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The petroleum ministry on Friday proposed a new approach to exploiting the country’s coal-bed methane (CBM) reserves for reviving investor interest in exploration and production of the natural resource. The idea, as outlined in amendments sough to the CBM policy of 2009, is to package CBM reserves with coal reserves in the blocks being planned to be auctioned shortly. As part of their bids during the auction of coal blocks, companies could bid for CBM as well.
India has the fourth-largest proved coal reserves in the world but there is a lack of detailed assessment of CBM reserves. The 33 CBM blocks awarded under the CBM policy of 1997 hold 64 trillion cubic feet of methane gas. Even as the CBM regime is based on revenue sharing, the contract is modelled on the lines of a production-sharing contract, and has stringent timelines.
At a joint meeting of the coal and petroleum ministries in May, the coal ministry agreed on joint exploration of CBM in coal blocks, with certain conditions. “In case of simultaneous extraction, the production plan of coal meant for the end-use project should not be affected. Also, the operator should adhere to safety guidelines of the Directorate General of Mines Safety,” it had said.
The petroleum ministry has now proposed to bring all coal leases held by CIL, others state-run companies, joint ventures and private companies under the framework of the CBM policy. Also, the exclusion criteria of 300-metre depth for CBM mining is proposed to be shelved. The new policy framework is currently awaiting the Cabinet’s approval.
So far, the oil ministry has conducted four rounds of CBM bidding which have led to award of 33 blocks. Only one of those blocks is under commercial production, even as 16 others have already been relinquished. Successful exploitation of India’s CBM potential has only remained a dream over the past decade and a half. So, what are the key lessons for the new government before it rolls out the new policy?
Challenges in extraction
The new approach must address the challenges inherent in CBM exploitation. One, large potential coalfields are honeycombed with old working systems, abandoned mines and working collieries. So, the CBM blocks to be offered have been demarcated far away from mining areas, leaving open intervening barrier zones between working mines and CBM blocks.
Exclusionary policy
All future mining areas have so far been excluded from blocks offered for CBM exploration. Some of those could be included, where possible.
Tapping unused methane
The coal ministry has so far allowed carving out CBM blocks only in areas where coal occurs beyond 300 metres deep. CBM released from existing coal mines during operations is not being systematically recovered and put to commercial use. Around 0.8 billion cubic metres of methane is annually released into the atmosphere by Indian coal mines during their operations. Expensive arrangements are required to maintain ventilation of methane, as it causes an explosive mixture with air causing serious safety hazard. The exclusion criteria of 300 meter depth for CBM mining, however, is proposed to be shelved under the new policy guidelines.
Availability
There is inadequate availability of CBM acreage. The coal ministry has provided only 26,000 square kilometers of area for CBM exploitation, apart from the mining leases held by Coal India Ltd (CIL). So, 81 per cent of India’s CBM potential is already leased to CIL.
Overlaps
There are multiple cases of overlap between coal blocks and CBM acreages. In view of safety-related concerns, the present mining regulations do not allow simultaneous development of different minerals within the same vertical horizon.
