Coal India to start producing CBM from Jharkhand block

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.

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.