CIL looks into shale gas, coal-bed methane options

Last Updated: Thu, Dec 13, 2012 04:57 hrs

The world's largest coal producer Coal India Ltd (CIL) may diversify into coal-bed methane (CBM) and shale gas.

Amid the turf war between the petroleum ministry and coal ministry over the authority over natural resources like CBM and shale, the Kolkata-based coal major today cautioned that due to practical and safety issues, it does want any other player to do operations in its lease-hold areas.

Though current rules forbid coal miners to venture into CBM, reports suggest that the petroleum ministry has given in-principle approval for a new policy on CBM in coal mining areas.

"In the CBM blocks up for auction, at least 20 per cent of them were coming under CIL's lease-hold areas. We would like to explore it directly and a proposal in this regard has been sent to the Centre in July. A final decision is still pending with the government," said S Narsing Rao, chairman and managing director, CIL.

Rao indicated that the firm will have a similar stand as far as shale gas is concerned, as a third party exploration may lead to more safety issues. The process of hydraulic fracturing or fracking - through which shale is extracted - involves massive pollution of underground water and seismic activity, apart from huge amounts of wasted water in bringing shale gas to the surface. The processing of 1000 million tons of shale may create about 360-370 million tons of solid waste.

"In CBM, if we get a goahead, the marketing and pricing will be applicable to us as per regulatory rules," Rao added. The firm may even be allocated the blocks on a nomination basis. The country is estimated to have 4.6 trillion cubic meters of CBM reserves.

Though CIL had formed a joint venture with ONGC earlier to extract CBM from two of its blocks in Jharia and Ranigunj coal fields, the project did not take a headway in the last three years, with the firms yet to submit a detailed development report. CIL has 26 per cent in JV, while ONGC holds remaining 74 per cent. Earlier this year, a CIL subsidiary Central Mine Planning & Design Institute (CMPDI) had invited expression of interest to develop CBM in its blocks research and development purposes.

Meanwhile, a draft policy on shale gas is expected to come up soon, following which blocks will be identified for auction. Last year, ONGC had succeeded in confirming the presence of shale at Ichhapur in the Burdwan district of West Bengal. The gas, formed from being trapped within shale formations contributes about 17 per cent of the energy needs of countries like the United States.

The state-run coal major had earmarked a capital expenditure plan of Rs 24,500 crore over the next five years.

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