1
NATURAL GAS AS AN ALTERNATE FUEL
FOR ELECTRICITY GENERATION IN INDIA
Summer Project Report
Presented To
The Academic Faculty
By
Varun Kumar Choudhary
Roll no.- 11BM60019
Industry Guide-
Dr. A. P. Dash
Senior Faculty, Project Management Institute,
NTPC Ltd. New Delhi.
Mr. B. P. Rath
Manager, New Project Development
NTPC Ltd.
Faculty Guide-
Dr. Kalyan Kumar Guine
Professor, Vinod Gupta School of Management,
IIT Kharagpur.
Vinod Gupta School of Management,
Indian Institute of Technology, Kharagpur
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Acknowledgement
I express my profound gratitude to my supervisors, Professor A.P Dash and B. P Rath sir whose
benign guidance has enlightened my path through the course of this work. Besides their
dedication to academic life, their disciplined and austere habits have been a source of constant
inspiration to me. They are humane with willingness to help others, care for everyone, and
always being concerned about the progress. It was an enriching experience to work and learn
under them.
Varun Kumar Choudhary
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Table of Contents
1. Executive Summery - ........................................................................................................ 5
2. NTPC PROFILE:- ............................................................................................................ 6
3. Project Objective- ........................................................................................................... 11
4. Introduction- ................................................................................................................... 12
4.1 Electricity is prime mover of Indian economy: ............................................................................. 12
4.2 Electricity demand in India- ........................................................................................................... 14
4.3 Dependence of Electricity demand on GDP growth rate- .............................................................. 15
4.4 Major available resources for electricity generation-..................................................................... 17
5. Coal as a fuel for electricity generation- ....................................................................... 19
5.1 Predominant Position of Coal- ....................................................................................................... 19
5.2 Inventory of geological resources of coal in India- ....................................................................... 19
5.3 Type and category-wise coal resources of India- ........................................................................... 20
5.4 Consumption pattern of coal- ......................................................................................................... 21
5.5 Factors Affecting Coal Prices in India-.......................................................................................... 21
5.5.1 Domestic coal production and demand: .............................................................................. 23
5.5.2 Coal Import- ........................................................................................................................ 23
5.5.3 Domestic Coal Price Fixation- .................................................................................. 24
5.5.4 Quantity of Coal to be sold at market price:- ...................................................................... 25
5.5.5 Impact of crude oil price on Thermal coal prices:- ............................................................. 25
5.5.6 Impact of Exchange rate on coal prices:- ............................................................................ 26
5.5.7 Impact of availability of land on coal prices- ...................................................................... 27
6. Renewable resources in India:-...................................................................................... 29
7. Natural Gas in India:- .................................................................................................... 37
7.1 Current Natural Gas Scenario in India-.......................................................................................... 37
7.2 Demand and Forecasts for India- ................................................................................................... 38
7.3 Competitive demand from Fertilizer & City Gas Sector- .............................................................. 39
7.4 Structure of the natural gas sector in India- ................................................................................... 40
7.5 Domestic Natural Gas in India- ..................................................................................................... 41
7.6 Domestic Gas pipe lines network in India- .................................................................................... 43
7.7 Trance-national gas pipe lines- ...................................................................................................... 44
7.7.1 TAPI- pipeline- ................................................................................................................... 45
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7.7.2 Iran–Pakistan–India pipeline- ............................................................................................. 46
7.7.3 Myanmar-Bangladesh-India Pipeline- ................................................................................ 47
7.8 Liquefied Natural Gas (LNG) – ..................................................................................................... 49
7.8.1 Regasification Capacity of India-........................................................................................ 49
7.9 Coal gasification in India- .............................................................................................................. 50
8. 8 Factors affecting Natural gas pricing:- ...................................................................... 51
8.1 Natural gas pricing in India- .......................................................................................................... 51
8.1.1 APM (Administered Pricing Mechanism) Gas Pricing:- ....................................................... 54
8.1.2 Pricing of Gas under Pre-NELP Production Sharing Contracts (PSC)................................... 55
8.1.3 Pricing of Gas with reference to NELP Provisions- .............................................................. 55
8.2 Imported Gas (LNG) Pricing- .......................................................................................................... 55
8.3 Pricing Issue:- ................................................................................................................................. 57
8.4 Framework of New Pool Pricing Mechanism:- .............................................................................. 59
8.4.1 Need for Pool Pricing:- ........................................................................................................ 59
8.4.2 Proposed Roadmap of Pool Pricing Mechanism:- ............................................................... 60
8.5 Effect of Globalization of Gas market on gas prices:- .................................................................... 62
9. 9 Shale Gas:- .................................................................................................................... 66
9.1 Shale gas historical back ground and development:- .................................................................... 66
9.2 Shale Gas Reserve:- ........................................................................................................................ 68
9.3 Hydraulic fracking- breakthrough in shale gas:- ............................................................................ 69
9.4 Issues with Hydraulic fracking:- ..................................................................................................... 71
9.5 Implication of shale gas reserve on traditional gas producers in US:- .......................................... 71
9.6 Implication on Indian gas market:- ................................................................................................ 72
9.7 China planned for shale gas development:- .................................................................................. 72
10. Energy Security in India:- .............................................................................................. 74
11. Findings & Recommendations:- .................................................................................... 79
12. References:- ..................................................................................................................... 82
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1 Executive Summery -
In India installed capacity for power generation is 199.87 Gigawatt (GW) as of March 2012; the
world’s fifth largest, of which approximately 30,000 MW running idle due to shortage of fuel
supply. The International Energy Agency estimates that estimates India will add between 600
GW to 1200 GW of additional new power generation capacity before 2050. Due to acute
shortfall in domestic coal production to meet demand and higher exchange rate is severely
affecting power sector in India. Exploration of huge shale gas reserve of USA and China and
natural gas have changed prospective of fuel supply. Indian coal is of high ash content and low
sulfur content. Its contribution to power sector is around 56.4% and natural gas contribution to
power sector is around 9.2% of total power generation. Our objective is the scope of natural gas
as an alternate fuel for electricity in India. Due to higher prices of coal and petroleum,
substitutively fuel demand can be met by natural gas. Natural gas demand is continuously
increasing and furcating is done at different scenarios of growth rate. There are three options for
natural gas- domestic natural gas, piped natural gas and imported liquefied natural gas. Domestic
gas production in India is continuously falling down is not viable option. Presently we have a
country wide network of 12,000 km of gas pipeline and having capacity to transport 230 mmscmd
of gas. Study of natural gas pricing method in India and factors affecting natural gas pricing and
scope of new pricing method pool pricing in India. Demand from different sectors i.e. fertilizer,
city gas sector and power sector. And scope of shale gas exploration and production.
With a burgeoning population, we have to recognize that resources are scarce and plan
accordingly. End use efficiency, reduction of wastage and accountability has great potential for
improvement. Investment in coal base electricity needs critical appraisal because of availability,
land requirement, pollution, green house gas emission and ash disposal and increasing cost of
environment needs critical appraisal. Natural gas based electricity generator are generally not
approved because of lack of domestic availability of natural gas besides domestic gas sector has
received a thrust with shale gas and Hydraulic fracking technology in US. A relook into fuel
import i. e. import of coal vis a vis import of natural gas is a national imperative in view of the
need for electricity keeping in view all other collateral concerns. Diesel generator can be
replaced by natural gas plant- In India electricity generated by DG set- 1200 MW at cost of Rs.
12/kwh and grid power at cost of Rs 3/kwh. This market will grow at the rate of 20% for coming
years. Natural gas can be used for distributed power generation-Due to heavy distribution and
transmission losses (around 30%) distributed generation by natural gas is better option as it can
be produced at cost of Rs. 6 to 7 per kwh.
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2 NTPC PROFILE:-
NTPC Limited (formerly National Thermal Power Corporation) is the largest state-
owned power generating company in India. Forbes Global 2000 for 2010 ranked it 341th in the
world. It is an Indian public sector company listed on the Bombay Stock Exchange although at
present the Government of India holds 84.5%(after divestment the stake by Indian government
on 19october2009) of its equity. With a current generating capacity of 34194 MW, NTPC has
embarked on plans to become a 75,000 MW company by 2017. It was founded on November 7,
1975.
NTPC's core business is engineering, construction and operation of power generating plants and
providing consultancy to power utilities in India and abroad.
The total installed capacity of the company is 34,194 MW (including JVs) with 15 coal based
and 7 gas based stations, located across the country. In addition under JVs, 5 stations are coal
based & another station uses naphtha/LNG as fuel. The company has set a target to have an
installed power generating capacity of 1,28,000 MW by the year 2032. The capacity will have a
diversified fuel mix comprising 56% coal, 16% Gas, 11% Nuclear and 17% Renewable Energy
Sources(RES) including hydro. By 2032, non fossil fuel based generation capacity shall make up
nearly 28% of NTPC’s portfolio.
NTPC has been operating its plants at high efficiency levels. Although the company has 18.79%
of the total national capacity it contributes 28.60% of total power generation due to its focus on
high efficiency. NTPC’s share at 31 Mar 2001 of the total installed capacity of the country was
24.51% and it generated 29.68% of the power of the country in 2008–09. Every fourth home in
India is lit by NTPC. As at 31 Mar 2011 NTPC's share of the country's total installed capacity is
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17.75% and it generated 27.4% of the power generation of the country in 2010–11. NTPC is
lighting every third bulb in India. 170.88BU of electricity was produced by its stations in the
financial year 2005–2006. The Net Profit after Tax on March 31, 2006 was INR 58,202 million.
