The Cabinet Committee on Economic Affairs (CCEA) allowed state-owned Coal India Ltd (CIL) to pump methane gas trapped in coal seams of its existing mines.
The decision by the CCEA would open a new revenue stream for the world's largest coal miner CIL. Further it would help unlock several mines that have remained out of bounds because of the presence of the explosive gas that make mining unsafe.
Currently, rules and regulations prohibit mining firms from extracting CBM during mining as the policy does not allow for simultaneous extraction of methane (CBM) and coal.
CBM extracted by CIL will be priced and marketed as per the government's gas pricing and utilization policy.
At present, only those companies that successfully bid for mines with CBM are allowed to explore and produce such gas. The government has auctioned 33 CBM blocks since 2001.
CIL holds at least 20% of the estimated 60 billion tonnes of coal resources in India. It has several coal mines in eight States, which are estimated to have CBM reserves of 3.5-4 trillion cubic feet.
Coal bed methane (CBM), coalbed gas, or coal mine methane (CMM) is a form of natural gas extracted from coal beds.
It is an unconventional source of energy because methane gas is contained in the coal and does not migrate to other rock strata.
In recent decades it has become an important source of energy in United States, Canada, and other countries. Australia has rich deposits where it is known as coal seam gas.
Coal Bed Methane Policy in India
CBM Policy was the Government of India on 19 July 1997 with an aim to offer the block for the exploration of CBM through open competitive bidding system.
It provides infrastructure status to the exploration and exploitation of CBM.
It asks the contractor to pay royalty at a flat rate of 10% ad valorem as is applicable to natural gas. These amounts will accrue to the State Governments concerned.
The duration of the CBM contract will be for 38 years for blocks located in a normal area and 40 years for blocks in a frontier area.
Government will not have any participating interest. Foreign/Indian companies could have 100% participating interest.
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