Cabinet may allow CIL to produce gas from coal seams

The Cabinet may this week allow state-owned miner Coal India Ltd to produce natural gas from coal seams (CBM) in its existing coal mines.

The Cabinet Committee on Economic Affairs (CCEA) is likely to consider this week allowing Coal India (CIL), the world's largest coal miner, to explore and produce coal-bed methane (CBM) in its existing mines, official sources said.

Currently, rules and regulations prohibit mining firms from extracting CBM during mining as the policy does not allow for simultaneous extraction of methane (CBM) and coal.

CBM exploration and production is allowed only in pure coal-seam gas bearing blocks which are auctioned. Since 2001, 33 CBM blocks have been awarded in four auction rounds. Besides, two CBM blocks to Oil and Natural Gas Corp (ONGC) and one to Great Eastern Energy Co Ltd were awarded on nomination basis.

According to the Directorate General of Hydrocarbons (DGH), India has CBM reserves of about 4.6 trillion cubic metres.

Currently, three CBM blocks are producing around 0.15 million standard cubic metres per day (mscmd). This is likely to touch 7.4 mscmd by 2013, according to the DGH.

Sources said CIL holds at least 20 per cent of the estimated 60 billion tons of coal resources in India. It has several coal mines in eight states, which are estimated to have CBM reserves of 3.5-4 trillion cubic feet.

Many of its acreage are gaseous and unsafe mines, where mining of coal is possible only after the extraction of CBM. Extracting methane (gas) ahead of coal mining from seams will allow CIL help unlock very significant quantities of coal reserves in areas of Jharkhand, West Bengal.

Sources said Coal India will be allowed to explore for CBM in the mines that were given to it on nomination basis. It can take a state-owned explorer like Oil and Natural Gas Corp (ONGC) as a partner for the venture.

Oil Minister M Veerappa Moily had orginally proposed allowing Coal India to rope in even private firms for CBM exploration and production. But the proposal was killed after strong objections from Coal Minister Sriprakash Jaiswal.

CBM extracted by CIL will be priced and marketed as per the Oil Ministry's gas pricing and utilisation policy.

Sources said CIL had short-listed five blocks in Jharkhand with estimated CBM reserves of about 1 Tcf for exploration in the first stage. They are: Munidih (282 Bcf), Kathara (282 Bcf), Asnapani (212 Bcf), Putki Buliwari (247 Bcf) and Mohuda (14 Bcf). These five assets are considered to be gaseous and unsafe mines at present.

CBM extraction would help CIL unlock nearly 100 million tons of medium grade coking coal, and about 1 Tcf of gas.