Net Profit after Tax for the quarter ended June 30, 2006 was INR 15528 million, which is
18.65% more than for the same quarter in the previous financial year. 2005).
In October 2004, NTPC launched its Initial Public Offering (IPO) consisting of 5.25% as fresh
issue and 5.25% as offer for sale by Government of India. NTPC thus became a listed company
in November 2004 with the Government holding 89.5% of the equity share capital. In February
2010, the Shareholding of Government of India was reduced from 89.5% to 84.5% through
Further Public Offer. The rest is held by Institutional Investors and the Public.
Pursuant to a special resolution passed by the Shareholders at the Company’s Annual General
Meeting on September 23, 2005 and the approval of the Central Government under section 21 of
the Companies Act, 1956, the name of the Company "National Thermal Power Corporation
Limited" has been changed to "NTPC Limited" with effect from October 28, 2005. The primary
reason for this is the company's foray into hydro and nuclear based power generation along with
backward integration by coal mining.
(NTPC) is in the 138th position in Fortune 500 in 2009. 10 Indian companies make it to FT's top
500.
Vision
“To be the world’s largest and best power producer, powering India’s growth.”
Mission
“Develop and provide reliable power, related products and services at competitive prices,
integrating multiple energy sources with innovative and eco-friendly technologies and
contribute to society.”
Core Values – BCOMIT
Business Ethics
Customer Focus
Organizational& Professional Pride
Mutual Respect & Trust
Innovation & Speed
Total Quality for Excellence
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Diversified Growth
As per new corporate plan, NTPC plans to become a 75 GW company by the year 2017
and envisages to have an installed capacity of 128 GW by the year 2032 with a well-
diversified fuel mix comprising 56% coal, 16% gas, 11% nuclear energy, 9% renewable
energy and 8% hydro power based capacity.
As such, by the year 2032, 28% of NTPC’s installed generating capacity will be based on
carbon free energy sources. Further, the coal based capacity will increasingly be based on
high-efficient-low-emission technologies such as Super-critical and Ultra-Super-critical.
Along with this growth, NTPC will utilize a strategic mix of options to ensure fuel security
for its fleet of power stations.
Looking at the opportunities coming its way, due to changes in the business environment,
NTPC made changes in its strategy and diversified in the business adjacencies along the
energy value chain. In its pursuit of diversification NTPC has developed strategic alliances
and joint ventures with leading national and international companies. NTPC has also made
long strides in developing its Ash Utilization business.
Hydro Power: In order to give impetus to hydro power growth in the country and
to have a balanced portfolio of power generation, NTPC entered hydro power
business with the 800 MW Koldam hydro project in Himachal Pradesh. Two more
projects have also been taken up in Uttarakhand. A wholly owned subsidiary,
NTPC Hydro Ltd., is setting up hydro projects of capacities up to 250 MW.
Renewable Energy: In order to broad base its fuel mix NTPC has plan of capacity
addition of about 1,000 MW through renewable resources by 2017.
Nuclear Power: A Joint Venture Company "AnushaktiVidhyut Nigam Ltd." has
been formed (with 51% stake of NPCIL and 49% stake of NTPC) for development
of nuclear power projects in the country.
Coal Mining: In a major backward integration move to create fuel security, NTPC
has ventured into coal mining business with an aim to meet about 20% of its coal
requirement from its captive mines by 2017. The Government of India has so far
allotted 7 coal blocks to NTPC, including 2 blocks to be developed through joint
venture route.
Power Trading: 'NTPC VidyutVyapar Nigam Ltd.' (NVVN), a wholly owned
subsidiary was created for trading power leading to optimal utilization of NTPC’s
assets. It is the second largest power trading company in the country. In order to
facilitate power trading in the country, ‘National Power Exchange Ltd.’, a JV of
NTPC, NHPC, PFC and TCS has been formed for operating a Power Exchange.
Ash Business: NTPC has focused on the utilization of ash generated by its power
stations to convert the challenge of ash disposal into an opportunity. Ash is being
used as a raw material input by cement companies and brick manufacturers. NVVN
is engaged in the business of Fly Ash export and sale to domestic customers. Joint
ventures with cement companies are being planned to set up cement grinding units
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in the vicinity of NTPC stations.
Power Distribution: ‘NTPC Electric Supply Company Ltd.’ (NESCL), a wholly
owned subsidiary of NTPC, was set up for distribution of power. NESCL is
actively engaged in ‘Rajiv Gandhi GraminVidyutikaranYojana’programme for
rural electrification.
Equipment Manufacturing: Enormous growth in power sector necessitates
augmentation of power equipment manufacturing capacity. NTPC has formed JVs
with BHEL and Bharat Forge Ltd. for power plant equipment manufacturing.
NTPC has also acquired stake in Transformers and Electricals Kerala Ltd. (TELK)
for manufacturing and repair of transformers.
Future Capacity Additions
NTPC has formulated a long term Corporate Plan upto 2032. In line with the Corporate Plan,
the capacity addition under implementation stage is presented below:
PROJECT STATE MW
Coal
1. Indira Gandhi STPP- JV with IPGCL & HPGCL ( 3 x 500) Haryana 1000
2. Sipat I (3 x 660) Chhattisgarh 1980
3. Simhadri II Unit - IV( 500) Andhra Pradesh 500
4. Vallur I -JV with TNEB ( 2 x 500) Tamilnadu 1000
5. Vallur Stage-I Phase-II -JV with TNEB ( 1 x 500) Tamilnadu 500
6. Bongaigaon(3 x 250) Assam 750
7. Mauda ( 2 x 500) Maharashta 1000
8. Rihand III(2X500) Uttar Pradesh 1000
9. Vindhyachal-IV (2X500) Madhya Pradesh 1000
10. Muzaffarpur Expansion (2x195) – JV with BSEB Bihar 390
11. Nabinagar TPP-JV with Railways (4 x 250) Bihar 1000
12. Barh II (2 X 660) Bihar 1320
13. Barh I (3 X 660) Bihar 1980
Hydro
1. Koldam HEPP ( 4 x 200) Himachal Pradesh 800
2. TapovanVishnugad HEPP (4 x 130) Uttarakhand 520
3. Singrauli CW Discharge(Small Hydre) Uttar Pradesh 8
Total 14748
Subsidiaries
NTPC Electric Supply Company Ltd. (NESCL)
The company was formed on August 21, 2002. It is a wholly owned subsidiary company of
NTPC with the objective of making a foray into the business of distribution and supply of
electrical energy, as a sequel to reforms initiated in the power sector.
NTPC Vidyut Vyapar Nigam Ltd. (NVVN)
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The company was formed on November 1, 2002, as a wholly owned subsidiary company of
NTPC. The company’s objective is to undertake sale and purchase of electric power, to
effectively utilise installed capacity and thus enable reduction in the cost of power. NVVN
NTPC Hydro Ltd. (NHL)
The company was formed on December 12, 2002, as a wholly owned subsidiary company of
NTPC with an objective to develop small and medium hydroelectric power projects of up to
250 MW. More>>
Pipavav Power Development Co. Ltd. (PPDCL)
A memorandum of understanding was signed between NTPC, Gujarat Power Corporation
Limited (GPCL) and Gujarat Electricity Board (GEB) in 2004 for development of a 1000 MW
thermal power project at Pipavav in Gujarat by forming a new joint venture company between
NTPC and GPCL with 50:50 equity participation. Pursuant to the decision of Gujarat
Government, NTPC Ltd. has dissociated itself from this company. PPDCL is under winding
up.
Kanti Bijlee Utpadan Nigam Limited, (formerly known as Vaishali Power Generating
Company Limited)
To take over Muzaffarpur Thermal Power Station (2*110MW), a subsidiary company named
‘Vaishali Power Generating Company Limited (VPGCL)’ was incorporated on September 6,
2006 with NTPC contributing 51% of equity and balance equity was contributed by Bihar State
Electricity Board. This company was formed to renovate the existing unit and run the plant.
The second unit has been successfully re-synchronized on October 17, 2007 after 4 years of
being idle. Renovation and modernization of the first unit is under progress. The company was
rechristened as ‘Kanti Bijlee Utpadan Nigam Limited’ on April 10, 2008.
Bharatiya Rail Bijlee Company Limited (BRBCL)
A subsidiary of NTPC under the name of ‘Bharatiya Rail Bijlee Company Limited’ was
incorporated on November 22, 2007 with 74:26 equity contribution from NTPC and Ministry
of Railways, Govt. of India respectively for setting up of four units of 250 MW each of coal
based power plant at Nabinagar, Bihar. Investment approval of the project was accorded in
January, 2008.
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3 Project Objective-
To find out viable option for fuel supply to set new power plant on India. Study of power sector
in India and all available fuel supply option for electricity generation in India to find out scope
of natural gas as an alternate fuel for electricity generation. Electricity demand projection in
India at different growth rate scenarios. Natural gas supply option as domestic natural gas
reserve and natural gas import. Study of piped natural gas and LNG import. To find out viable
natural gas supply option while keeping in mind price, gas reserve, infrastructure requirement
and time period required to be operational. Natural gas as a fuel for distributed power
generation to reduce transmission losses and replacement of DG sets by natural gas based
turbines. Natural gas price mechanism in India and in different regional gas market and impact
of globalization of gas market. Scope of shale gas exploration and impact of it on India and
traditional natural gas producer.
