New Delhi: Oil and Natural Gas Corp.’s (ONGC) plans to start production this year from its coal-bed methane (CBM) block in Jharkand have suffered a delay of around two years because of problems related to land acquisition.
“We can’t meet our target. We were planning to start production from our Jharia block. There is a huge problem of land acquisition as for one piece of land there are hundreds of owners. There are no clear titles with little support coming from the state government,” said an ONGC executive who did not wish to be identified.
ONGC, which owns a 90% stake in the block—Coal India Ltd holds the balance—was targeting a production of 0.30 billion cubic metres (bcm) from the block in 2007-08.It also planned to increase production to 0.75bcm by 2011-12 and invest Rs950 crore in the project.
“We are hopeful that the production may start somewhere in 2009,” the ONGC executive added. Meanwhile, Great Eastern Energy Corp. (GEECL), a part of the YKM Holdings Group, has already started production at its CBM block at Asansol in Assam.
Ravi Mahajan, partner at accounting firm Ernst & Young, said that the problems ONGC was facing at Jharkand were similar to those that plagued “special economic zones” (SEZs). The Union government was forced to draft new guidelines for land acquisition after its SEZ initiative ran into opposition from farmer groups.
CBM is a viable alternative to natural gas as fuel for power generation and the manufacture of fertilizers and ceramics. It is a gas found in coal seams and India has the sixth largest reserves of coal in the world.
A significant production of CBM could help address the country’s gas shortage.
Demand for gas in the country is currently 179.17 million standard cubic metres ofgas per day (mscmd), while supply lags far behind at at 80.54mscmd.
After the US, Australia and China, India is the fourth country where CBM is expected to be commercially produced. There are no official estimates of CBM reserves in the country.
The government has thus far awarded 26 CBM blocks for exploration. These are spread over 13,600 sq. km and the total CBM resources in these blocks are estimated at 1,374bcm, which translates into a production potential of around 38mscmd.