Prashant Modi’s GEECL clocking towards growth in 2013

Great Eastern Energy Corp Ltd (GEECL) which is led by Prashant Modi is a London-listed entity, engaged in natural gas production in West Bengal, India. The Prashant Modi company is set to declare its first annual profit, according a report on Reuters. GEECL extracts and sells natural gas from the coal bed methane (CBM) to the industrialists.

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Their business model is business and environmental friendly. GEECL’s proposition is to cut down heavy manufacturing cost involving machineries which are run suing expensive fuel. This gas is delivered using GEECL’s pipelines.

Although CBM field is too small in India to attract bigger industries, but GEECL has made a big impact in producing environmental friendly natural gas.

India’s import of Liquefied Natural Gas (LNG) production has been increasing with every passing year. GEECL’s business model can be an effective way to beef up natural gas production to meet demands.

UK institutional shareholders have financed the company since its listing in 2005. In a recently held meeting of shareholders, the company decided to raise funds by listing it on Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). 8 million new shares will be offered and the funds raised will be utilized in drilling and well development.

GEECL offers his customers gas delivered via its own 100 kilometer pipeline network to the steel works and food processors of Asansol, Raniganj and Durgapur.

Prashant Modi – CNG pipeline production plans

Prashant Modi - HandshakeNew partnership by Prashant Modi

GEECL will be entering into a new partnership, Prashant Modi has announced, with Indian Oil Corporation. This decision has been made so that GEECL will be able to convert several of the existing petrol pumps, located on various Indian highways, to compressed natural gas stations.

Prashant Modi revealed his company’s plan to extend its current pipeline to the area of Calcutta, so as to keep up with the customer demand for compressed natural gas. GEECL were successful in their commissioning of the first natural gas pipeline, which now extends from the gas gathering station, to twelve kilometres away, at its central gathering station. This is the very first pipeline dedicated to distributing coal bed methane to businesses in India and will be a part of a fully integrated network which will consist of drilling wells, producing coal bed methane, compressing the gas and transporting it to GEECL customers around the Asansol city centre area.

The twelve kilometre pipeline is now catering to the energy requirements of factories and plants around the Asansol area, and is also able to feed into other pipelines which connect to eastern Durgapur and western Kulti. Speaking of this, the president of GEECL, Prashant Modi expressed his ‘pride and delight’ at the way in which the CBM pipeline had developed. It is, Modi said, a significant milestone in the construction of compressed natural gas pipelines.

Although only the twelve kilometre gas pipeline is currently operational, the company have laid down the beginnings of further pipelines which span more than thirty kilometres, and will be able to connect over twenty wells to the central gas gathering station. On top of this, Prashant Modi explained, GEECL has also laid down steel ten kilometres of pipeline in Durgapur, and has now received permission from the National Highways Authority of India to lay pipes along fifty seven kilometres of coastline in the west of the country. Once completed and operational, these other pipelines will mean that almost every region in India will be able to easily access compressed natural gas and benefit from this affordable and clean source of fuel.

Prashant Modi – The complexities of CBM pricing

Prashant Modi - pricing puzzle pieceGas pricing by Prashant Modi

According to Prashant Modi, all CBM producing companies, including his own, GEECL, are facing with the complex issue of gas pricing. Whilst the model contract for the coal bed methane blocks provides GEECL with the freedom to market the gas produced at prices they essentially set themselves, the Indian government has asked all CBM producers to sell the gas first to the customers in priority sectors, which, Prashant Modi says, effectively controls pricing through the limitation of the consumer pool.

Reliance Industries requested that the government permit the price of CBM gas to be indexed to LNG prices, asking for approximately $12 for every million metric thermal unit. Prashant Modi says that it has now received several bids at this price; however Modi makes the point that unlike natural gas and oil, wherein the operator can recover their costs first, and then pay royalty on its profits to the Indian government, producers of CBM are expected to pay royalties from the very first day of production.

According to Prashant Modi, if GEECL and other CBM producers were permitted to recover their costs first, they too would be able to sell at a lower rate, but for now this is not the case. Currently, Modi’s company sells its gas at the government approved and market discovered price of $7.80 per million metric thermal unit. However, the delivery costs will vary from one CBM customer to the next, depending on charges relating to transportation. Meanwhile, Essar Oil, and its fields in the eastern Raniganj block have gotten a base price of $5.20 per mmbtu approved. As things stand, Prashant Modi says, the pricing policies for CBM need quite a bit of fine tuning, so as to ensure a price fixing mechanism which is more transparent.

The right to determine the pricing of gas that is produced from Indian CBM blocks lies with the Petroleum Ministry, but Prashant Modi says that the Ministry has chosen to refer this decision to the EGM (Empowered Group of Ministers). The EGM currently calculates prices for CBM produced from blocks that have been auctioned under NELP (New Exploration and Licensing Programme).

CBM drainage systems – what are the benefits? An explanation featuring Prashant Modi

Coal bed methane drainage systems have become increasingly popular with energy companies over the last few years. Aside from the cheaper costs associated with the shallow coals beds, Prashant Modi, an expert in the subject, says that this type of system offers a number of advantages in terms of finance and efficiency. Here we go through these benefits in more detail.

English: Road end sign, Letham Moss Composite ...

Prashant Modi – Road end sign, Letham Moss Composite Energy are extracting coal bed methane from flooded coal seams beneath Letham. (Photo credit: Wikipedia)

One of the most appealing aspects of the coal bed methane drainage system for most natural gas companies is the savings which can be made in ventilation power costs. Coal bed methane drainage systems do not require the installation of additional ventilation methods for production, which can save the energy company a significant amount of money over time. Prashant Modi says that this reduction in ventilation costs also leads on to further savings, as there is less need for development openings. This means that the number and size of shafts which connect the coal seam to the external surface can be cut down on, resulting in far cheaper production costs.

Coal bed methane drainage systems also result in an increased reserve –with less development openings such as head-gates, sub-mains and mains, a larger quantity of methane from the coal can then be extracted from blocks of a fixed size. This is because only about half of the methane inside coal which is located in the development sections of the mine can be extracted, whilst more than 85% of the methane located in the production sections of a mine is suitable for extraction.

Yet another benefit of coal bed methane drainage systems, according to Prashant Modi, is that there are fewer delays associated with the production process as a result of excess water. The presence of large volumes of water in the roof strata of a coal mine is often cited as the reason for costly delays occurring with underground mining work, particularly in relation to the development sections inside the mine. According to Prashant Modi, these delays can be mitigated, and in some cases completely eliminated, by the use of a coal bed methane drainage system.