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4 Introduction-
4.1 Electricity is prime mover of Indian economy:
Electricity is the prime mover of growth and is vital to the sustenance of a modern economy. The
projected growth of the Indian economy depends heavily on the performance and growth of the
power sector. It is the endeavor of the Government to ensure that agriculture, industry,
commercial establishments and all households receive uninterrupted supply of electricity at
affordable rates. The electricity sector in India had an installed capacity of
199.87 Gigawatt (GW) as of March 2012, the world's fifth largest. Captive power plants generate
an additional 31.5 GW. Thermal power plants constitute 66% of the installed capacity,
hydroelectric about 19% and rest being a combination of wind, small hydro, biomass, waste-to-
electricity, and nuclear. India generated 855 BU electricity during 2011-12 fiscal year.
In terms of fuel, coal-fired plants account for 57% of India's installed electricity capacity,
compared to South Africa's 92%; China's 77%; and Australia's 76%. After coal,
renewal hydropower accounts for 19%, and natural gas for about 9%.
In December 2011, over 300 million Indian citizens had no access to electricity. Over one third
of India's rural population lacked electricity, as did 6% of the urban population. Of those who did
have access to electricity in India, the supply was intermittent and unreliable. In 2010, blackouts
and power shedding interrupted irrigation and manufacturing across the country.
The per capita average annual domestic electricity consumption in India in 2009 was 96 kWh in
rural areas and 288 kWh in urban areas for those with access to electricity, in contrast to the
worldwide per capita annual average of 2600 kWh and 6200 kWh in the European Union. India's
total domestic, agricultural and industrial per capita energy consumption estimate vary
depending on the source. Two sources place it between 400 to 700kWh in 2008–2009. As of
January 2012, one report found the per capita total consumption in India to be 778 kWh.
India currently suffers from a major shortage of electricity generation capacity, even though it is
the world's fourth largest energy consumer after United States, China and Russia.The
International Energy Agency estimates India needs an investment of at least $135 billion to
provide universal access of electricity to its population.
The International Energy Agency estimates India will add between 600 GW to 1200 GW of
additional new power generation capacity before 2050.This added new capacity is equivalent to
the 740 GW of total power generation capacity of European Union (EU-27) in 2005. The
technologies and fuel sources India adopts, as it adds this electricity generation capacity, may
make significant impact to global resource usage and environmental issues.
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India's electricity sector is amongst the world's most active players in renewable energy
utilization, especially wind energy. As of December 2011, India had an installed capacity of
about 22.4 GW of renewal technologies-based electricity, exceeding the total installed electricity
capacity in Austria by all technologies.
India's network losses exceeded 32% in 2010 including non-technical losses, compared to world
average of less than 15%. Both technical and non-technical factors contribute to these losses, but
quantifying their proportions is difficult. Some experts estimate that technical losses are about
15% to 20%, A high proportion of non‐technical losses are caused by illegal tapping of lines, but
faulty electric meters that underestimate actual consumption also contribute to reduced payment
collection. A case study in Kerala estimated that replacing faulty meters could reduce
distribution losses from 34% to 29%.
Key implementation challenges for India's electricity sector include new project management
and execution, ensuring availability of fuel quantities and qualities, lack of initiative to develop
large coal and natural gas resources present in India, land acquisition, environmental clearances
at state and central government level, and training of skilled manpower to prevent talent
shortages for operating latest technology plants.
For the past two decades, India has had to face increasing deficit in power supply, both for
meeting its normal energy requirements as well as its peak load demand. The problem is acute
during peak hours and summers, and necessitates planned load shedding by many utilities to
maintain the grid in a healthy state. The average all-India shortages in 2009-10 were at 10 per
cent in terms of normal energy requirement and about 13 per cent in terms of peak load.
With the shortage at both the normal and the peak levels, Indian power industry does not exhibit
much cyclicality. Further, with assured returns, the margins of players and their profitability is
almost independent of the economic cycles. Electricity is the most important component of
primary energy. India’s electricity consumption has grown at an average rate of 7.3 per cent
during the period 2002-07 to about 577.9 TWh. Consumption has increased at a faster rate since
2002-03, reflecting buoyant industrial demand. Industrial consumers are the largest group of
electricity consumers, followed by the domestic, agricultural and commercial consumers, in that
order. India’s per capita electricity consumption increased from 178 kWh in 1985-86 to 704.4
kWh in 2007-08. Over the period, 2001-08, per capita consumption has increased at an average
rate of 4.45 per cent. It is still much lower compared to the international standards.
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4.2 Electricity demand in India-
Electricity demand at peak load and at normal load is mentioned below in table. In past ten years
normal energy shortfall is regularly increasing, in 2003-04 it was 7.1 % and in 2008-09 it was
11.1% of demand. Peak load energy shortage is also high. Indian economy is one of fastest
growing economy of world. As economy is growing energy demand is also growing to meet
industrial demand.
Table- Electricity Demand and Supply
FY Energy Peak Demand
(MU) (MW)
Demand Availability Shortage % Demand Met Shortage %
2002-03 545,983 497,890 48,093 8.8 81,492 71,547 9,945 12.2
2003-04 559,264 519,398 39,866 7.1 84,574 75,066 9,508 11.2
2004-05 591,373 548,115 43,258 7.3 87,906 77,652 10,254 11.7
2005-06 631,024 578,511 52,513 8.3 93,214 81,792 11,422 12.3
2006-07 693,057 624,716 68,341 9.9 100,715 86,818 13,897 13.8
2007-08 737,052 664,660 72,392 9.8 108,866 90,793 18,073 16.6
2008-09 777,039 691,038 86,001 11.1 109,809 96,785 13,024 11.9
2009-10 830,594 746,644 83,950 10.1 118,472 102,725 15,747 13.3
2010-11 861,591 811,100 50,491 5.9 152746 137013.2 15732.84 10.3
Table- Electricity demand projection at different growth rate-
Energy Requirement Peak Demand Installed Capacity
Required
(Billion kWh) (GW) (GW)
GDP
growth at 6.00% 8.00% 9.00% 6.00% 8.00% 9.00% 6.00% 8.00% 9.00%
2011-12 1097 1,097 1,097 158 158 158 199 199 199
2016-17 1407 1,524 1,586 203 220 228 255 276 288
2021-22 1804 2,118 2,293 260 305 330 327 384 416
2026-27 2267 2,866 3,219 327 413 464 411 520 584
2031-32 2850 3,880 4,518 411 560 651 517 704 820
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Electricity demand projection as mentioned in above table was done on basis falling elasticity of
electricity, data source- report of planning commission of India.
Table- Elasticity used for projection-
Year Electricity
(falling Elasticity)
2011-12 to 2021-22 0.85
2021-22 to 2031-32 0.78
4.3 Dependence of Electricity demand on GDP growth rate-
Electricity is prime mover of growth rate. As industrialization grows power demand also grows
to maintain higher production rate. By analyzing past 20 years data, shows that growth in
electricity demand is varies as per GDP growth rate and we got following relationship between
electricity demand and growth rate-
Y = 29167X + 227827
Where Y= Electricity Demand
X= GDP growth rate
Also electricity demand projection was done for GDP growth rate of 6%, 8% and 9% for next
20 years at falling elasticity of electricity.
16
Chart-As per data in Annexure -2
0
2
4
6
8
10
12
0
100000
200000
300000
400000
500000
600000
700000
800000
900000
1000000
%
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i
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M
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Year
Electricity Demand and GDP Growth Rate
Electricity Demand(Mus) GDP Growth Rate(%)
y = 29167x + 227827 R² = 0.9736
0
100000
200000
300000
400000
500000
600000
700000
800000
900000
1000000
5.5 4.8 6.7 7.6 7.6 4.1 6.2 7.4 4 5.2 3.8 8.4 8.3 9.3 9.3 9.8 7.6 9.1 8.8 6.9
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(
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GDP growth rate
Electricity Demand and GDP
Electricity Demand and GDP Linear (Electricity Demand and GDP)
17
4.4 Major available resources for electricity generation-
Major power resources
option
Hydro Energy Coal
Domestic coal
Imported coal
Blended Coal
Legnite
Nuclear Energy
Wind Energy Solar Energy Natural gas
Domestic gas
Piped Natural gas
LNG
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The 17th electric power survey of India report claims-
Over 2010–11, India's industrial demand accounted for 35% of electrical power
requirement, domestic household use accounted for 28%, agriculture 21%,
commercial 9%, public lighting and other miscellaneous applications accounted for
the rest.
The electrical energy demand for 2016–17 is expected to be at least 1392 Tera Watt
Hours, with a peak electric demand of 218 GW.
The electrical energy demand for 2021–22 is expected to be at least 1915 Tera Watt
Hours, with a peak electric demand of 298 GW.
hydro 19%
coal 57%
gas 9%
Oil 1%
Neclear 2%
RES 12%
Sector wise power generation in 2012 in India
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5 Coal as a fuel for electricity generation-
5.1 Predominant Position of Coal-
-In terms of fuel, coal-fired plants account for 57% of India's installed electricity
capacity, compared to South Africa's 92%; China's 77%; and Australia's 76%. After coal,
renewal hydropower accounts for 19%, and natural gas for about 9%.
-A cumulative total of 285862.21 Million Tonnes of Geological Resources of Coal have
so far been estimated in India as on 1.4.2011.
-Coal is likely to remain our mainstay of fuel for power generation till 2030-31.
However, current shortage is cause of concern.
