Govt permits CIL to explore natural gas in coal seams

The government has allowed Coal India to produce natural gas (CBM) from coal seams in mining leases it already holds.

Until now, Coal India was allowed to mine only coal from its mines or leases.

The Ministry of Petroleum and Natural Gas in a November 3 order said Coal India and its subsidiaries will be allowed to explore coal-bed methane (CBM) gas in mining leases they possess.

Coal India Ltd (CIL), however, will not be allowed to "alienate CBM lease rights". It can also not involve a third party for CBM exploitation except Central or State PSUs with experience in CBM mining lease.

The majority stake shall remain with Coal India, the order said.

CIL will have to submit within 24 months of the grant of CBM mining lease, a field development plan (FDP) to the Directorate General of Hydrocarbons (DGH) and it would have to start production not later than the projected date in that plan.

It will be liable to pay a penalty of Rs 1 lakh per month for any delay in production after the stated deadline.

The timeline for submission of FDP, which will detail investment as well as production profile, may be extended by 12 months on a case to case basis with sufficient justification but any delay beyond this would attract a penalty of Rs one lakh per month.

While the government has so far awarded 33 blocks for exploration and exploitation of CBM, a majority of the gas bearing areas are under coal mining. There was no policy that allowed for simultaneous production of coal and CBM gas.

CIL holds about 80 per cent of the CBM bearing areas and the move to grant it the rights to explore coal seam gas is aimed at expediting production of gas.

"CBM areas covered under coal mining lease area will be utilised by the lessee (Coal India) in a manner so as to facilitate extraction of CBM prior to coal mining operations or simultaneously with coal mining operations to optimally develop and conserve CBM," the order said.

Coal Bed Methane is methane (natural gas) trapped in coal seams underground. Such gas can be extracted by drilling into the seam.

Coal India will have to comply with all statutory requirements relating to environment and safety.

"Mining lease for CBM operations in respect of such blocks/areas will be granted by the Ministry of Petroleum and Natural (MoPNG) under the provisions of Oilfields (Regulation & Development) Act 1948 and Petroleum and Natural Gas rules 1959 and CBM operations will be governed under the provisions of these enactments," the order said.