Renowned scientist Dr. K V Raghavan, distinguished professor, Indian Institute of Chemical Technology and who headed the Gas Commission of Andhra Pradesh, referred to the quantity and quality of gas produced at the KG Basin. He pointed to the composition of the gas and to the most effective uses to which it can be put.

C Ramulu, advisor to the APGIC who brings with him over three decades of experience with the oil industry, stressed the importance of a cooperative approach on the part of the southern states to optimize the use of gas produced in quick time.

A very large find…

The gas-find in the KG Basin appears very large even on global standards. Production is expected to increase from the current rate of 60 mn metric standard cubic metres per day (mmscmd) to 80 mmscmd by March 2010. With more explorers commencing production in 2010, additional production are reckoned at over 80 mmscmd; there are optimistic estimates that availability from the KG Basin alone in the region of 200 mmscmd.

Sadly, despite the fairly long phase of reaching production from the basin extended over five years, not much attention was paid by the policymakers and business leaders of the south to focus on the construction of pipelines to transfer the gas from the terminal at Kakinada to user industries in south. Equally sadly, politicians, business leaders of the south, media, academics and other interested sections have not yet taken the initiative to benefit out of this God-given boon.

I will provide a measure of what gas can do: just 2 mmscmd can help produce around 3200 tonnes of urea per day; or generate 450 MW- 500 MW of electricity. Thus the estimated production of 82 mmscmd from March at the KG Basin can produce either over 131,200 tonnes of urea per day or generate 20,000 MW of power!

Former advisor-PMO and secretary, finance/P&NG, Dr. S Narayan referred to the imperative of business and other consumers getting ready to make use of the gas. He pointed to the lack of interest on the part of business to seize the opportunity.

B Santhanam, Managing Director, Saint Gobain Glass India, said that if his company had access to natural gas, it can replace the expensive furnace oil presently used. He estimated savings on this account alone at Rs. 100 crore per annum on current prices.

Chairman of the Ramco Group of companies, P R Ramasubrahmaneya Rajha, said that the savings in energy costs for his cement companies could be even higher.

C K Ranganathan, Chairman, CII (TN), agreed to take the issue forward with policymakers through CII. To start with, CII can work on the savings in energy that could be brought about in a dozen major industrial sectors.

The south has a more crying need for switching to gas, especially by its fertilizer units. These were set up in the 1960s and the 1970s as adjuncts to large capacity refineries or were port-based, with facile access to naphtha as the feedstock. In those years of cheap crude prices (around a $ 1.10 per barrel or around Rs. 40 per tonne) price of naphtha was only a few hundred rupees per tonne. Thus urea could be produced cheap and no subsidies were involved. These fertiliser companies earned handsome profits: Madras Fertilisers (MFL) was the pride among public sector undertakings, declaring dividends of 50 per cent in the early 1970s!

Today naphtha prices are in excess of Rs. 37,000 per tonne; urea produced at this price costs over Rs.30,000 even for old plants that have amortized their investments. In contrast, fertilizer companies along the HBJ pipeline and others with natural gas as feedstock, produce urea at around Rs. 7000 a tonne, are profitable and are growing. SPIC, the largest unit in the southern region which flourished in the 1980s and 1990s, has stopped production for several months. MFL has accumulated losses of over Rs. 800 crore and is a sick unit under BIFR. The Cochin Fertilizer unit of FACT and Mangalore Chemicals Fertilisers are also languishing.

P R Kosalaram, general manager, Madras Fertilisers Ltd, provided a picture of how the viability of MFL can improve by switching to gas as a feedstock.

Surprisingly, with a powerful politician like MK Alagiri (TN chief minister M Karunanidhi's son) as the minister of fertilizers one doesn't see quick action to supply these units with natural gas.

Promise of three trunk lines and several spur lines

Dr. S K Saha, zonal deputy general manager of the public sector giant GAIL India, provided a comprehensive picture on the plans to construct a gas grid for the south involving a cost (for GAIL alone) of over Rs. 8000 crore. There are two sources: the LNG terminal at Kochi and the other at Dabhol in Maharashtra.

The first 24” dia pipeline will connect the Kochi LNG terminal with Mangalore via Kanjirrakod and Bengaluru over a distance of 862 km with an additional 230 km of spur lines with a capacity of 16 mmscmd.

The second pipeline will connect Dabhol with Bengaluru over a distance of 730 km with 30" dia of mainline and 650 km of spur lines with capacity of 16 mmscmd. These two pipelines will cover large sections of Kerala, Karnataka, Tamil Nadu, Goa and Maharashtra.

The first phase of these pipelines will be ready only during 2012 and the second phase two years further. Sourcing the gas for the full requirement and prices have not been firmed up yet.

Bengaluru will have access to three sources

There will be a third pipeline to bring gas from the KG Basin to south, to be constructed by Reliance Gas Transmission Infrastructure Ltd. In the first phase, it will be laid for 445 km from Kakinada to Chennai for a capacity of 27 mmscmd. This will benefit the southern districts of AP and the northern districts of Tamil Nadu. The target for completing this is December 2011.

In the second phase, a Chennai - Tuticorin pipeline over 670 km benefiting western and southern districts of Tamil Nadu is to be completed by December 2012.

Reliance also will be extending the pipeline from Chennai to Bengaluru by December 2012.

RGTIL, will also construct in parallel the Kakinada-Vizag pipeline for delivery by December 2011 and extend it to Howrah by December 2012.

The plans are quite impressive. But they are quite several months away.

Kochi terminal to feed FACT and NTPC by 2012

M R Karmachandran, executive director, Kerala State Industrial Development Corporation, read out the message of Kerala chief minister and expressed hopes on a major transformation of the fortunes of the NTPC's Kayamkulam power plant and FACT's fertilizer unit when gas flows from the LPG terminal at Kochi.

Renowoned scientist Dr. G Thyagarajan, who presided over the panel discussions, pointed out that the pipelines can be taken along the coast eliminating the need for elaborate land acquisition issues. He also pointed to the easy availability of gas would give a big fillip to economic growth.

President of Madras Chamber of Commerce and Industry and past president of AIMA, Srinivasan K Swamy, stressed the need for business leaders of the south becoming more aggressive in regard to their demand for the gas grid infrastructure.
A good cross section of scientists, professionals and senior managers from industry, including N Vittal, Dr N S Srinivasan and Dr A B Mandel attended the meeting.

This initiative of IE received handsome support from Mr. R Krishnamoorthy, Editor, Dinamalar, The Ramco Group, BHEL, Cethar Vessels and Saint Gobain.

- The Way forward (Click to continue)