5.2 Inventory of geological resources of coal in India-
As a result of exploration carried out up to the maximum depth of 1200m by the GSI, CMPDI,
SCCL and MECL etc, a cumulative total of 285862.21 Million Tonnes of Geological Resources
of Coal have so far been estimated in the country as on 1.4.2011. The details of state-wise
geological resources of coal are given as under:
GONDWANA COAL FIELDS: - Annexure -2
TERTIARY COAL FIELDS- Annexure- 3
Categorization of coal resources-
The coal resources of India are available in older Gondwana Formations of peninsular India and
younger Tertiary formations of north-eastern region. Based on the results of Regional/
Promotional Exploration, where the boreholes are normally placed 1-2 Km apart, the resources
are classified into ‘Indicated’ or ‘Inferred’ category. Subsequent Detailed Exploration in selected
blocks, where boreholes are less than 400 meter apart, upgrades the resources into more reliable
‘Proved’ category. The Formation-wise and Category-wise coal resources of India as on
1.4.2010 are given in table below:
(in Million Tonnes)
Formation
Proved Indicated Inferred Total
Gondwana Coals 113407.79 137371.76 33590.02 284369.57
Tertiary Coals 593.81 99.34 799.49 1492.64
Total 114001.60 137471.10 34389.51 285862.21
* Includes 749.92 M.T. of Inferred resources established through mapping in North-
Eastern region.
20
5.3 Type and category-wise coal resources of India-
The Type and Category-wise coal resources of India as on 1.4.2011 are given in
table below:-
(in Million Tonnes)
Type of Coal
Proved Indicated Inferred Total
(A) Coking :-
-Prime Coking 4614.35 698.71 0 5313.06
-Medium Coking 12572.52 12001.32 1880.23 26454.07
-Semi-Coking 482.16 1003.29 221.68 1707.13
Sub-Total Coking 17669.03 13703.32 2101.91 33474.26
(B) Non-Coking:- 95738.76 12368.44 31488.11 250895.31
(C) Tertiary Coal 593.81 99.34 799.49* 1492.64
Grand Total 114001.60 137471.10 34389.51 285862.21
* Includes 749.92 M.T. of Inferred resources established through mapping in North-
Eastern region.
Status of Coal Resources in India during Last Five Years:
As a result of Regional, Promotional and Detailed Exploration by GSI, CMPDI and SCCL etc, the
estimation of coal resources of India has reached to 267.21 Bt. The estimates of coal resources in the
country during last 5 years are given below:
(in Million tonnes)
As on
Geological Resources of Coal
Proved Indicated Inferred Total
1.1.2006 95866 119769 37666 253301
1.4.2007 99060 120177 38144 257381
1.4.2008 101829 124216 38490 264535
1.4.2009 105820 123470 37920 267210
1.4.2010 109798 130654 36358 276810
21
5.4 Consumption pattern of coal-
By analyzing past 30 years data, shows that coal consumption is increasing year by yearas
power demand increasing in India. Due to limited coal reserves, if coal consumption keep
growing at same rate as per past trend, all economic coal reserve will be extracted within 30
years.we got following relationship for coal consumption pattern in India.
Y = 18035X + 41974
Where Y= Coal consumption
X= Year
Annexure- 4
5.5 Factors Affecting Coal Prices in India-
y = 18035x + 41974 R² = 0.9425
-0.05
0
0.05
0.1
0.15
0.2
0
100000
200000
300000
400000
500000
600000
700000
800000
900000
19
80
1
98
1
19
82
1
98
3
19
84
1
98
5
19
86
1
98
7
19
88
1
98
9
19
90
1
99
1
19
92
1
99
3
19
94
1
99
5
19
96
1
99
7
19
98
1
99
9
20
00
2
00
1
20
02
2
00
3
20
04
2
00
5
20
06
2
00
7
20
08
2
00
9
20
10
C
o
a
l
T
o
n
n
e
s
Year
Consumption
% Change
22
Significant demand from China and India is increasingly accounting for the bulk of worldwide
coal usage. Hence, coal demand and consequently coal prices will depend on the strength of the
economic recovery in the emerging markets, particularly China and India as mentioned. As
several of coal commodity currencies (Aussie Dollar, SA Rand and the Columbian Peso) have
floating exchange rates, any appreciation in the value of these currencies consequently increases
the prices for holders of non-commodity currencies.
Coal price
Coal Demand
and Production
Coal Import
Domestic coal
pricing
Coal to sold at market
price
Cost of Land
Crude oil prices
Exchange rate
23
5.5.1 Domestic coal production and demand:
Domestic coal production is not meeting demand. Currently around 37,000 MW capacities of
power plants running idle due to shortage of fuel supply. Coal India is also not meeting coal
production target. Due to coal supply shortage prices are going up. Due to industrialization,
power demand is growing. It is estimated that at the end of terminal year of 11th Five Year
Plan (2011-12), the coal demand would be about 713 Million Tonnes, whereas the indigenous
availabilitywould be about 630 Million Tonnes. Therefore, there is likely to be a gap of 83
Million Tonnes, which is required to be met through imports. The details are given below:-
(Fig. in million tonnes)
Source 2008-09 2009-10 2010-11 2010-11 XI Plan
Proj.
Actual Actual BE RE 2011-12
CIL 4
01.44
4
15.88
4
60.5
4
33.5
4
86.5
SCCL 4
4.54
4
9.37
4
7.05
5
0.5
4
7
Others 4
4.03
4
9.25
6
5.87
5
2.05
9
6.41
Total
indigenous
supply
4
90.01
5
14.5
5
73.42
5
36.05
6
29.91
Demand 5
50
5
97.98
6
56.31
6
24.78
7
13.24
Gap to be met
through imports
5
9.98
8
3.48
8
2.89
8
8.73
8
3.33
Total Import
(a+b)
5
9
7
3.25
8
2.89
8
8.73
8
3.33
5.5.2 Coal Import-
As per the present Import Policy, coal can be freely imported (under Open General License) by
the consumers themselves, considering their needs and exercising their own commercial
prudence. Due to higher international coal prices and regularly depreciating rupees value, import
of coal is not economical option for power generation. Coking coal is being imported by Steel
Authority of India Limited (SAIL) and other Steel sector manufacturing unites mainly to
bridge the gap between the requirement and indigenous availability and to improve the
quality. Coal based power plants, cement plants, captive power plants, sponge iron plants,
industrial consumers and coal traders import non- coking coal. Coke is imported mainly by
Pig-Iron manufacturers and Iron &Steel Sector consumers using mini-blast furnace. Details
of import of coal and products during the last five years are as under:
24
Table:-Coal import (Fig. in million tonnes)
2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
Coking Coal 16.89 17.88 22.03 21.08 23.46 27.6
Non Coking coal 21.7 25.2 27.76 37.92 44.28 52.02
Coke 2.62 4.69 4.25 1.88 2.2 4.63
Total Import 41.21 47.77 54.04 60.88 69.94 84.05
5.5.3 Domestic Coal Price Fixation-
Government of India deregulated the prices of Non-Coking Coal of grades A,B&C,
Coking coal and Semi/Weakly coking coal on 22.03.1996. Subsequently, on12.03.1997,
Government of India deregulated the prices of non-coking coal of grade D, Hard Coke
and Soft Coke and also allowed Coal India Ltd to fix coal prices for grades E,F&G till
Jan'2000 on every six months by updating cost indices as per escalation formula
contained in the 1987 report of the Bureau of Industrial Cost & Prices. With effect from
01.01.2000, CIL was free to fix the prices of all grades of coal in relation to the market
prices.
Pursuant of the above, CIL fixed the prices of coal from time to time and last such revision
has been made on26.02.2011, to be effective w.e.f 00 hrs of 27-02-11.
Grade wise Basic Price of coal at the Pit-head prices of all varieties of Run of
Mine Coal have been given in Table I to V applicable to the Power Utilities
(including IPPs), Fertilizers and Defense and in Table VI to X applicable to
consumers other than the Power Utilities, (including IPPs), Fertilizers and
Defense excluding statutory levies for Run-of-mine (ROM) Non-Long-
Flame Coal ,Long flame Coal, Coking Coal, Semi Coking Coal & Weakly
Coking Coal, direct feed Coal, Assam Coal for various subsidiaries of CIL as
shown below:
COMPANYWISEGRADEWISECOALPRICESOFCILFORPOWER
UTILITIES (INCLUDINGIPPs), FERTILIZERSANDDEFENCE
Basic Price of Run of Mine Non-Long-Flame Non-Coking Coal- Annexure- 5
Basic Price of Run of Mine of Other Non-Coking Coal- Annexure- 6
Basic Price of Run of Mine Long-Flame Non-Coking Coal- Annexure- 7
Coking Coal (Run of Mine) Annexure- 8
Semi Coking & Weakly Coking Coal (Run Of Mine) Annexure- 9
Direct feed Coking Coal (Run of Mine) Annexure- 10
Assam Coal (Run of Mine) Annexure- 11
25
5.5.4 Quantity of Coal to be sold at market price:-
Coal distribution through e-auction was re-introduced in the new coal distribution
policy in 2007 mainly to provide access to companies that do not have regular sources
of supply. Most of the through e-auction is transported through roads. Only 10% of
total coal production of Coal India Ltd is being sold by e-auctioning and prices for
remaining are being administered by Government of India. Coal India is being asked
to sign fuel supply agreement with power sector companies and not increase supplies
to other sectors. Present spot market prices are at least 60% higher than notified prices
of coal. Coal prices in domestic spot market have risen by 50% over past three years.
As mentioned below in table Coal India may cut e-auctioning 10 to 7% by 2016-17.
Diversion of coal from e-auction is expected to enable CIL to offer 47 MT more coal
to power sector.
Table- Coal e-auction plan for Coal India Ltd. up to 2016-17
Year 2012-13 2013-14 2014-15 2015-16 2016-17
Production(MT) 464 486 508 530 556
e-auction% 10 10 9 8 7
Amount(MT) 46 49 46 42 39
5.5.5 Impact of crude oil price on Thermal coal prices:-
The coal demand revived upon the energy price surges during the two oil crises. The
primary factor having spurred the revival was that coal was priced much cheaper than
the- then skyrocketing oil and gas prices. Then such demerits as handling difficulties and
environmental load, if taken into account, can undermine utility of coal unless it should
be priced cheap, the greatest merit. In short, the oil price sets the ceiling of coal prices.
