KOLKATA (miningweekly.com) – State-owned Coal India Limited (CIL) has earmarked $462-million for its foray into exploration and production of coalbed methane (CBM), following government’s announcement that it will relax rules to allow the company to exploit the resource.

Though plans are yet to be finalised, sources have said that the initial investment would possibly ride on two coal blocks in the eastern Indian province of Jharkhand, recently allocated under the preferential nomination basis to CIL subsidiary Bharat Coking Coal Limited (BCCL).

The sources said that as per a roadmap for its foray into CBM production, CIL would shortly float a tender for appointed of a foreign consultant mandated to prepare a techno-economic feasibility report on a future CBM business plan.

The consultant’s report would be based on an already completed ‘study’ prepared by Central Mine Planning and Development Institute (CMPDIL), the in-house consultancy arm of CIL.

CIL would also start scouting for a global technology supplier cum investment partner to undertake CBM production projects through joint venture companies, as reported earlier by Mining Weekly Online.

Besides the two blocks under BCCL with an estimated gas reserves of 25-billion cubic meters, CIL could also look at exploration and development projects at one coal block at Jharia coalfields under Eastern Coalfields Limited, another wholly owned subsidiary of CIL with estimated gas reserves of three-billion cubic meters.

The final configuration and choice of blocks to be developed would be taken based on the techno-economic feasibility report to be prepared by the chosen foreign consultant, the sources added.

Last week, the Indian government’s apex policy making body, the Cabinet Committee for Economic Affairs, relaxed rules for CIL to develop CBM from coal blocks held by its various subsidiaries without having to go by rules pertaining to petroleum and natural gas.

In 2015, CIL was granted the freedom to explore and develop CBM from coal blocks, but its foray into natural gas was caught in a limbo by rules pertaining to petroleum and natural gas that stipulate that the miner has to apply for a fresh mining lease to extract CBM on a coal block. Under the revised rules, the government miner will not have to seek a new mining lease from the Petroleum and Natural Gas Ministry for exploration and production of CBM.

Even though these are early days of project implementation, CIL officials are already looking at options for captive users of the gas to be produced. The officials said that one of the best options would be to supply gas to a defunct production facility that CIL is reviving and the balance to steel plants that are looking to reduce dependency on imported coking coal.