Essar Oil, Lanco, Adani bid for Coal India's underground gasification projects

Pratim Ranjan Bose Kolkata | Updated on April 11, 2011

CIL’s earlier attempt at underground gasification could not achieve pilot production.

Private sector energy majors Essar Oil, Essel Mining, Lanco Infratech, Adani Enterprises and four other companies have submitted bids to Coal India Ltd for participation in the underground coal gasification (UCG) projects at the Kaitha and Thesgora coal blocks in Jharkhand and Maharashtra respectively. The projects are spearheaded by CIL's R&D wing, the Central Mine Planning and Design Institute Ltd in Ranchi.

According to sources, the technical evaluation of the bids is currently underway and the commercial bids are expected to be opened in mid-May. The bidding process for the projects closed in March.

Of the two blocks, Thesgora is regionally explored and has a prognostic reserve of 187 million tonnes. Kaitha is unexplored and has a reserve of 166 mt of coal.

UCG projects are undertaken in assets having rich resources but considered technically difficult to mine — to produce Syngas through the in-situ gasification process by injecting oxidants in the coal seams.

Syngas gas is a mixture of carbon-monoxide, hydrogen and carbon-dioxide. It has a lesser energy density than natural gas and is used as a fuel source or feedstock for the production of other chemicals. Though not introduced in India so far, the process is in application in industrialised countries.

Project details

According to sources, CIL has structured the projects in three phases — exploration (two years), pilot assessment (three years) and commercial production (25 years).

On the lines of NELP bidding, CIL has outlined a minimum work programme (MWP) for the selected operator in the exploratory and pilot phases. The prospective bidder has to promise the minimum guaranteed investments in each phase and the share of the proposed production of gas.

If technically eligible, the bidder promising the maximum investment in each phase and proposing to take the lowest share of production will get the project.

Similar to NELP, the selected operator may exit in the early phases but only after completing the MWP or sacrificing the guaranteed amount. “The preliminary assessment of the potential production and investment required may only be known on completion of the pilot project,” a source told Business Line, adding the exploration phase would require an investment of Rs 30-40 crore by the selected operator.

While CIL has no financial commitment in the projects, it will offer the coal block as equity and will also be responsible for availing of the environmental clearances.

The company, however, may enter into JVs with the operator for creating marketing infrastructure if the project reaches the production stage.

Bids submitted

According to sources, the Kaitha block at Ramgarh close to Ranchi has received bids from Essar Oil, Essel Mining, Lanco Infratech, Adani Enterprises, Corporate Ispat Alloys (Nagpur), Aryan Coke Beneficiation (Gurgaon), Global UCG (Gurgaon) and Sainik Mining. Except for Global and Essel, all the others have also submitted bids for Thesgora.

CIL attempted UCG in collaboration with the Russians in 1985 at a deep lignite deposit at Merta Road in Gujarat.

However, pilot production could not be initiated due to environmental concerns.

Published on April 11, 2011

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