Ahmedabad: Six years after it was conceived, India’s first underground coal gasification project has remained a non-starter for lack of approval from the coal ministry for its pilot run at Vastan, near Surat in Gujarat, officials familiar with the situation said.
The project was to be jointly developed by Oil and Natural Gas Corp. Ltd (ONGC) and Gujarat Industries Power Corp. Ltd (GIPCL).
Underground coal gasification is a method of converting coal still in the ground into a combustible gas that can be used for industrial heating, power generation or the manufacture of hydrogen, synthetic natural gas or diesel fuel. The process allows the utilization of otherwise unrecoverable coal deposits in an “economically viable and environmentally safe way”, according to the World Coal Association website.
A senior coal ministry official said work is under way on a new policy for allocation of coal blocks for gasification and approval for the pilot would be given only after the policy is put in place.
The ministry has been caught in a controversy over coal block allocations after government auditor Comptroller and Auditor General of India said in a report released last month that the exchequer had suffered a loss of Rs.1.86 trillion because of irregularities in the allocations.
The coal gasification project, on an experimental basis, was planned in 2006 and was aimed at increasing the energy security of the country by producing cheaper gas from coal or lignite resources that cannot be easily tapped using conventional mining technologies, beyond a depth of 150 to 200 metres.
Countries such as Australia, South Africa, Canada, China and New Zealand have successfully rolled out such pilot projects.
ONGC and GIPCL have been ready to run the pilot for the past two years, having secured approvals including environmental clearances, but the project has been stuck for lack of permission from the coal ministry to mine the Vastan lignite block near Surat, said two senior ONGC officials and one top GIPCL official, on condition of anonymity.
ONGC entered into a technical collaboration with Russia’s Skochinsky Institute of Mining in 2004 for underground coal gasification in India. GIPCL, which owns the Vastan lignite block, applied to the coal ministry for a mining lease way back in 2006.
The equal joint venture aims to tap 30 million tonnes of lignite and convert it into synthetic gas, enough to fire a 100 megawatts (MW) power plant for a period of 25-30 years, said a senior official of ONGC involved in the project. So far, ONGC and GIPCL have spent in excess of Rs.20 crore on the project.
If the cost of setting up a coal-fired power project is Rs.5-6 crore a MW, in the case of underground coal gasification it would be as low as Rs.3-4 crore per MW, he said. After the pilot project, ONGC and GIPCL had aimed at going commercial by producing gas that would be enough to fuel a 300-400 MW power plant.
Even if 5% of un-mineable coal and lignite reserves of India is converted to gas using UCG technology, there is a potential to produce 2.6 trillion cu. m equivalent of natural gas, the ONGC official said.
ONGC, while drilling for hydrocarbons, discovered large reserves of coal/lignite at depths of more than 600 meters which could be exploited through coal gasification technology. Even if a fraction of it is realized, it can go a long way in meeting India’s energy requirements.
Such coal reserves are estimated to be around 63 billion tonnes in the Mehsana-Ahmedabad block and 60 billion tonnes in Patan-Tharad block—both in Gujarat. The Mehsana-Ahmedabad block alone is estimated to contain 15,000 billion cu. m of natural gas which is more than 70 times the free gas reserves of ONGC.
“We met officials from the ministry of coal three months ago. They have verbally communicated that we will soon get the mining lease but we are yet to receive any official communication,” said the senior GIPCL official.
According to the last recorded minutes of a review meeting for the project held on 24 August 2011, “…It was agreed that entire block of 23 sq. km only be considered for allotment since successful carrying out of pilot project provide scope for initiating expansion by GIPCL without need for approaching ministry of coal once again. ...” The minutes do not mention any policy changes.
The meeting was chaired by A.K. Bhalla, joint secretary in the coal ministry, and attended by representatives of ONGC, GIPCL and Neyveli Lignite Corp. Ltd.
“We are now framing guidelines for allocation of underground blocks and have hired an independent agency to work out a methodology which would include details like block size, calorific value of the mineral, etc,” Bhalla said.
Once this is done, the mining lease rights would be given to GIPCL and ONGC, he said, but declined to specify a time frame for the new policy to be put in place.
ONGC has also entered into an agreement with Neyveli Lignite and Coal India Ltd for developing and applying underground coal gasification technology in various parts of India including Rajasthan and Madhya Pradesh.
In 2007, the Gujarat Mineral Development Corp. said in a stock exchange filing that it had entered into a joint venture with Reliance Industries Ltd for a Rs.5,000 crore coal gasification project in Gujarat in which Gujarat Mineral would have a 51% equity stake and Reliance Industries the balance 49%. “Not much headway has been made in the project so far,” said a Gujarat Mineral official who did not want to be named. An official in Reliance Industries who was aware of the development confirmed that there had been little progress on the project.