- [Act 1] Coal mining
- [Act 2] Energy: unconventional gases
- [Act 3] Natural Gas
Economic Survey Ch11. Energy, Infrastructure and Communications. Total five subparts
- Energy: Coal, Shale Gas, CBM, Natural gas
- Petrol, Diesel, Clean Energy & Tele-Communication
- Roads, Industrial corridors, PPP, Infrastructure problems & reforms
- Shipping, aviation
- Railways infrastructure
|majority of Indian mines||majority of Chinese mines|
|from open ground / aka Strip mining||via tunnel|
|cheaper cost||expensive because needs Ventilation, safety measures|
|more environment damage||less|
Ranking: top users of coal
- Thermal Power plants
- Brick-Ceramic, unorganized small scale
Survey points: Why coal shortage in India?
- Environment Clearance
- Cyclone Phailin
- declined coal supply from Talcher, Odisha
- Rourkela (SAIL); Angul (Jindal) = Steel production affected.
- Labour strike in Odisha
1. NTPC allotted new blocks
|100%||in power generation, transmission, distribution, trading|
|49%||in power exchanges|
3. CIL signed ~160 fuel supply agreements (FSA).
- Signed between coal India (CIL) and power plants
- Guarantees 20 years coal supply to the powerplant.
- If coal India fails to supply minimum 80%, then penalty.
- Coal India will have to Import if it faces domestic coal shortage. (no penalty, if customer rejects imported coal)
- 160 agreements signed. Target: ~78,000 MW worth coal supply
- Improve 3 critical railway lines- Jharkhand, Odisha, Chhattisgarh
- Make clearcut guidelines on Environment clearances + rehabilitation
- Revamp coal-mining policy:
- Revamp Coal India ltd. and its 8 subsidiaries as per TL Shankar Committee’s recommendations.
- Only allow large companies to enter Coal Mining business. Because they have deep pockets to comply with Environment protection requirements. Smaller companies try to cut corners or evade taxes.
- Remove administered pricing for coal.
- Pass Coal Regulatory Authority Bill, 2013. (but lapsed)
- Pass Coal mines nationalization bill. (pend. in RS since 2000)
- Original act in 1973- It prohibits private companies from mining and selling coal.
- Exemption given to captive mining i.e. thermal powerplant, steel companies themselves mining coal for as “raw material”.
- Result? Coal mining sector doesn’t attract foreign investment.
- 2000: New bill wants to permit all private companies from mining coal. Pending in Rajya Sabha
Clean Energy cess
- Levied on coal, peat and lignite
- to finance clean energy projects and research
Budget 2014 Increased this cess
|Rs.50/tonne||Rs.100 / tonne|
- promised full coal for all power plants setup by 2015
- Rail road connectivity between coal mines and power plants
- Will invest in “Ultra- Modern Super Critical Coal Power Technology”- to coal consumption and CO2 emission
related topic: UMPP
- UMPP= coal-based supercritical Ultra Mega Power Projects (UMPP)
- Who? Ministry of Power
|Mundra||Gujarat. Fully working|
|Tilaiya||Jharkhand will finish in 13th FYP|
- Budget 2014 promised to Setup more coal washeries.
- Coal from mines- contains dirt + incombustible material
- This increases weight, transport cost. More smoke & pollution when burned.
- Coal washing removes these impurities and useless material.
- Hence it is one type of “Clean coal technology.
- We’ll amend the Mines and Mineral Development act 1957. To sort out the problem areas in Environment clearance, land acquisition and royalties/ profit sharing
- Royalty revision is done every three years. Last time in 2009.
- 2014: we’ll revise it again, will give more royalties to states.
|Conventional gas||Unconventional gas|
|Ex. Natural gas||Ex. Tight sands gas, coal bed methane, shale gas|
|medium to high permeability reservoirs||Reservoirs are impermeable|
|The reservoirs have natural fractures||don’t have|
|Small in volume but easy to drill||High volume but difficult to drill|
Basin centered gas (Survey)
- one type of unconventional gas
- also called “tight gas sands”
- In the deeper parts of sedimentary basin.
- Their Reservoir has no Nature fractures, have to use hydraulic fracturing technique to extract gas.
- technique employed to extract gas from reservoirs without natural fractures
- drilling=> special fluid pumped
- fluid contains water + sand + chemicals
- This pumping creates fractures in the basin.
- Gas migrates into the well.
- 15% of US Gas production via Hydraulic fracturing technique
- India doing trials since 2010
- Colourless, odourless, lighter than air.
- just like Coalbed methane locked in coal seams, … , Shale gas is a Natural gas trapped within shale rock formations in sedimentary basins.
