CIL arm Bharat Coking Coal enters CBM extraction with Rs 1,800-cr project

Signs joint venture with Ahmedabad-based Prabha Energy Pvt Ltd for the Jharia Block-1 in Jharkhand

Coal India’s subsidiary Bharat Coking Coal ltd (BCCL) has ventured into coal bed methane (CBM) extraction through a joint venture with Ahmedabad-based Prabha Energy Pvt Ltd. The two companies have signed a revenue sharing contract worth Rs 1,800 crore for Jharia Block-I in Jharkhand.

BCCL would invest Rs 370 crore towards the cost of the land and the balance cost will be met by the CBM developer Prabha Energy. The block is owned by BCCL.

The company said Jharia CBM Block-I has a resource of around 25 billion Cubic Metres (BCM) and average production capacity is pegged at 1.3 million metric standard cubic metres per day.

The project is scheduled in three phases. The first phase of exploration is of two years from the signing of the contract followed by the pilot phase of three years. Thereafter the production phase is for 30 years.

“CIL is hopeful that the first two phases would be completed earlier than scheduled and production commences sooner than planned”, said the company in a statement.

It further said, CBM extraction is a part of CIL’s diversification portfolio under clean coal initiatives. Pramod Agarwal, chairman and managing director, CIL in an interview to this paper had mentioned CBM as part of the company’s expansion plans.

“Apart from CIL’s core expansions, diversification is predominantly in solar power generation, clean coal initiatives like coal bed methane extraction, surface coal gasification, coal to methanol and washeries,” Agarwal had said.

ALSO READ: Expansion in newer business will reduce funding dependence: Coal India CMD

https://www.business-standard.com/article/companies/expansion-in-newer-business-will-reduce-funding-dependence-coal-india-cmd-121031800576_1.html

CIL has assigned its consultancy arm CMPDI as the principal implementing agency to oversee the project.

The company in its statement said, “The captured gas can be put into use for many commercial uses. The commissioning of gas pipeline in eastern India under URJA Ganga project is in the works by GAIL. CBM produced may be used for city gas distribution or through pipeline for potential users.”

Prabha Energy already has a CBM block – North Karanpura, Jharkhand in a consortium with state-owned major ONGC and Oil India ltd (OIL). State-owned GAIL is supposed to buy the gas from this block. In 2018, ONGC said it will sell gas from North Karanpura block to GAIL at US$ 5.56 per MMBTU.

Prabha Energy is a subsidiary company of Deep Industries Limited focusing on CBM exploration & production business. According to the company’s corporate presentation, Prabha Energy is experienced in upstream, midstream and downstream activities relating to exploration and production of natural gas from Coal Bed Methane. Jharia-I would be the second CBM project for the company.

Since 2005, after the Centre came out with a CBM policy, 33 CBM acreages have been awarded. Out of these, ONGC has developed four CBM blocks.

CIL in 2018 decided to venture into CBM extraction after the Union Cabinet waived off the need to procure a separate licence for extracting methane from the coal mines in its leasehold areas. The company had then identified two projects – Jharia-I and Raniganj in West Bengal for CBM extraction.