1 Technical and Environmental Challenges for CBM Resource Development in India Deep Industries Limited 3rd India Unconventional Gas Forum Conference (IUGF) 2013 18th January 2013

CBM An Overview CBM Resources across the Globe (Tcf) Introduction Pumping methane gas from a coalbed Trapped in the middle of coal, CBM is naturally occurring methane gas with traces of other hydrocarbons and non- hydrocarbons The global estimate for potential CBM production is expected to be more than 7000 Tcf The countries that are currently significant producers of CBM are Australia, Canada, US, India, China and a few western European countries Close to 10% of the natural gas produced in US is contributed by CBM CBM Resources across the Globe (Tcf) 229-2697 469-2598 449-900 579-1200

CBM Blocks awarded till date India CBM- Update 33 Blocks CBM Resource potential 62 TCF Main operators are DIL, Essar, RlL, ONGC, GEECL, RNRL, BP & Dart Energy CBM Blocks awarded till date State No. of Blocks Area (Sq.Km) West Bengal 4 1308 Jharkhand 7 2454 Madhya Pradesh 3701 Rajasthan 3972 Chattisgarh 3 1917 Andhra Pradesh 2 1136 Maharashtra 1 503 Gujarat 790 Orissa 766 Tamil Nadu Assam 113 Total 33 17,246 * Source: DGH

DEEP INDUSTRIES LIMITED: OVERVIEW Diversified oil & gas company serving the industry in India since 1991. Business interests: Gas Compression Drilling and Work over Rigs Oil & Gas Exploration & Production CBM Exploration & Production Largest natural gas compression service provider in India in the private sector, with over 90% market share. E&P portfolio includes domestic & overseas blocks.

DIL- Exploration & Production Assets DIL India Operations DIL Indonesia operations Marginal Gas fields Total Acreage: 94.26 sq. km Total Resource: 1.42 BCM GV(N)-CBM-2005/III Acreage: 386 sq. km Resource: 29.6 BCM VN-ONN-2010/1 Acreage: 3776 sq. km SR-ONN-2005/I Acreage: 789 sq. km VN-ONN-2010/2 Acreage: 4909 sq. km SR-CBM-2005/III Acreage: 338 sq. km Resource: 31.32 BCM CB-ONN-2010/3 Acreage: 534 sq. km Total Acreage holding: Reservoir Type India Indonesia Total CBM 724 sq. km 996 sq. km 1720 sq. km Oil & Gas 10102 sq. km -

Singrauli CBM Block At a Glance Parameter Singrauli CBM Block Stage Under Appraisal Phase Acreage 330 sq. km Reserves / Resources 1,106 bcf (GIIP) No. of Seams 8 Coal Seam Depth 2015 ft – 2800 ft Coal Seam Thickness (net) 88.6 ft Gas to Coal Content 130 – 180 (scf/ton)

Singrauli CBM Block Prospective Area Five Spot Core Program: 9 coreholes Coal thickness (Core & Log) Gas Content, Adsorption Isotherm Injection/ Falloff Permeability Test SC-06 SC-05 Five Spot SC-03 SC-08 SC-04 Production Wells: 5-Spot pilot Production Test Completion Effectiveness Relative Permeability Reserve Certification Reservoir Simulation Spacing & Pattern Production Forecast Field Production Potential Field Development Program * to be completed SC-07 SC-01 SC-02

Water Well Mud Drilling CBM Well Drilling Drilling large number of wells at low cost is a big challenge in CBM. 350 M (Approx) 12 1/4” hole X 9 5/8” casing 8 ½” hole X 7” casing Water Well Mud Drilling Air Drilling 850 M (Approx) The innovative combination drilling of surface section using small rigs and Coal section to the target depth drilled using Air Drilling rigs resulted in reduction of drilling time and cost up to 30-35% Benefit of using Air as drilling fluid Minimum formation damage Faster penetration rates, longer bit life and fewer trips Damage Zone Around Wellbore Air Drilled Well Open Cleats Around Wellbore Mud Drilled Well

Dewatering the CBM Wells CBM Well Production Challenges Dewatering time - Optimum speed of pumps need to be maintained to achieve desired dewatering Sand flow back and workovers- Sand flow back and frequent pump repairs during the initial phase requires workover rig all times Produced Water Quality CBM Projects in India generally have good quality of water produced from the CBM wells which requires no or very little water treatment before disposal. But disposal of large quantity of water is a challenge. Relative Permeability 1 0.8 0.6 0.4 0.2 krg krw 1 Saturation Well STW # 3

Typical Coalbed Methane Well Production Profile 1,000 Peaks Flattens Somewhat Decline Depends on Well Spacing 100 Gas 10 Water 1 5 15 20 TIME, years Production Rate ( Water - BBL/ Day), Gas (MSCFD)

Multiple Seam Completion

Surface Facility and Compression of Gas

Large Land Sites for drilling CBM Wells 1 vertical well and 4 directional wells at 90 Deg phasing with horizontal reach of about 500 -600 m drilled from a pad. Many benefits of this approach: Land Requirement reduction up to 60% Land cost savings and Civil work savings Savings on ILMs of drilling rigs, logging trucks, cementing units, HF Units , completion & workover rigs Savings on in-filed pipelines, instrumentation and surface facilities Logistics, security, etc. Directional Wells from a single well site 500 m

Logistical, Environmental & Social Challenges Logistical: Very less logistic support available as generally all CBM assets occur in the remote areas CBM requires drilling of very large number of wells and setting up required surface facilities Extensive logistics support need to be created Environmental: As CBM reservoirs are low pressure operations, environment impact is very less Need amendment in the existing rule and regulations Social: Effect on local community and their resistance Need the follow good and effective CSR plan

CBM Evacuation Challenges Almost all the CBM blocks in India are located in frontier areas No CBM gas transportation infrastructure developed

Conclusion Coalbed methane is a technology play that requires reservoir understanding and appropriate technology for all phases of prospect evaluation and field development. Drilling, completing and producing of large no of wells at low cost using innovative techniques always remains a challenge. CBM Reservoirs are generally water saturated & require dewatering and gas production takes time to commence.

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