Aiming to fast track production and exploitation of coal bed methane (CBM) reserves in the country, the Petroleum Ministry plans to make amendments in the existing CBM Policy of 2009 which will seek to incentivise investment for production of the energy efficient form of gas. Also the contractor will be allowed to sell gas based on price bidding without adhering to any allocation priority.
According to sources privy to the development, the Petroleum Ministry is preparing a comprehensive note for making the aforementioned amendments in the CBM Policy. The contentious issue of overlapping of CBM and coal blocks, which has led to a lot of dispute between the Petroleum and Coal Ministries in the recent past, is to be addressed through a workable mechanism, which is likely to be put into place, sources added.
The Government also plans to allow exploration and exploitation of CBM from areas under coal mining lease allotted to various companies, both State-owned as well as private. In other words, blocks held by Coal India ltd (CIl) as well as those by private entities could be brought under one roof. The only issue is that the Coal Ministry has to agree to it.
Also to simplify the existing CBM contract, the Petroleum Ministry aims to remove micro management of operations.It has been further decided that modern technology should be used for reviving old wells and maximising production from such fields.
Sources familiar with the issue said that as of now the Coal Ministry allows carving out of CBM blocks only in areas where coal occurs beyond 300 metres deep. This provision is likely to be removed, they added.
CBM acquired from existing coal mines during operations, as of now, is not used commercially. Around 0.8 billion cubic metres of methane is annually released into the atmosphere by coal mines during their excavation.
Till date only 33 CBM blocks have been awarded across the country and these hold around 64 trillion cubic feet of methane gas. Out of these, only one block is under commercial production, while 16 reserves have been relinquished by the owners, sources said.
India has the fourth-largest proved coal reserves in the world but there is a lack of detailed assessment of CBM reserves. The country has an estimated 710.39-948.73 billion cubic metre of CBM gas.
Coal bed methane is gas that is stored and buried deep in the coal seams and is like any other natural gas. It has fast emerged as a clean fuel alternative for power production.
Interestingly during the regime of the UPA Government also, the Petroleum Ministry had suggested allowing private entities to explore CBM blocks along with CIl, however the proposal was rejected by the Coal Ministry.
