- [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
[Act 1] Coal mining
|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
C2: Coal sector: Reforms already taken
1. NTPC allotted new blocks
|100%||in power generation, transmission, distribution, trading|
|49%||in power exchanges|
3. CIL signed ~160 fuel supply agreements (FSA).
C3: What is Fuel supply agreement?
- 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
C4: Survey: coal sector Future reforms
- 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)
C5: What is Coal Mining nationalization Bill?
- 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
C6: Budget 2014: coal announcements
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.
C7: Budget 2014: mineral sector reforms
- 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.
[Act 2] Energy: unconventional gases
G1: Basin centered gas
|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.
G2: Hydraulic fracturing technique?
- 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
G3: Shale gas & challenges in its extraction?
- 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)||
G4: Syngas & Underground coal gasification
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
G5: Coal bed methane (CBM)
- 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|
[Act 3] Natural Gas
|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.|
N1: C.Ranagarajan pricing formula
|Imported Gas||Domestic Gas|
||based on Rangarajan formula
N2: Reliance pricing problem
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.
N3: Connection between Natural gas vs fertilizers?
- 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.
N4: NELP Auction
- 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.
N5: NELP-X (Tenth Round)
- 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|
N6: Survey reforms: Natural resource pricing
- 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.
N7: Budget 2014: Natural gas related
- 15,000 km gas pipeline already laid.
- we’ll lay another 15,000km pipeline
- To bring entire country under gas grid.
- finance via PPP
In Energy: unconventional gases pie-chart you have mentioned solar as 4%.
I think it should be >8% as it crosses 2500MW mark or to be exact 2647MW in may-2014; and total renewable is 31000MW; so that makes it 8.5%approx;
To be exact: Wind = 21136MW
Bagasse cogen = 2648MW
Small Hydro = 3803MW
Solar = 2648MW
Biomass = 1365MW
Waste 2 power = 107MW
Hence a query : That we will take bagasse cogen within biomass as i read both under separate headings??
yaar mai aapka article khatm nahi kar pata ………….then i logged in to my gmail………i found 2 more articles there……..aap to modi ji ki bullet train se bhi fast ho……….only 3 words 4 u…….kya baat…….kya baat….kya baat……..tc
BTW…India is the largest producer of Guar Gum!
The name syngas is derived from the use as an
intermediate in generating synthetic natural gas
and to create ammonia or methanol. It is a gas
that can be used to synthesize other chemicals,
hence the name synthesis gas, which was
shortened to syngas. Syngas is also an
intermediate in creating synthetic petroleum to
use as a lubricant or fuel.
thanks.. was wondering why it is called so
mrunal sir …..i m regular reader of ur blog…..it’s awesome……i think widout u I would b unable to complete even a single chapter of economic survey as it is too lengthy and boring…..but u made it simple and easy to understand……
keep up the gud work………
Hydraulic fracturing- Shale oil and gas extraction industries consumes about 90% of guar gum produced from India and Pakistan. -Wikipedia
Could anyone elaborate the kejriwal case regarding nelp?
Generation of Renewable Energy—–
Hello sir , could you please check the percentage of biomass and bagasse
Unaligned Ads not cool !!!
nice work mrunal da !!