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Coal India to speed up coal bed methane exploration

The government has asked mining giant Coal India to take up exploration of coal bed methane (CBM) in the country expeditiously, with an aim to ramp up its output to at least 5 million standard cubic metres a day (mmscmd) from less than 1 mmscmd now.

Recently, Cabinet secretary Pradeep Kumar Sinha took a review of CBM production in the country. It was brought to his notice that Coal India (CIL) has not made any progress despite the Cabinet allowing the PSU miner to go-ahead with CBM mining in December 2013, sources told FE.

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Post the order from highest authority in government, the coal ministry would discuss the strategy to take out CBM from its Coal India’s block with petroleum ministry and upstream regulator Directorate General of Hydrocarbons (DGH). On a later stage, ONGC may also be roped in to collaborate with Coal India to mine CBM, said the sources.

In December 2013, then UPA’s Cabinet allowed Coal India and other state-run firms to also exploit CBM, while taking out coal. But there was no movement on ground. The state-run firms are holding mines in joint venture with private companies and the latter did not have rights to explore CBM.

The Cabinet secretary was wary of the fact bureaucratic red tape may have prevented state-run firms to go-ahead and mine CBM, but Coal India should have made progress in the past two years. The petroleum and coal ministries are separately working on a policy to allow private captive coal mine owners to also monetise on CBM resources in their blocks.

The petroleum ministry is working towards bringing policy changes to boost natural gas production from CBM blocks to 10 mmscmd by 2017-18 from less than 1 mmscmd now.

There are three major roadblocks for CBM exploration — overlapping of CBM block area with coal mining area, fiscal regime and requisite clearances, as 81% of area under CBM blocks is with Coal India.

India has auctioned nearly 30 CBM blocks under four rounds and gave another three blocks prior to auctions. However, currently only one block held by GEECL that operates the Raniganj (South) block is under commercial production. Another block held by Essar Oil in West Bengal has started producing small volumes of gas but is not declared commercial yet.

According to DGH, output from CBM blocks was expected to go up to 7.4 mmscmd by 2013-14, but it was not achieved. The total sedimentary area for CBM exploration in India is of the order of 26,000 sq km. Out of this, exploration has been initiated in only 52% of the area. In other words, a large area remains to be explored, says DGH web site.

GEECL, the first company in India to commercially produce CBM, sells around 0.30-0.35 mmscmd to customers in West Bengal. The block has 2.44 tcf of estimated gas in place.

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