Coal India (CIL) will start producing coal bed methane (CBM) from its lease hold area under Bharat Coking Coal ( BCCL) in Jharkhand. This is the first time the coal miner is producing gas from coal seams, as part of its diversification plans to produce clean energy from coal. CBM extraction will prevent releasing gas into atmosphere while mining coal.
The company has already issued a Letter of Acceptance to a CBM developer, selected through a global bidding process, this month. CIL will be the third company after Great Eastern Energy Corporation ( GEECL) and Essar Oil and Gas Exploration and Production ( EOGEPL) to extract CBM from the coal belts of eastern India.
Bharti Airtel, Coal India, Jubilant FoodWorks, Reliance Power, PNB Housing, Adani group stocks in focus
DHFL, Coal India, Axis Bank, Reliance Power, Ruchi Soya, Adani Enterprises stocks in focus
Coal India may announce 20-25 per cent additional dividend on June 14
Until 2015, CIL was only allowed to extract coal from its lease hold area. But the ministry of petroleum and natural gas has allowed the coal miner to extract CBM without alienating lease rights, with a rider to involve only a central or state PSU for exploitation of CBM and that the majority stake be held by CIL.
Central Mine Planning and Design Institute, CIL’s consultancy arm, has been involved as the principal implementing agency for the CBM development in its leasehold areas. Around 80% of the CBM bearing areas come under the coal monolith.
A CIL executive said the Jharia CBM Block-I will likely come up at an investment of Rs 1,880 crore as per the project feasibility report. While BCCL will be investing 20% of the total capital required, the developer will invest the rest. CIL did not disclose the name of the developer citing non-disclosure norms, though it said an Indian developer has been awarded the work.
The Jharkhand CBM block-1 has a resource base of over 26 billion cubic metres (BCM) spread over an area of 27 sq km. Average production capacity has been pegged at 1.3 million metric standard cubic metres per day once the commercial operation kick-starts from 2026. The life span of this methane extraction project has been estimated to be over 25 years, the executive said.
The PSU miner has also floated two global tenders this month to look for developers for two more CBM projects having a combined resource potential of 2.7 BCM. A block at Ranigunj under Eastern Coalfields in West Bengal has 2.2 BCM resource while Sohagpur CBM Block under South Eastern Coalfields in Chhattisgarh has 500 million cubic metres resource of methane.
The CBM produced may be used for city gas distribution or distributed through the GAIL gas pipeline, being commissioned under Urja Ganga project, to potential gas users.