1. New natural gas: How coal-bed methane can benefit SMEs

New natural gas: How coal-bed methane can benefit SMEs

Coal-bed methane (CBM), an unconventional source of natural gas found in coal deposits, is now considered as an alternative source for augmenting India’s energy resources.

Published: August 11, 2017 4:51 AM
natural gas, methane gas, sme, small medium enterprises, small and medium enterprises, natural gas news According to the Directorate General of Hydrocarbons, India has the fifth-largest proven coal reserves in the world and, so, holds significant prospects for exploration and exploitation of CBM. (Reuters)

Coal-bed methane (CBM), an unconventional source of natural gas found in coal deposits, is now considered as an alternative source for augmenting India’s energy resources. According to the Directorate General of Hydrocarbons, India has the fifth-largest proven coal reserves in the world and, so, holds significant prospects for exploration and exploitation of CBM.

Transformation of Raniganj

By using CBM gas as an industrial fuel, the profile of small-scale industries in the Raniganj region of West Bengal has been radically transformed. Of course, the change did not occur easily, or overnight, for that matter. Raniganj, being in the large and growing industrial heartland of the state, has small-scale units that have been using traditional fuels such as coal and fuel oils as feedstock. When CBM was initially made available, most units and industries were apprehensive about using it. However, a small experiment with CBM usage played a major role in changing the scenario completely.

Clean benefits

Highlighting the agenda of Make-in-India, it was made amply clear to the user industries that the thermal output and quality of CBM were far superior to alternative fuels. The latter not only had a larger carbon trail, but were also worsening ambient pollution. Slowly, some small and medium enterprises (SMEs) began using CBM and were pleasantly surprised with the results. Once these benefits became clear to others, they too began using CBM. Soon, productivity levels of all users improved.

Driven by sustained development efforts in the eastern region, new industries began to emerge. Gradually, investments also went up and employment opportunities increased, thereby contributing to the region’s overall economic health.

The convincing argument about CBM being a much cleaner alternative than conventional fuels played a decisive role in the turnaround in sentiment. Most CBM blocks are in remote backward areas and development there is of utmost importance.

Besides environmental considerations, productivity can be increased by small and medium business ventures while shifting to natural gas usage rather than other forms of fuel. For example, various cottage industries spread across north India—in UP, Bihar, Rajasthan and others—can benefit from this shift.

For CBM producers too, the use of natural gas as a fuel by SMEs is a favourable scenario. This is because, in the beginning, CBM production volumes are small. Over the years, production volumes gradually build up. Thus, it is in the interest of all CBM producers to develop the local small-scale consumer base to sustain their initial production targets. Later, as they keep scaling up, more and bigger units can become part of the customer portfolio, but mainly cater to SMEs. Such a calibrated approach also ensures there are no great demand-supply mismatches.

 

National agenda

Moreover, the increasing use of natural gas as a fuel by SMEs will be instrumental in augmenting the overall national goal of developing a gas-based economy. In the recent past, the government has highlighted its desire to increase the share of natural gas in the energy mix. Riding upon Make-in-India, SMEs can play a pivotal role in the national agenda by increasingly using natural gas in meeting domestic manufacturing goals in a clean and productive manner. Such an approach would also be helpful in promoting the country’s climate change agenda.

More exploration, production and use of indigenous hydrocarbon would help the nation cut down its energy imports, saving valuable foreign exchange. The government has brought in new exploration and production policies—Hydrocarbon Exploration and Licensing Policy (HELP) and Open Acreage Licensing Policy (OALP)—which can attract huge investments into India.

Given the right policies in place and that the demand-supply dynamics in the Indian gas market continue to be buoyant—and are likely to remain so for a couple of decades—this is the right time to boost production capacities and supplies across all the CBM-rich regions of the nation.

Prashant Modi

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