Particularly up to first half of the 2008, coal has demonstrated price advantages over
crude oil. After that at the time of uncertainty during global recession, crude oil prices
fall abruptly while not in case of coal. Again in 2009 prices of both coal and crude oil
started rising, and from January, 2011 coal again demonstrated advantages over crude
oil.
As it is clearly shown in graph coal prices are directly related to crude oil prices, varies
according to crude prices change. Namely price ratio of steaming coal to crude oil has
been as small as staying within the 0.38 – 0.45 range. For these reasons, the ceiling on of
coal prices can be put at around 75% of the crude oil price equivalent heat value.
26
Table- Crude oil prices and coal prices per month
Annexure- 12
5.5.6 Impact of Exchange rate on coal prices:-
A sharp decline in the value of the rupee is bound to affect the power generation capability
of power plants that are heavily dependent upon imported coal for electricity generation.
This would mean an increase in the level of energy deficit in the country. Moreover, a fall
witnessed in power generation capacity is likely to have an adverse effect on all the three
sectors of the economy namely agriculture, industry and services.
Another dimension to the rupee depreciation episode is that not only has the expenditure on
imports increased but this coupled with an inflexible tariff structure means that the power
companies are going to suffer huge losses.
The global prices of thermal coal in November 2011 were lower than that in May 2011.
Yet, the depreciation of rupee has meant that the importer has to pay an additional Rs.
684.6 per tonne to import the same quantity of coal.
Please refer to table below:
Table: Impact of Rupee Depreciation on Thermal Coal Price-
Month Price $ Exchange rate Price Rs
May 127.6 45.05 5739.5
November 121.9 52.7 6424.1
Difference -5.7 7.7 684.6
Annexure- 13
0
50
100
150
200
250
0
20
40
60
80
100
120
140
Ap
r-0
7
Jul-
07
Oct
-07
Jan
-08
Ap
r-0
8
Jul-
08
Oct
-08
Jan
-09
Ap
r-0
9
Jul-
09
Oct
-09
Jan
-10
Ap
r-1
0
Jul-
10
Oct
-10
Jan
-11
Ap
r-1
1
Jul-
11
Oct
-11
Jan
-12
Ap
r-1
2
U
S
$
/
t
o
n
U
S
$
/
b
a
r
r
e
l
Relationship Between Crude oil and coal prices
Crude oil Price per barrel
Coal price per metric ton
27
5.5.7 Impact of availability of land on coal prices-
Due to soaring up of land prices and compensation to land owner as per new land
acquisition policy hues amount of money is paid for coal mining lease and that cost further
increasing coal prices. New land pricing policy detail is given bellow-
Land Acquisition Policy in India:-
The Indian Ministry of Rural Development introduces its new draft Land Acquisition and
Rehabilitation & Resettlement Bill which is a policy framework to balance
between land acquisitions for industrialization with the concerns of those who depend on
that land for livelihood.
The new draft Land Acquisition and Rehabilitation & Resettlement Bill of 2011 which will
go through a cabinet vote very soon, has been designed to address the concern of balancing
the need for land to support rapid industrialization on one hand, and the needs of the people
who depend on it for their livelihood.
India is the third largest economy in the world today, but it faces an urgent need for growth
through industrialization, especially through manufacturing. This puts the nation in need
for land for a number of purposes from fuelling the inevitable process of urbanization and
greater industrialization, to a variety of 'public purposes'.
The nation has had a land acquisition act since 1894 which as over the time, seen quite a
few amendments. But the recent heightening of public concern over land acquisition issues
and the absence of a comprehensive law covering the issues of resettlement, rehabilitation
and compensation of livelihoods, has highlighted the need for a wholesome law.
The bill states the legitimate reasons for land acquisition as the above mentioned ones and
additionally defines the purview of the term ‘public purposes’ as the following:
0
50
100
150
200
250
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
0.0
0
7-J
ul
7-O
ct
8-J
an
8-A
pr
8-J
ul
8-O
ct
9-J
an
9-A
pr
9-J
ul
9-O
ct
10
-Jan
10
-Ap
r
10
-Ju
l
10
-Oct
11
-Jan
11
-Ap
r
11
-Ju
l
11
-Oct
12
-Jan
12
-Ap
r
U
S
$
R
u
p
e
e
s
coal price in RS per MT coal price in US& per MT Exchange rate
28
1. Strategic purposes: e.g., armed forces, national security;
2. Infrastructure and Industry: where benefits largely accrue to the general public
3. Land acquired for R&R purposes
4. Village or urban sites: planned development -residential purpose for the poor and
educational and health schemes
5. Land for private companies for public purpose;
6. needs arising from natural calamities.
Rehabilitation and Resettlement
It has been observed in the past that the rehabilitation and resettlement aspect is frequently
neglected once the acquisition is over, leading to widespread resentment and rebellion from
the ‘affected families’, who are basically those people who either lose the and that they
own, or livelihood that they had derived from the acquired land. The current draft
necessitates the application of its rehabilitation and resettlement requirements if
the land acquired by private companies exceeds 100 acres.
The new bill states that the Government can either acquire land for its own use or for the
use of private companies for stated public purpose. But the draft makes it clear that
no acquisition can take place until 80% of the project affected families give their consent to
the acquisition. Also, the government can make no acquisition of multi-cropped or irrigated
lands or even land for the private purposes of private companies.
The rehabilitation and resettlement requirements which are a major highlight of this
draft included a number of minimum entitlements making a special provision of scheduled
castes and scheduled tribes.
Compensation and benefits
As per the compensation package, the award amount paid for the land acquired in case of
urban areas should be not less than double the market value determined, and not less than
six times in case of rural areas.
For landowners the entitlements include a subsistence allowance of Rs. 3000 per month per
family for 12 months along with Rs. 2000 per family as annuity for 20 years, with the use
of appropriate indexes for inflation. The loss of a house has to be compensated with the
building of a new one adhering to some minimum size requirements. Entitlements for
transportation and employment provisions also need to be guaranteed. An unemployment
benefit has to be paid if not even a single member of the family is given employment
opportunities. For those who lose their livelihood, the bill states similar entitlements.
29
6 Renewable resources in India:-
Status of renewable energy resources in India- New & Renewable Energy
Cumulative deployment of various Renewable Energy Systems/ Devices in the country as on
30/04/2012
Renewable Energy Program/
Systems
Target for
2012-13
Achievement
during
April,2012
Total
achievement
during 2012-
13
Cumulative
achievement u
p to 30.04.2012
I. POWER FROM RENEWABLES:
A. GRID-INTERACTIVE POWER (CAPACITIES IN MW)
Wind Power 2500 36.65 36.65 17389.31
Small Hydro Power 350 5.75 5.75 3401.06
Biomass Power 455 16.00 16.00 1166.10
Bagasse Cogeneration 7.50 7.50 1992.73
Waste to Power -Urban 20
- - 89.68
-Industrial - - -
Solar Power (SPV) 800 37.72 37.72 979.00
Total 4125.00 103.62 103.62 25017.88
B. OFF-GRID/ CAPTIVE POWER (CAPACITIES IN MWEQ)
Waste to Energy -
Urban
-Industrial
20.00 1.20 1.20 102.95
Biomass(non-bagasse)
Cogeneration
60.00 2.50 2.50 385.00
Biomass Gasifiers -
Rural- Industrial
1.50 - - 16.12
10.00 - - 134.09
Aero-Genrators/Hybrid
systems
0.50 - - 1.64
SPV Systems (>1kW) 30.00 - - 85.21
Water mills/micro hydel 2.00(500
Nos.)
-. - 1877 Nos.
Total 126.00 3.70 3.70 725.01
II. REMOTE VILLAGE ELECTRIFICATION
No. of Remote Village/Hamlets
provided with RE Systems
- - - -
III. OTHER RENEWABLE ENERGY SYSTEMS
Family Biogas Plants (No. in 1.25 - - 45.09
30
lakhs)
Solar Water Heating - Coll.
Areas (Million m2)
0.60 - - 5.46
Solar Energy in India:-
Solar water heaters have proved the most popular so far and solar photovoltaic for
decentralized power supply is fast becoming popular in rural and remote areas. More than
700000 PV systems generating 44 MW have been installed all over India. Under the water
pumping program more than 3000 systems have been installed so far and the market for
solar lighting and solar pumping is far from saturated. Solar drying is one area which offers
very good prospects in food, agricultural and chemical products drying applications.
The Jawaharlal Nehru National Solar Mission (JNNSM) has set ambitious targets for
power generation from solar energy in India. The Mission aims to have about 10 GW of
grid-connected solar power plants by 2022. The mission is divided into 3 phases and the
targets for grid-connected solar PV plants for each phase are-
Phase 1 2010-2013 500 MW
Phase 2 2013-2017 1,500 MW
Phase 3 2017-2022 7,000 MW
Total 10,000MW
In addition to the JNNSM, several state governments have separate solar policies
(Rajasthan, Gujarat and Karnataka) and many other state governments (Tamil Nadu,
Maharashtra, Andhra Pradesh etc) are drafting solar policies on their own. Apart from this,
the Renewable Purchase Obligation (RPO) is expected to drive the growth of the solar PV
power generation sector.
