State-owned Coal India Limited said on Monday that its subsidiary Bharat Coking Coal has signed a contract worth Rs 1.88 billion with Prabha Energy for the commercial extraction of coalbed methane.
Coal Bed Methane (CBM) is an unconventional form of natural gas found in coal deposits or coal seams.
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“Bharat Coking Coal Limited (BCCL) signed a first-of-its-kind revenue sharing contract worth a tentative Rs 1,880 million for commercial coal bed methane mining with CBM developer Prabha Energy Private Limited on Monday, selected through a global bidding process, “Coal India (CIL) said in a statement.
CBM would be mined from Jharia Block I under the BCCL leasing area.
While BCCL would be contributing around Rs 370 crore towards the cost of the land, the rest will be paid by the CBM developer.
CIL has assigned CMPDI, its Ranchi-based consulting arm, as the lead executing agency to oversee the project.
The president of CIL, Pramod Agrawal, and the director (technical) of the company, Binay Dayal, were virtually present during the signing of the contract.
“This is an important development and with this CIL would be entering a new era of CBM mining alone in its leasing area,” CIL said.
Spread over an area of approximately 27 square kilometers, Jharia CBM Block-I has a resource of around 25 billion cubic meters (BCM). Average production capacity is set at 1.3 million metric standard cubic meters per day once commercial operation begins.
The project is scheduled in three phases. The first exploration phase lasts for two years from the signing of the contract followed by the three-year pilot phase. Thereafter, the production phase is 30 years.
With the vast experience that the CBM developer has, CIL is hopeful that the first two phases will be completed ahead of schedule and production will begin ahead of schedule.
CBM extraction is part of CIL’s diversification portfolio under clean coal initiatives.
Taking advantage of CBM has a double advantage. Methane has energy potential and the captured gas can be used for many commercial uses. GAIL is working on the commissioning of the gas pipeline in eastern India under the URJA Ganga project. The produced CBM can be used for city gas distribution or through pipelines for potential users.
Furthermore, methane is a potent greenhouse gas with a global warming potential greater than 25-28 times compared to Co2 and is of concern for mine safety and the environment. Removing fugitive methane gas from UG coal mines and using it in a cost-effective and practical way can improve mine safety, productivity, increase revenue, and reduce GHG emissions.
CIL represents more than 80 percent of the national coal production.