Coal Bed Methane in India

Industry Information Insights 2014

 Table of Contents
Background

Introduction

CBM Policy

CBM Rounds

Present Status

Production from CBM Blocks

 Background
The Ministry of Coal has made CMPDI (Central Mine Planning & Design Institute) nodal
agency for development of CMM in India. CMPDI has successfully implemented a CMM
demonstration project at Moonidih mine of Bharat Coking Coal Ltd. (BCCL), funded by
GoI/UNDP/GEF. Successful implementation of the project has proved the efficacy of the
technology of CMM extraction and its utilization in Indian geo-mining conditions.

Based on success of the demonstration project, India has taken steps for identification of
prospective areas for development of CMM projects and coal fields characterized by
occurrence of multi-seams of high rank coals which were considered potential areas for CMM
development.
 Introduction
Coal Bed Methane

Coal Bed Methane is a natural gas (methane) absorbed in coal and lignite seams. It is one of
the eco-friendly sources of energy. To harness this potential source of energy, the Government
of India approved comprehensive CBM policy for exploration and production of CBM gas in
July 1997.

Till date, 33 CBM contracts have been signed for exploration of CBM gas. 30 CBM blocks have
been awarded through international competitive bidding in four rounds of CBM Policy. Two
blocks were awarded on nomination basis and one block through FIPB route.
 CBM Policy
To facilitate development of CBM, the Government of India formulated CBM Policy in 1997.
The highlights of the policy are:

Blocks to be awarded through open international competitive bidding system

No participating interest of the Government
No upfront payment, No signature bonus
Exemption from payment of customs duty on imports required for CBM operation
Freedom to sell gas in the domestic market
A seven years tax holiday
10% royalty payable to the state government
 CBM - I
In May 2001, for the first time in India, Government offered 7 blocks under 1st round of CBM
bidding, out of which 5 blocks were awarded and contracts were signed. Contracts for
another 3 blocks awarded on nomination basis were also executed.

Block Name State Operator

RG(E)--CBM~2001/l West Bengal Essar Oil
BK-CBM-2001/1 Jharkhand ONGC
NK-CBM-2001/1 Jharkhand ONGC
SP(E)-CBM-2001/I Madhya Pradesh RIL
SP(W)-CBM-2001/l Madhya Pradesh RIL
 CBM - II
Under 2nd round of CBM bidding, 9 blocks were offered through international competitive
bidding in May 2003. A total of 14 bids were received for 8 out of 9 blocks offered. Contracts
for these 8 awarded blocks were signed in June 2004.

Block Name State Operator

SK-CBM-2003/II Jharkhand ONGC
NK-(W)-CBM-2003/Il Jharkhand ONGC
ST-CBM-2003/II Madhya Pradesh ONGC
SH(N)-CBM-2003/II Chattisgarh RIL
BS(l)CBM-2003/II Rajasthan RIL
BS(2)-CBM-2003/II Rajasthan RIL
WD-CBM-2003/II Mahashtra ONGC
BS(3)-CBM-2003/II Gujarat ONGC
 CBM - III
International competitive bids were invited by the Government of India for 10 CBM blocks
under 3rd round of CBM bidding in 2006. For the first time major foreign E&P companies
participated. A total of 54 bids were received for all the 10 blocks, from 26 companies
including 8 foreign and 18 Indian companies. Multiple bids were received for all the 10
blocks.
Block Name State Operator
BB-CBM-2005/III West Bengal BPE
RM-CBM-2005/III Jharkhand Arrow
SP(N)-CBM-2005/III Madhya Pradesh GEO-PETROL
SR-CBM-2005/III Madhya Pradesh Coal Gas
TR-CBM-2005/III Chattisgarh Arrow
MR-CBM-2005/III Chattisgarh Arrow
BS(4)-CBM-2005/III Rajasthan GEO-PETROL
BS(5)-CBM-2005/III Rajasthan GEO-PETROL
KG-(E)-CBM-2005/III Andhra Pardesh GEO-PETROL
GV(N)-CBM-2005/III Andhra Pardesh Coal Gas PETROL
 CBM - IV
The fourth bid round of Coal Bed Methane Policy was launched in April, 2009. 10 blocks
covering an area of about 5000 Sq. Km. were offered in CBM-IV. 27 bids were received for 8
blocks under CBM-IV.

Out of eight blocks, multiple bids were received in respect of 7 Blocks and single bid was
received in respect of Block SR(W)-CBM-2008/IV in Madhya Pradesh. No bids were received
in respect of two CBM Blocks located in Wardha Coalfield of Maharashtra.

Block Name State Operator

RM(E)-CBM-2008/1V Jharkhand Essar Oil Limited
TL-CBM-2008/IV Odisha Essar Oil Limited
IB-CBM-2008/IV Odisha Essar Oil Limited
SP(ME)-CBM-2008/IV Madhya Pradesh Essar Oil Limited
ST-CBM-2008/IV Madhya Pradesh Dart Energy - Tata Power
AS-CBM-2008AV Assam Dart Energy - Oil India
MG-CBM-2008/IV Tamil Nadu GEECL
 CBM - IV
Under 4th round of CBM bidding, 10 blocks were put on offer through international
competitive bidding. A total of 27 bids were received for 8 blocks from 19 companies
including 3 foreign companies.

These bids were opened on 12 October, 2009. Deep Ch IV Pvt. Ltd. turned out to be
provisional winner for 7 out of 8 blocks in consortium with different partners. The remaining
1 block was awarded to Essar Oil Limited.

However, after evaluation, ECS rejected all the bids submitted by Deep as it did not furnish
essential documents along with the bids within the bid submission date.

Accordingly, the blocks were awarded to the second rank bidder. Out of the 7 blocks, 4 were
awarded to Essar Oil, 1 block to GEECL and the remaining 2 blocks to Arrow Energy in
consortium with OIL and TPCL. The contracts for all the seven blocks were signed on 29 July,
2010.
 Present Status of CBM
Blocks Awarded

A total of 33 CBM blocks have been awarded so far, out of which 3 blocks have been
relinquished by the contractors, citing poor prospects.

Under CBM-II Round held during 2004, ONGC was awarded 5 CBM blocks. Out of these,
ONGC has relinquished 3 blocks, namely ST-CBM-2003/II, WD-CBM-2003/II and BS(3)-CBM-
2003/II, on the ground of poor prospectivity, after completing the Minimum Work
Programme (MWP) of drilling coreholes/test wells under Exploration Phase-I.

CBM Reserves

CBM reserve of 9.12 Trillion Cubic Feet (TCF) has been established in 6 CBM blocks in the
states of West Bengal (2), Jharkhand (2) and Madhya Pradesh (2).

Two CBM blocks in West Bengal, operated by ONGC (Oil & Natural Gas Corporation Ltd.)
and EOL (Essar Oil Ltd.), are under exploration phase.
 CBM Production
Commercial production of coal bed methane (CBM) in India started from 14 July, 2007 from
Raniganj (South) block in West Bengal operated by Great Eastern Energy Corporation Ltd.
(GEECL).

Presently CBM gas is being produced by 3 Operators - Great Eastern Energy Corporation
Limited (GEECL), Essar Oil Ltd. and Oil & Natural Gas Corporation (ONGC) from Raniganj
South, Raniganj East and Jharia CBM blocks respectively. Reliance Industries Ltd. (RIL) plans
to start production of natural gas from Sohagpur CBM block in Madhya Pradesh from 2015-
16.

Year CBM Production (MMSCM)

2007-08 14.25
2008-09 13.103
2009-10 38.402
2010-11 41.362
2011-12 84.191
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