India is densely populated and has high solar insulation, an ideal combination for
using solar power in India. Much of the country does not have an electrical grid grid, so
one of the first applications of solar power has been for water pumping; to begin replacing
India's four to five million diesel powered water pumps, each consuming about
3.5 kilowatts, and off-grid lighting. Some large projects have been proposed, and a
35,000 km² area of the Thar desert has been set aside for solar power projects, sufficient to
generate 700 to 2,10 Gigawatts.
The Indian Solar Loan Program, supported by the United Nations Environment
Program has won the prestigious Energy Globe World award for Sustainability for helping
to establish a consumer financing program for solar home power systems. Over the span of
three years more than 16,000 solar home systems have been financed through 2,000 bank
31
branches, particularly in rural areas of South India where the electricity grid does not yet
extend.
Launched in 2003, the Indian Solar Loan Programme was a four-year partnership between
UNEP, the UNEP Risoe Centre, and two of India's largest banks, the Canara Bank and
Syndicate Bank.
Announced in November 2009, the Government of India proposed to launch its Jawaharlal
Nehru National Solar Mission under the National Action Plan on Climate Change with
plans to generate 1,000 MW of power by 2013 and up to 20,000 MW grid-based solar
power, 2,000 MW of off-grid solar power and cover 20 million sq. meters with collectors
by the end of the final phase of the mission in 2020.
Also, TERI's Lighting a Billion Lives Campaign started in 2008 aims to replace kerosene
and paraffin lamps with CFLs to provide off-the-grid lighting to villages and thus ease the
load on the power grid while at the same time provide the people with safe, non-polluting
light at night. So far, it has provided 35,000 CFLs to 640 villages in 16 states in India and
also about 500 CFLs in Myanmar. This campaign has reportedly benefited 175,000 people.
India's largest photovoltaic (PV) power plants- Annexure -2
Wind Energy:-
In progress are wind resource assessment programme, wind monitoring, wind mapping,
covering 800 stations in 24 states with 193 wind monitoring stations in operations.
Altogether 13 states of India have a net potential of about 45000 MW.
The development of wind power in India began in the 1990s, and has significantly
increased in the last few years. Although a relative newcomer to the wind industry
compared with Denmark or the United States, India has the fifth largest installed wind
power capacity in the world. In 2009-10 India's growth rate was highest among the other
top four countries.
As of 31 March 2011 the installed capacity of wind power in India was 16078 MW, mainly
spread across Tamil Nadu (6007 MW), Maharashtra (2310.70 MW), Gujarat (2175.60
MW), Karnataka(1730.10 MW), Rajasthan (1524.70 MW), Madhya Pradesh (275.50
MW), Andhra Pradesh (200.20 MW), Kerala (32.8 MW), Orissa (2MW), West Bengal (1.1
MW) and other states (3.20 MW). It is estimated that 6,000 MW of additional wind power
capacity will be installed in India by 2012. Wind power accounts for 6% of India's total
installed power capacity, and it generates 1.6% of the country's power. India's wind atlas is
available.
The worldwide installed capacity of wind power reached 197 GW by the end of 2010.
China (44,733 MW), US (40,180 MW), Germany (27,215 MW) and Spain (20,676 MW)
are ahead of India in fifth position. The short gestation periods for installing wind turbines,
and the increasing reliability and performance of wind energy machines has made wind
power a favored choice for capacity addition in India.
32
Suzlon, an Indian-owned company, emerged on the global scene in the past decade, and by
2006 had captured almost 7.7 percent of market share in global wind turbine sales. Suzlon
is currently the leading manufacturer of wind turbines for the Indian market, holding some
52 percent of market share in India. Suzlon’s success has made India the developing
country leader in advanced wind turbine technology.
Wind Power projects in India-
Power Plant Producer Location State Total
Capacity
(MWe) Vankusawade Wind
Park
Suzlon Energy Ltd. Satara Dist. Maharashtra 259
Cape Comorin AbanLoyd Chiles Offshore
Ltd.
Kanyakumari Tamil Nadu 33
KayatharSubhash Subhash Ltd. Kayathar Tamil Nadu 30
Ramakkalmedu Subhash Ltd. Ramakkalmedu Kerala 25
Muppandal Wind Muppandal Wind Farm Muppandal Tamil Nadu 22
Gudimangalam Gudimangalam Wind Farm Gudimangalam Tamil Nadu 21
Puthlur RCI Wescare (India) Ltd. Puthlur Andhra
Pradesh
20
LamdaDanida Danida India Ltd. Lamda Gujarat 15
Chennai Mohan Mohan Breweries &
Distilleries Ltd.
Chennai Tamil Nadu 15
Jamgudrani MP MP Windfarms Ltd. Dewas Madhya
Pradesh
14
Jogmatti BSES BSES Ltd. ChitradurgaDist Karnataka 14
PerungudiNewam Newam Power Company
Ltd.
Perungudi Tamil Nadu 12
Kethanur Wind Farm Kethanur Wind Farm Kethanur Tamil Nadu 11
Hyderabad APSRTC Andhra Pradesh State Road
Transport Corp.
Hyderabad Andhra
Pradesh
10
Muppandal Madras Madras Cements Ltd. Muppandal Tamil Nadu 10
PoolavadiChettinad Chettinad Cement Corp.
Ltd.
Poolavadi Tamil Nadu 10
Shalivahana Wind Shalivahana Green Energy.
Ltd.
Tirupur Tamil Nadu 20.4
33
Tidal Energy- • Tides generated by the combination of the moon and sun’s gravitational forces
• Greatest affect in spring when moon and sun combine forces
• Bays and inlets amplify the height of the tide
• In order to be practical for energy production, the height difference needs to be at
least 5 meters
• Only 40 sites around the world of this magnitude
• Overall potential of 3000 gigawatts from movement of tides
India set to get Asia’s first power plant-
With the proposed commissioning of a 50-Mw tidal power project off the coast of Gujarat
in 2013, India is ready to place its first “seamark” that will be a first for Asia as well.
London-based marine energy developer Atlantis Resources Corporation, along with
Gujarat Power Corporation Ltd, has signed a memorandum of understanding (MoU) with
the Gujarat government to start this project.
The cost for the plant is expected to be in the vicinity of Rs 750 crore. This plant is also is
expected to be scaled up to 250 Mw.
Timothy Cornelius, CEO, Atlantis Resources Corporation, said with just about 2 giga watt
of tidal power installations in the world today, this is a completely new and uncharted
power sources with immense potential. “Tidal power today is what wind energy was 10
years back,” he said.
Due to the high investment in setting up the project, a typical tidal power project is
expected to break even between 8 and 12 years after commissioning. Despite the long
gestation period to make it commercially viable, tidal power has unparalleled
environmental advantages.
“Tidal current power uses turbines to harness the energy contained in the flow of ocean
tides. It is unique as like tidal movements, power output is highly predictable and
sustainable with zero visual impact and the turbines are completely submerged. Tidal
power is like putting a wind turbine subsea and the turbine rotors rotate slowly, causing
very little environmental impact to marine flora and fauna,” said Cornelius.
The power offtaker would be Gujarat Power Corporation. The final cost of power per unit
will be determined at the completion of front-end engineering and design (FEED) phase,
but was expected to be competitive when compared to the large solar power projects
planned for development in Gujarat, the company said.
The project is currently owned by Atlantis and GPCL and project equity participants will
be sought at the completion of FEED phase.
34
Late last year, Atlantis became the turbine supplier to the largest planned marine power
project in the world, MeyGen, a 378-Mw tidal power project in the Pentland Firth in
Northern Scotland.
Current estimates suggest 15 per cent of the world’s power demands can be met by tidal
current power sources, while the estimates for India are currently around 5 per cent of its
annual demand for power.
“It is only an estimate, but it could be certainly more than 5 per cent, inclusive of wave
power and tidal power, from what we know now. However, resource investigation has just
begun and with so much coast line, I would expect this number to increase significantly,”
said Cornelius.
Sea water, which is 832 times denser than air, gives a 5 knot ocean current more kinetic
energy than a 350-km an hour wind, thus allowing ocean currents to have a very high
energy density. Accurate predictions of tidal current movements also make this one of the
most predictable and, therefore, reliable sources of renewable energy available today.
Nuclear Energy-
The global nuclear industry is moving forward at a brisk pace, only slightly slowed by the
Fukushima accident. The International Atomic Energy Agency’s most realistic estimate is
that 90 new nuclear plants will enter service by 2030. Ten new nuclear plants went online
over the past two years.
The home of more than one billion people, India has had one of the world’s fastest-growing
economies over the past decade. During this same time frame, the country has made big
strides in increasing its capacity for nuclear generation of electricity.
India now envisages increasing the contribution of nuclear power to overall electricity
generation capacity from 3.2% to 9% within 25 years. By 2020, India's installed nuclear
power generation capacity will increase to 20,000 MW.
India now ranks sixth in terms of production of nuclear energy, behind the U.S., France,
Japan, Russia, and South Korea.
There are now 439 nuclear reactors in operation around the world in over 30 countries,
providing almost 16% of the world’s electricity.
Given the emphasis on rapid expansions in the Indian nuclear power industry, it is
imperative to bring the Indian know-how and resources together with global nuclear skills
and experience to introduce a new dimension to the upcoming nuclear power projects.
Looking at all above important issues, UBM India is bringing its 4th International
Exhibition and Conference from 25 to 27 September 2012 at Mumbai. The exhibition and
the concurrent summit will be an excellent global networking opportunity for the
exhibitors, visitors and delegates. It will provide an opportunity for all companies showcase
35
their nuclear expertise and know-how and identify business opportunities in the Indian
market.
