New Delhi: Essar Oil & Gas Exploration and Production Ltd (EOGEPL) has received environment clearance for exploring shale gas reserves in its Raniganj block in West Bengal, an official said.

This follows the government’s decision to allow operators freedom to explore both conventional oil and natural gas as well as non-conventional sources like coal-bed methane (CBM) and shale reserves within a exploration acreage.

Previously, companies could explore only oil and natural gas or CBM depending on their licence for the block.

The official said the expert appraisal committee (EAC) in 29 January meeting allowed Essar to drill 20 wells to explore shale gas in its Raniganj CBM block.

It has been awarded an exploration lease for shale gas, CBM and hydrocarbons in the Raniganj block.

EOGPL has got approval to drill 20 shale wells at a cost of 10 crore. To start with, it will drill five wells in the block to test the shale potential.

“We will start off with collecting the data. For this, we will need to drill the coal, identify the sweet spot and then drill horizontally for almost a kilometre," said Vilas Tawde, managing director and chief executive officer (CEO) of EOGEPL.

“If this exploration is successful, we plan to drill around 220-250 wells that will require an investment of 7,000 crore," he added.

The official said the company could spend up to $1 billion in development of shale reserves if the exploration programme was successful.

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