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Coal India allowed to mine CBM but under strict timelines

In order to speed up gas production from coal bed methane (CBM) blocks, the petroleum ministry has allowed Coal India to mine the hydrocarbon and set specific timelines for the same. However, the permission comes with a rider — that Coal India cannot involve a private third party for CBM exploitation. It can only give out equity participation to a central or state PSU with experience in CBM exploration, while the majority stake would remain with Coal India.

“As a leaseholder Coal India , its subsidiaries will comply with the ORD Act 1948 and P&NG rules 1959 for CBM operations in all such blocks,” said a petroleum ministry order of November 3.

Coal India would utilise its mine in a way that it extracts CBM prior to coal mining operations or it may take up simultaneous exploration of both the natural resources.

One of the major roadblocks for CBM exploration is overlapping of CBM block area with coal mining area, as 81% of the area under CBM blocks is with Coal India. The petroleum ministry order asking Coal India to take out CBM in a timebound manner would help prevent the issue.

The petroleum ministry said that within 24 months of grant of CBM mining lease, Coal India needs to submit field development plan (FDP) to the Directorate General of Hydrocarbons (DGH). The time for submission of FDP may be extended by 12 months by the ministry on a case-to-case basis.

For delay in submission of appraisal plan and FDP beyond 36 months, Coal India would have to pay a penalty of Rs 1 lakh per month. In addition, if Coal India delays production from the projected date in the FDP, it would be liable to a penalty of Rs 1 lakh per month of delay.

In December 2013, then UPA’s Cabinet allowed CIL and other state-run firms to also exploit CBM, while taking out coal. But there was no movement on ground. Cabinet secretary Pradeep Kumar Sinha took a review of CBM production. It was brought to his notice that CIL has not made any progress despite the Cabinet allowing the miner to go-ahead with CBM mining.

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 sqkm. Of this, exploration has been initiated in only 52% of the area.

source: http://www.financialexpress.com