Presently Nuclear power is the fourth-largest source
of electricity in India after thermal, hydroelectric and renewable sources of electricity.As of
2010, India has 20 nuclear reactors in operation in six nuclear power plants, generating
4,780 MW while seven other reactors are under construction and are expected to generate
an additional 5,300 MW.
In October 2010, India drew up "an ambitious plan to reach a nuclear power capacity of
63,000 MW in 2032", but "populations around proposed Indian NPP sites have launched
protests, raising questions about atomic energy as a clean and safe alternative to fossil
fuels". There have been mass protests against the French-backed 9900 MW Jaitapur
Nuclear Power Project in Maharashtra and the 2000 MW Koodankulam Nuclear Power
Plant in Tamil Nadu. The state government of West Bengal state has also refused
permission to a proposed 6000 MW facility near the town of Haripur that intended to host
six Russian reactors. A Public Interest Litigation (PIL) has also been filed against the
government’s civil nuclear program at the Supreme Court. Despite these impediments the
capacity factor of Indian reactors was at 79% in the year 2011-12 as against 71% in 2010-
11. Nine out of Twenty Indian reactors recorded an unprecedented 97% Capacity factor
during 2011-12. With the imported Uranium from France, the 220 MW Kakrapar 2 PHWR
reactors recorded 99% capacity factor during 2011-12. The Availability factor for the year
2011-12 was at 89%.
Bio-mass Energy-
Bio-energy contribution to the total primary energy consumption in India is over 27%.
Indeed, this is the case for many other countries, because biomass is used in a significant
way in rural areas in many countries. However, the contribution of biomass to power
production is much smaller than this - currently, biomass comprises only about 2650 MW
of installed capacity, out of a total of about 172000 MW of total electricity installed
capacity in the country (May 2011).
India is the pioneer in biomass gasification based power production. While gasification as a
technology has been prevalent elsewhere in the world, India pioneered the use of biomass
gasification for power production. As a result, prominent Indian solution providers in
biomass gasification are implementing their solutions in other parts of the world.
EAI estimates the total installed capacity of biomass gasification based power production
in India will be about 140 MW, out of a total of about 2600 MW of biomass based power
(cumulative of grid connected and off grid). Of the total, biogas based power generation
has the share (about 1400 MW), followed by combustion-based biomass power production
(about 875 MW). While biomass gasification currently contributes little to power
production, EAI foresees significant growth for this sector in future.
Waste Resource-
36
Every year there is an estimated 30 million tons of solid waste and 4,400 million cubic
meters of liquid waste generated in urban areas of India alone. The problems caused by
solid and liquid wastes can be significantly mitigated through adoption of environment-
friendly waste-to-energy technologies. These technologies hold the promise of reducing
quantity of wastes and in addition, generate a substantial quantity of energy from them, and
greatly reduce pollution of water and air. In spite of the unquantifiable level of benefits,
they are still not seen as an attractive business opportunity. The reason for this is the lack of
understanding about the various (technology/process) options available and long term
viability of the waste to energy projects.
We at EAI have been researching the waste to energy industry for the past few years and
have developed a thorough understanding of the various technology options and their
viabilities. Diverse business opportunities along the value chain, the global scenario and the
market segment for each of the waste to energy technologies are well known to us and we
are poised to provide a balanced opinion about waste to energy industry.
can provide extensive research and consulting assistance for value generation from the
following types of waste:
Industrial solid waste
Municipal solid waste
Hazardous waste
Industrial liquid waste
Sewage and Fecal Waste
Agro and crop waste
We can also provide customized inputs for value and energy generation based on the
following processes:
Anaerobic digestion
Pyrolysis
Gasification
Combustion
Fermentatio
Limitation of Renewable energy resources in India- Renewable energy often relies on the weather for its source of power that is
unpredictable and intermittent.
Solar power is dependent on availability of sunlight. Thus the availability of power
fluctuates from zero to maximum every day.
The current cost of renewable energy technology is also far in excess of traditional
fossil fuel generation.
37
7 Natural Gas in India:-
7.1 Current Natural Gas Scenario in India-
India is the world’s seventh largest energy producer, accounting for 2.49% of the worlds
total annual energy production. It is the fifth largest energy consumer, accounting for
about
3.45 % of total energy consumption in 2004, which has been increasing by an average of
4.8 % percent a year since 1990. The share of commercial energy in total primary energy
consumption increased from 59.7 % in 1980-81 to 79.3 % in 2008-09. India’s GDP has
grown at more than 8-8.5 % during the last few years, and is expected to grow minimum at
the rate of 7.5-9 % in the coming few years. The growth has taken place despite the huge
deficit in energy infrastructure and infrastructure. Even today, half of the country’s
population does not have access to electricity or any other form of commercial energy, and
still use non- commercial fuels such as firewood, crop residues end during cakes as a
primary source of energy for cooking in over two-thirds of households.
Major gas projects in India-
Project State Commissioned Capacity (MW)
RGPPL, Anjanvel Maharashtra 1480
Dadri Uttar Pradesh 817
Paguthan Gujarat 654.73
Auraiya Uttar Pradesh 652
Jhanor-Gandhar Gujarat 648
Kawas Gujarat 645
Faridabad Haryana 430
Anta Rajasthan 413
Vemagiri Power Generation Ltd. Andhra Pradesh 388.5
Rajiv Gandhi CCPP Kayamkulam Kerala 350
38
7.2 Demand and Forecasts for India-
The demand of natural gas has sharply increased in the last two decades at the global
level. In India natural gas was first discovered off the west coast in 1970s, and today, it
constitutes 10 % of India’s total energy consumption. Over the last decade it has gained
importance as a source of energy and its share is slated to increase to about 25 % of the
total energy basket by 2025-2030. In its Reference Scenario, the IEA expects Indian gas
demand to increase to 94 billion cubic meters by 2020 and to 132 billion cubic meters by
2030, driven by the industrial and power generation sectors. This means anannual
increase of 5.4 % – one of the highest in the world. In the 450 Scenario, demand by 2020
would be slightly lower (89 billion cubic meters), but by 2030 would almost remain at
the same level as in the Reference Scenario –
132 billion cubic meters– as gas would be needed to displace coal. The latest available
Indian demand forecasts for the 11th
Five- year plan (2007-12) show gas demand
increasing by between 37 % and 58 % over that period and the power sector being the
main driver for incremental gas demand (see Table below).
39
Natural Gas Demand Projection
Reference- http://ebookbrowse.com/rr07-23-india-natural-gas-indd-pdf-d132734147
7.3 Competitive demand from Fertilizer & City Gas Sector-
Further, ICRA expects the prospects for the CGD business to remain good in the long term,
given the under-penetration of city gas in India in the absence of adequate gas and
transmission pipeline capacity. Natural gas allocation will invite Expression of Interest
(EOI) from those interested, henceforth called applicant, in the use of the gas as advertised.
It will also indicate the compression/transportation charges, as applicable, to each field in
advance and clarify that these shall have to be borne by the applicant (s).
EOIs shall be submitted in a sealed cover super scribing the priority sector they belong to.
The sectors have been prioritized as given below.
a. Gas-Based Urea fertilizer plants
b. LPG Plants
c. Power Plants supplying power to the grid/state utilities at regulated rates under PPA.
d. CGD systems for domestic and transport sectors
e. Steel/Refineries/Petrochemicals for feedstock purposes.
f. CGD for industrial and Commercial Consumers.
g. Any other customers for captive and merchant power, feedstock or fuel purpose.
Allocation shall start from applicants highest in the priority as mentioned above. Further,
only if the full gas demands of all applicants in the preceding sector are met, will the
succeeding priority sector be taken up for allocation in that sector.
Reference- http://www.petroleum.nic.in/
40
7.4 Structure of the natural gas sector in India-
Until recently, the exploration and production of natural gas in India was undertaken
exclusively by the state owned Oil and Natural Gas Corporation Ltd (ONGC) and Oil India
Ltd (OIL). As a result of government initiatives to encourage private sector investment in
exploration and production activities and to deregulate the oil and gas sector, several
private sector participants are also now engaged in exploration and production (figure 17;
PETROTECH Society and PwC 2007; GAIL 2007).
Under the New Exploration Licensing Policy (NELP), operating since 1999, foreign and
domestic private sector companies acquire exploration blocks and undertake exploration
activities either as joint venture consortiums with state owned companies or independently.
Reliance Industries Ltd (RIL) is the largest oil and gas acreage holder among the private
sector companies in the country. It is also India’s first private sector company in the
exploration and production sector to have discovered large natural gas reserves in the
eastern offshore Krishna–Godavari basin in late 2002. Other private sector participants in
exploration and production activities include BG India, Nikko Resources and Cairn Energy.
Pipeline gas transport is primarily undertaken by state owned GAIL (India) Ltd, formerly
the Gas Authority of India Ltd. GAIL is India’s largest gas transmission and marketing
company, with a high pressure pipeline network of around 5600 kilometers. The largest
pipeline network, Hazira–Vijaipur–Jagdishpur, with a total length of more than 2800
kilometres, covers the states of Gujarat, Rajasthan, Madhya Pradesh, Uttar Pradesh,
Haryana and Delhi in the north west of the country. The 610 kilometer long Dahej–Vijaipur
pipeline owned by GAIL transports regasified LNG received at the Dahej terminal operated
by Petronet LNG Ltd (PLL).
