Essar Oil Ltd today said it has received environmental clearance for its coal bed methane (CBM) gas field at Raniganj in West Begnal.

"This environmental clearance allows the full field development of the Raniganj block, excluding forest area, and will enable Essar to increase production to the targeted level of around 3 million standard cubic metres of gas per day up from around 60,000 standard cubic metres per day currently," the company said in a statement here.

The phase-III environmental clearance will allow the firm to drill up to 650 wells to produce gas from below coal seams, called CBM.

So far, 135 wells have been drilled at Raniganj, of which 57 are in production. The drilling programme will now be accelerated, it said.

Raniganj, in which Essar Oil has a 100 per cent interest, is a 500 square kilometre block with total proven and probable reserves (2P), independently evaluated by consultants Netherland, Sewell and Associates Inc, of 113 billion cubic feet (bcf).

Naresh Nayyar, Essar Energy, Chief Executive, said: "The final phase III environmental approval for Raniganj is an exciting milestone and is the key to us reaching peak production. We expect to grow the coal bed methane business significantly in the coming years as we utilise the learnings from Raniganj to develop our other four blocks."

Essar Oil, which is a subsidiary of London-listed Essar Energy, is awaiting a government decision on an appropriate commercial sales price for Raniganj, but in the meantime will continue to sell gas from the block at the approved test sales price.

The has already contracted gas sales from Raniganj to local industrial customers. The majority of the gas sold from the project is being sold to a new fertiliser plant being built approximately 30 kilometer from the Raniganj field.

Of Essar's eight oil and gas blocks, five are CBM blocks, with more than 10 trillion cubic feet (tcf) of reserves and resources. This includes the large Rajmahal gas field in Jharkand province, which has around 4.7 Tcf of best estimate prospective resources, located 150 km from Raniganj.