ONGC Signs MoU with Coal India for Underground Coal Gasification

ONGC entered into a Memorandum of Understanding (MoU) with Coal India Ltd. (CIL) for active association in Underground Coal Gasification (UCG).

Both ONGC and Coal India will have equal (50:50) participation both in terms of investments and benefits. This collaboration effort proposes the pilot projects to prove the potentialities of the process of UCG which is expected to culminate in to establishment of UCG stations by 2009.

The site for such pilot project(s) will be selected jointly by both CIL and ONGC (from among 15 short-listed sites all over India) in consultations with the technical expert (Skochinsky Institute of Mining of Russia) based on the suitability on various considerations including coal quality, area and environmental aspects. The estimated investment in one UCG station is around US$ 15.32 million (more than Rs. 75 Crore), excluding the cost of power plant would cost around Rs. 600 Crore.

Underground Coal Gasification (UCG) is an alternative and supplementary energy source, which assumes importance in view of enormous coal resources of India. India is richly endowed with coal reserves (India has 10 per cent of global Coal reserves, compared to less than 0.5 per cent in Oil and Gas), with around 300 billion Tonnes of Reserves, out of which 50 billion Tonnes (less than 20 per cent) are recoverable.

The UCG process allows converting un-mineable coal/lignite (more than 80 per cent of the 300 billion Tonnes Reserves) into combustible gases by gasifying the coal in-situ. It is a chemical process in which coal is subjected to gasification by igniting coal and sustaining ignition by injecting air, oxygen and steam in to the coal seam. Coal is converted from solid to a mixture of gases, liquids and ash by heat and chemical reactions. Produced gases are mixture of combustible gases like carbon monoxide, hydrogen and methane and non combustible gases as well. The gases thus produced can be utilized as fuel gas and for power generation and as a feed stock for liquid fuels and petrochemicals.

Incidentally, ONGC operates world’s biggest in-situ combustion process to augment recovery of its heavy oil reserves in north Gujarat, for the last quite a few years. ONGC had earlier worked on an UCG pilot in Gujarat in the 80s, which had to be shelved due to foreign exchange shortage those days.

Speaking on the occasion of the signing of MoU, C&MD of ONGC Mr. Subir Raha said that Coal Gasification offers a very good solution to the challenges in harnessing the enormous coal resources of the country, viz. high ash content, residual content and transportation.

Citing the Indian President’s vision of national Energy Security by 2030, Mr. Raha said out of the available options for attaining the Energy Security in the next 25 years, Coal Gasification is the most viable one. The calorific value of UCG ranges between 10 – 30 per cent of Natural Gas. “Given the huge potential of both Underground and Surface Coal Gasification in India, the imports of energy-related products can be cut down to manageable levels”.

He added that ONGC is exploring induction of proven technology in Surface Gasification as well, and a mix of both Underground and Surface Gasification would be employed for optimum results.

Expressing optimism that the revenue streams from UCG would be robust, Mr. Subir Raha shared,“Finally, the pricing of the gasified coal would determine the profitability”.

The Chairman of Coal India Mr. Shashi Kumar termed the MoU as a memorable one, and expressed happiness that, “Coal has now been accepted as one to remain the mainstay of Indian Energy Security”.

MoUs have already been entered by ONGC with Gujarat Mineral Development Corporation Ltd. (GMDC), Gujarat Industries Power Company Ltd. (GIPCL) and Neyveli Lignite Corporation Ltd. (NLC). One more MoU is expected with Singareni Collieries Company Ltd. (SCCL) in the next few weeks.

ONGC has selected Skochinsky Institute of Mining (SIM), a 77 year old Russian institute involved in extensive R&D work in UCG, for technical collaboration on a licensed technology. ONGC and Skochinsky are working together to evolve a detailed work plan to develop and apply this technology in various parts of India. Skochinsky is visiting ONGC on 15th December 2005 to recommend the pilot sites.

Based on the Pilots, the Detailed Feasibility Report (DFR) would emerge, giving specific numbers on which the detailed cost analysis and the Volume of Gas that can be obtained from UCG would be worked out.