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Government to Offer 6 Coal Bed Methane Blocks in Auction: Report

Government is likely to offer six coal bed methane (CBM) blocks, all in Gujarat, under the fifth round of auction this fiscal year, a senior Oil Ministry official said.

CBM is a generic term used for gas that is found in adsorbed state in coal and found in coal layers.

"We have identified 6 CBM blocks for offering in the next round of CBM block auction," the official said.

The blocks are GJ(1)-CBM-2013/V, GJ(2)-CBM-2013/V, GJ(3)-CBM-2013/V, GJ(4)-CBM-2013/V, GJ(5)-CBM-2013/V and GJ(6)-CBM-2013/V - all in Gujarat.

In the previous rounds, a total of 33 CBM blocks spread over 16,613 square kilometers had been awarded. The blocks awarded hold 62.4 trillion cubic feet (Tcf) of in place reserves, out of which 9.9 Tcf has been established so far.

"So far only 8 blocks have reached development stage and only one block has reached commercial production stage and four others are producing incidental CBM," he said.

The government, he said, is keen to push for CBM extraction in a big way and will soon announce the 5th round of bidding.

"The bid round has to be approved by the Cabinet and once that happens, the government will issue Notice Inviting Offer (NIO)," the official said.

"Fiscal and terms of CBM block offering are under finalisation and will need to be approved by the Cabinet."

Roadshows will be held in India and abroad to attract global majors to invest.

Of the 33 CBM blocks offered in the first four rounds, four blocks have been given up for poor prospectivity and 12 others are under the relinquishment. Prospecting license for three other blocks had not been granted.

So in effect, there are only 14 operational CBM blocks. Among the companies which have relinquished the blocks include Australia-based Dart Energy, which gave up four out of five blocks it had won. BP plc of UK, the only other big foreign name to have bid for CBM blocks in India, too is relinquishing its CBM block in West Bengal.

The official said Great Easter Energy Corp's Raniganj (South) block in West Bengal is the only one on commercial production since July 2007 and is currently producing 0.42 million standard cubic meters per day of gas.

State-owned Oil & Natural Gas Corporation's (ONGC) Raniganj (North) block in West Bengal as well as Jharia and two other blocks in Jharkhand have reached development phase.

Essar Oil's CBM block in West Bengal and Reliance Industries' Sohagpur CBM blocks in Madhya Pradesh too have reached development phase.

The official said Essar is producing 0.64 mmscmd of incidental CBM while RIL too is producing some incidental gas.

source: http://profit.ndtv.com