The Hindu Business Line : CIL sets its sights on coal gas

THE conventional method of exploiting coal reserves is set to change in the coming years as State-owned Coal India Ltd (CIL) is keen on producing natural gas from coal instead of producing only raw coal.

Though the Coal Ministry has directed CIL to produce at least 62 million tonnes of raw coal over and above its 11th Plan (2011-2012) target of 445 mt, the company is considering achieving the target by producing coal gas and substituting a part of the additional raw coal production target.

Sources feel that coal gas will give CIL a better return on investment compared to the conventional method of mining. Moreover, coal gas will be an environment-friendly premium fuel for all segments of consumers.

In fact, CIL has evinced interest in the coal gas business after GAIL (India) and ONGC approached it to exploit gas from virgin coal blocks by introducing "underground coal gasification" technology. Both GAIL and ONGC have separately submitted proposals to CIL for undertaking such activities in a joint venture. A board-level CIL source said the proposals would be placed before the company's next board meet.

With a vast proven reserve of coal, the country has the potential to change the fuel mix in favour of natural gas, which could lead to substantial fuel savings for the power and fertiliser sectors.

CIL, along with ONGC, has already started exploring the possibility of commercial exploitation of natural gas from coal bed methane (CBM).

A model CBM project, with UNDP aid, is being set up at the Munidih coal mine of Bharat Coking Coal Ltd. Incidentally, a few virgin coal blocks have been allotted to Reliance Industries and the Essar group for CBM-exploitation purposes.

If CBM exploitation is essentially a pre-mine activity, the concept of underground coal gasification is entirely a new one with a much larger dimension.

Here, there is no need to develop a virgin mine. Coal is simply burnt inside the deposit to produce coal gas.

It is felt that this would be a "win-win" situation for CIL and GAIL or ONGC if some virgin coal blocks under CIL were taken up for underground coal gasification purposes through the joint venture route.