Business Today: Policy flip-flop halts Indian CBM industry in its tracks

Five years ago, Prashant Modi, President of Great Eastern Energy Corporation (GEECL), announced that his company had begun to extract coal bed methane (CBM) from its Raniganj (South) block in West Bengal. It was a small find, but a giant step forward in harnessing a source of energy that was hitherto untapped in India. Methane is the main energy source in natural gas and CBM is simply methane found in coal beds. Many countries have been using it for years to meet their energy needs. The Raniganj find promised to drive more such discoveries across India, and ultimately ease the country's energy burden. According to the Directorate General of Hydrocarbons, India is estimated to have around 4.6 trillion cubic meters (168 trillion cubic feet) of CBM reserves. One TCF of natural gas is enough to generate about 100 billion kilowatt hours of electricity. Suddenly, CBM was the next big thing for India's energy sector.

Cut to 2012, however, and the picture is dismal. Of 33 CBM blocks allocated, only one is producing gas. There have been discoveries in three others but commercial production has been delayed over pricing of the gas. The rest have either been relinquished because of technical and land acquisition issues or are awaiting clearance and are yet to commence exploration. As things stand, only 0.24 mmscmd (million metric standard cubic metres per day) of CBM is being produced today, from one block. One mmscmd can fire a 220 megawatt power plant for a day. MORE