Govt mulls new pricing formula for coal-bed methane

The government is looking at a new pricing regime for coal-bed methane (CBM) to help monetise the clean energy source lying below coal seams, Oil Minister Dharmendra Pradhan said today.
Producing gas trapped below coal seams (CBM) considered uneconomical at current gas price of USD 4.24 per million British thermal unit considering that such an exploitation requires a huge number of well to be drilled and per well output is very low.
"A pricing mechanism needs to be looked at (for boosting CBM production)," he said at a seminar on CBM here.
India has prognosticated CBM resource of 63 trillion cubic feet, of which 10 Tcf has been established. "After 20 years, CBM production is only 1 million standard cubic meters per day (mmscmd), constituting only 1 per cent of total natural gas production," Oil Secretary K D Tripathi said.

Pradhan said the endeavour is to bring a comprehensive and holistic policy that will help boost CBM production.
Private firms like Essar Oil say pricing is inadequate and public sector companies like ONGC too in muted voices say the same thing, he said.

"The policy will be brought after stakeholder consultations," he said adding the operators will have to assure that they will increase production as well as bring in technology.
He however did not give details of the policy nor a timeframe for bringing it.
"Affordability of consumers will have to be kept in mind while framing such a policy," he said.

The Government has so far awarded 33 CBM blocks in four rounds of auctions. Of these, 13 blocks have either been relinquished or offered to be relinquished due to poor CBM prospectivity.
Great Eastern Energy Co Ltd (GEECL) has begun production from Raniganj (South) block in West Bengal and is currently producing about 1 million standard cubic metres per day, while state-owned Oil and Natural Gas Corp (ONGC) has entered the development phase in four blocks, including Raniganj (North).
Reliance Industries (RIL) has entered the development phase in its Sohagpur East and West CBM blocks in Madhya Pradesh, while Essar Oil has done the same in case of RG(E)-CBM-2001/1 block in West Bengal.

Tripathi said the problems faced by CBM operators including land acquisition and overlapping of CBM resource with coal reserves.
Pradhan said unlike past when different arms of the government acted at cross-purpose, the present regime has started to sort out overlapping and other issues.
Coal India Ltd has been allowed to explore and produce CBM in their coal fields, he added.