- India locations: Cambay, Gondwana, Krishna-Godawari onland, and Cauvery.
- ONGC, OIL, GAIL exploring these sites.
- Subject falls under Director General of Hydrocarbans (DGH)
- MoU between USA, and India for technical knowledge sharing
Why shale gas not a priority in India?
- Difficult to store and transport
- Shale gas too requires hydraulic fracking method for extraction. Therefore creates following problems
|Hydraulic Fracking Needs||India’s problem|
|Large Water Supply|
|Guar Gum (Fluid Viscosity Agent)|
What is underground coal gasification method?
- Underground coal gasification is a method to extract gas from deep, unrecoverable coal reserves, where manual (labour) mining is impossible or costly.
- They dig two wells
- injection well: water+oxygen+gasification agent pumped from here
- production well: synthetic gas (syngas) comes out from here
What’re the Benefits of underground coal gasification?
- Syngas can be used in manufacturing hydrogen & fertilizers.
- Sulphur, mercury, arsenic, tar, ash etc. byproducts remain underground = less pollution.
- needs less water than conventional mining and hydraulic fracking
- CBM = Methane found in coal seams
- results from two sources (1) organic / microbial action (2) geothermal heating of coal
- India has 4th largest reserve of CBM in the world. at present hardly 10% of the reserves are exploited.
- 1997: Government announced CBM policy. awarded 33 blocks so far.
- This policy doesn’t allow simultaneous exploration of coal and CBM. Reason?
- CBM highly explosive. Requires additional safety measures.
- Therefore, CBM has to be extracted first, and once well is exhausted, then coal mining can begin.
- C.Ranagarajan’s gas pricing formula applies to Coal bed methane as well.
|Dhanbad||1st ever commercial extraction of CBM in India|
|Sohagpur, Madhya Pradesh||Reliance|
|Assertion||In 12th FYP, India’s dependence on coal has increased higher than expected.|
|reason||There has been a sharp deceleration in the production of natural gas|
|correct answer||Both correct, R explains A, because Economic survey says so.|
|Imported Gas||Domestic Gas|
|based on Rangarajan formula|
Reliance KG-D6 BASIN (Mukesh Ambani)
Mill. Metric British thermal unit (MMBTU)
|existing price||Rangarajan price|
This Rangarajan formula based price was to be effective from June 2014. But Government had to postpone it for another three months, because of following Criticism
- RIL wantonly reduced production to blackmail Government into raising the gas prices
- Fertilizer industry’s input cost will increase => Government’s fertilizer subsidy bill will also increase.
- Natural gas contains methane
- Methane + Oxygen+Nitrogen+Catalyst=> Ammonia (using Hyber Process)
- This Ammonia is used in production of Urea, Nitro-fertilizers.
- Therefore, shortage of natural gas affects fertilizer industries as well.
- As per the Constitution – Union government owns all the hydrocarbon resources of India
- Therefore, only union can ‘auction’ the exploration rights of hydrocarbons.
- 1997: Government designed New Exploration Licensing Policy (NELP).
- 1999: auctions started under NELP policy. So far 9 rounds done.
- ~150 blocks in operation, per day ~7000 barrels of oil + ~14 million m3 gas produced.
Who gets gas from NELP blocks?
Government has arranged this priority order:
- Fertilizer plants
- LPG plants
- Power plants
- City Gas Distribution (CGD)
- Earlier 80% of their requirement fulfill by NELP gas. Remaining 20% they had to import.
- Feb 2014: 100% demanded fulfilled by NELP gas. (After Kejriwal case in SC)
- Steel, petrochemicals, refinery etc.
- 2014: 10th Round- but delayed due to two reasons
- General elections- model code of conduct
- Difference of opinion about pricing mechanism.
- It’ll provide “Uniform Licensing Policy regime” i.e. company can explore Oil, gas, coal-bed methane, shale gas- all of them within the given area. No need obtain separate license for each hydrocarbon product.
|profit sharing||production linked|
|first contractor recovers investment, then begins paying the Government||Contract must begin paying Government as soon as production starts.|
|NELP-X likely to be under this mechanism|
- Private players should be allowed to sell energy / mineral resources at world price parity.
- Otherwise, this sector will not receive the necessary investment.
- Under NELP blocks, Private Player faces two risks (1) what if nothing is found (2) fluctuation in world prices of energy resources.
- Therefore, Survey recommends “percentage revenue sharing formula”. This way, private players’ risk will be minimized.
- 15,000 km gas pipeline already laid.
- we’ll lay another 15,000km pipeline
- To bring entire country under gas grid.
- finance via PPP