years, the company is looking to scale up output from 1 million metric standard cubic meter per day (mmscmd) to 2.3 mmscmd with an annual revenue target of Rs1,200 crore, according to Tawde.

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