India has the third-largest reserves of coal in the world. Therefore, the expectation is that there is also a high potential for coal bed methane (CBM), said Prashant Modi, CEO of Great Eastern Energy Corporation.
The problem so far has been a lack of investor interest, which should now recover due to the new Open Acreage Licensing Policy (OALP) introduced by the government, he said in an interview.
“Generally, the new policy of OALP and HELP (Hydrocarbon Exploration and Licensing Policy) should help,” Mr Modi said. “They have removed the cost recovery structure, which was a big headache. Revenue sharing is much cleaner and simpler. The other major issue that they cleared partially was of pricing and marketing freedom.” “Going forward, if it is market priced, people will invest,” Mr Modi added. “The legacy issues are over. The older fields are anyway depleting. November 15 is the first deadline for the expressions of interest, so let’s see. By end December, they will announce who will get what.”
Mr. Modi said that there has not been a bidding round in CBM since 2010. “The DSF (discovered small fields) bids happened, but I don’t think any of them have progressed up to now,” he added. “From the information I have, many of them are already in the market for sale.” “The reserves will be established once people start exploring,” Mr. Modi said.
“There is a lot of coal in India — it has the third largest reserves in the world. So there is scope for CBM. And if the policy is right, then people will take the risk. There is enough CBM resource according to the government. The issue was that investment was not coming in.”
According to Mr. Modi, Great Eastern Energy Corporation was the first in CBM in India, having started operations in 1993. The company produces 20 million cubic feet of gas per day with 156 wells drilled and ₹1,600 crore invested so far.
He added that given the nature of CBM extraction, the fuel could be a perfect fit for SMEs.
“As compared to conventional oil and gas and shale, where the production is the highest in the beginning and then goes down, in CBM, the production increases gradually till it hits it peak, and so it is best suited for SMEs who require smaller amounts of fuel,” Mr. Modi said.
And, since CBM is a cleaner and more efficient fuel than coal or furnace oil, it could lead to significant efficiency improvements — of as much as 40% — for such companies. Read more