The Directorate General of Hydrocarbons (DGH), established under the administrative control of the Ministry of Petroleum and Natural Gas, has commenced a new round of sale for coal bed methane (CBM) blocks through international competitive bidding.
CBM is a form of natural gas generated during the process of coalification and adsorbed into the solid matrix of the coal. It is classified as unconventional source of natural gas owing to its nature of occurrence. The sale has been initiated under ‘Special CBM Bid Round-2022’ for 16 CBM blocks that are spread over Madhya Pradesh (4), Chhattisgarh, Telangana (3 each), Maharashtra, Odisha (2 each), Jharkhand and West Bengal (1 each).
These blocks cover an area of 5,817 square kilometers (km) and possess CBM resource of around 500 billion cubic meter (BCM).
The bid evaluation criteria involves proposed count of core holes and test wells along with the revenue share quoted by the bidder in case of blocks falling under the category-I basin that have proven reserves and are already producing. On the other hand, for blocks falling under the category-II basin which have contingent resources and pending commercial production, bid criteria excludes the revenue sharing part.
Other salient features of the sales include marketing and pricing freedom, single licence to cover both conventional and unconventional hydrocarbon resources, availability of gas pipeline infrastructure and extensive access for exploration activity throughout the contract period.
Overview of CBM block sales
The government had formulated CBM policy in 1997 in order to augment natural gas production. This was supported by the fact that the country has the fifth largest proven coal reserves in the world and thus holds significant prospects for CBM exploration.
Accordingly, CBM blocks were carved out by the DGH in close interaction with the Ministry of Coal (MoC) and the Central Mine Planning and Design Institute (CMPDI). Till date, four rounds of CBM bidding rounds have been carried out, resulting in awarding 33 CBM blocks that cover 16,598 square km out of the total available coal bearing areas for CBM exploration of 26,000 square km.
Currently, commercial production has begun at Raniganj South, Raniganj East, Sohagpur West and Bokaro blocks. In addition, incidental CBM gas is being produced during testing of CBM wells in Jharia and Sohagpur East.
Up to FY21, cumulative CBM production has reached 4,385 million standard cubic meters (MMSCM), as per data provided by the DGH.
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