GAIL also has regional gas distribution grids, totalling around 1 800 kilometers of varying
length and diameter in Ahmedabad, Assam, Baroda, Cauvery basin, Hazira, Krishna-
Godavari basin, Mumbai, Rajasthan and Tripura. Other regional natural gas pipeline
operators include Gujarat Gas Company Ltd (GGCL) and Gujarat State Petronet Ltd
(GSPL) in Gujarat, Assam Gas Company Ltd (AGCL) and Tripura Natural Gas Company
Ltd (TNGCL) in Assam and Tripura respectively. Indraprastha Gas Ltd (IGL) in Delhi,
Mahanagar Gas Ltd (MGL) in Mumbai and GGCL in Gujarat are also developing city gas
distribution networks for the supply of compressed natural gas (CNG) and city gas in their
respective areas.
The gas produced by ONGC and part of the gas from joint venture consortiums, such as the
Panna/ Mukta and Tapti joint venture formed by BG India, ONGC and RIL, is marketed by
GAIL. The gas produced by OIL is marketed by OIL itself, except in Rajasthan where
GAIL markets its gas. Gas produced by Cairn Energy and Gujarat State Petroleum
Corporation Ltd (GSPC) is being sold directly by the respective companies.
Companies operating India’s LNG import facilities include Petronet LNG Ltd (PLL) and
Shell Hazira. PLL, the operator of India’s first LNG receiving and regasification terminal at
41
Dahej, Gujarat, is comprised of four state owned oil and gas companies
— GAIL, ONGC, Indian Oil Corporation Ltd (IndianOil) and Bharat Petroleum
Corporation Ltd (BPCL). The Hazira LNG Terminal and Port is partnered by Shell Gas BV
and Total GazElectricité Holdings France, representing two of the largest private LNG
suppliers in the world.
Ratnagiri Gas and Power Private Ltd (RGPPL) is a special purpose organisation that has
been incorporated to take over assets and revive the former Dabhol Power Company
project in the state of Maharashtra. The Dabhol project is an integrated facility consisting
of a gas fired power plant and an associated LNG receiving and regasification terminal. The
RGPPL shareholders include GAIL, state owned National Thermal Power Corporation Ltd
(NTPC), Maharashtra State Electricity Board Holding Co Ltd (MSEB) and Indian financial
institutions.
Production LNG Supplier Transport CNG
distribution
Gas Marketing
ONGC PLL (Daheg&
Kochi)
GAIL GGCL(Gujrat) GAIL
OIL Shell (Hazira) IOL MGL(Mumbai) GSP
BG India RGPLL (Dabhoi) GSPC IGL(Delhi) ONGC
GSPC ONGC
(MangAlore)
RIL RIL AGCL
RIL AGCL BG India RIL
Cairn India ONGC Indian Oil
Nikko
Resources
BPCL
OIL
BG India
Cairn India
Available option for Natural gas supply In India:-
1). Domestic Natural Gas Resource
2). Natural Gas Import- (A) Piped Natural Gas
- (B) Liquefied Natural Gas
3). Gasification of Coal
7.5 Domestic Natural Gas in India-
According to Oil and Gas Journal, India had approximately 38 trillion cubic feet (Tcf) of
proven natural gas reserves as of January 2011. EIA estimates that India produced
approximately 1.8 Tcf of natural gas in 2010, a 63 percent increase over 2008 production
levels. The bulk of India's natural gas production comes from the western offshore regions,
especially the Mumbai High complex, though fields in the Krishna-Godavari (KG) are
increasingly important.
42
In 2010, India consumed roughly 2.3 Tcf of natural gas, more than 750 billion cubic feet
(Bcf) more than in 2008, according to EIA estimates. Natural gas demand is expected to
grow considerably, largely driven by demand in the power sector. The power and fertilizer
sectors account for nearly three-quarters of natural gas consumption in India. Natural gas is
expected to be an increasingly important component of energy consumption as the country
pursues energy resource diversification and overall energy security.
Despite the steady increase in India's natural gas production, demand has outstripped
supply and the country has been a net importer of natural gas since 2004. India's net
imports reached an estimated 429 billion cubic feet (Bcf) in 2010.
Sector Organization
State-owned companies play a predominant role in India's gas sector, although their share
of production is smaller than in the oil sector. ONGC accounted for about half of India's
natural gas production in 2009-2010. Reliance Industries will also have a greater role in the
natural gas sector in the coming years, as a result of a large natural gas find in 2002 in the
KG basin. In June 2011, the Indian government approved a $7.2 billion joint venture
agreement between Reliance and BP that will focus on expanding offshore development.
Natural gas prices in India are regulated by the government. Administered Pricing
Mechanism (APM) natural gas – gas produced from fields handed to ONGC and OIL by
the Indian government – more than doubled in price in May 2010; from $1.8/million (MM)
Btu to $4.2/MMbtu, although some customers still receive subsidies. Prices for privately
produced gas, which are indexed to the price of oil, are slightly higher.
The Gas Authority of India Ltd. (GAIL) holds an effective monopoly on natural gas
transmission and distribution activities. Although the transmission sector was opened to
foreign investment in 2006, 80 percent of natural gas consumed in India was transported
through GAIL's 4,100-mile trunk pipeline network. The company expects to double the
size of this network by 2014. Reliance Industries is also investing heavily in the
transmission sector to move its KG-basin gas to market.
Exploration and Production
Until 2008, the majority of India's natural gas production came from the Mumbai High
complex in the northwest part of the country. Recent discoveries in the Bay of Bengal have
shifted the center of gravity of Indian natural gas production.
In April 2009, production from Reliance Industries' Dhirubhai 1 and Dhirubhai 3 gas fields
in the D6 block of the KG Basin has led to a massive expansion in domestic supply. The
block holds estimated reserves of 11.5 Tcf. Of the nearly 1.4 Bcf/d of initial production,
nearly half went to gas based power plants, the rest to fertilizer, LPG plants, and city gas
distribution entities. After reaching a production peak of 2.8 Bcf/d in December 2009,
Reliance decided in July 2010 to cap production of KG-D6 at 2.1 Bcf/d pending resolution
of infrastructure and field maintenance problems. Industry analysts expect the BP-Reliance
partnership to address these issues.
In addition to these new offshore finds, India plans to expand the development of
unconventional gas resources. The country already produces some coalbed methane and
seeks to expand these volumes soon. In addition, an EIA-sponsored study on world shale
gas resources reports that India possesses 63Tcf of technically recoverable shale gas
resources. The country has yet to hold a licensing round for its shale gas blocks.
43
As per the Ministry of petroleum, Government of India, India has 1,437 billion cubic
meters (50.7×1012
cu ft) of confirmed natural gas reserves as of April 2010. A huge mass of
India’s gas production comes from the western offshore regions, particularly the Mumbai
High complex. The onshore fields in Assam, Andhra Pradesh, and Gujarat states are also
major producers of natural gas. India imports small amounts of natural gas. In 2004, India
consumed about 1,089×109 cu ft (3.08×10
10 m
3) of natural gas, the first year in which the
country showed net natural gas imports. During 2004, India imported 93×109 cu ft
(2.6×109 m
3) of liquefied natural gas (LNG) from Qatar.
As in the oil sector, India’s state-owned companies account for the bulk of natural gas
production. ONGC and Oil India Ltd. (OIL) are the leading companies with respect to
production volume, while some foreign companies take part in upstream developments in
joint-ventures and production sharing contracts. Reliance Industries, a privately-owned
Indian company, will also have a bigger role in the natural gas sector as a result of a large
natural gas find in 2002 in the Krishna Godavari basin.
The Gas Authority of India Ltd. (GAIL) holds an effective control on natural gas
transmission and allocation activities. In December 2006, the Minister of Petroleum and
Natural Gas issued a new policy that allows foreign investors, private domestic companies,
and national oil companies to hold up to 100% equity stakes in pipeline projects. While
GAIL’s domination in natural gas transmission and allocation is not ensured by statute, it
will continue to be the leading player in the sector because of its existing natural gas
infrastructure.
7.6 Domestic Gas pipe lines network in India-
Presently we have a country wide network of 12,000 km of gas pipeline and having
capacity to transport 230 mmscmd of gas.
The UPA government under the Union Minister of Petroleum and Natural Gas Minister,
Shri S. Jaipal Reddy has dedicated a 2200km long natural gas pipeline to the nation. The
gas pipeline inaugurated on 23 March 2012 is built at a massive budget of 13100 crores
wherein 505 crore were paid to the landowners whose lands were acquired by GAIL (Gas
authority of India Limited) for the purpose. The new pipeline is capable of carrying 66
MMSCMD of natural gas and generating power up to 3500 MW. It will also help to
provide the CNG/PNG/ natural gas in the areas from where it will pass. The construction of
the pipeline was completed in 45 months and it crosses 25 national highways, 56 state
highways, 35 railway crossings, 399 water bodies and 53 other pipelines while passing
through the states of Gujarat, Madhya Pradesh, Uttar Pradesh, Rajasthan, Delhi, Haryana,
Punjab and Uttrakhand.
44
7.7 Trance-national gas pipe lines-
A. Tapi- pipeline
B. Iran-Pakistan-India pipeline
C. Myanmar-Bangladesh- India pipeline
45
7.7.1 TAPI- pipeline-
The 1,680-kilometre Turkmenistan-Afghanistan-Pakistan-India (Tapi) pipeline, Ashgabat’s
dream project that first appeared in 1995, has been on hold for many years due to the
Taliban insurgency in Afghanistan.
The presidents of Turkmenistan, Pakistan, and Afghanistan met for the first time to discuss
the project, while India was represented by the country’s Energy Minister MurliDeora.
They signed an intergovernmental agreement on the Tapi pipeline, with energy ministers
signing a separate framework document on the project, but no deal was reached on future
sales or the consortium for the future construction tender.
Gas Authority of India (GAIL) the state-owned company has signed this natural gas sale
and purchase agreement with TurkmenGaz for Turkmen gas shipped via the Turkmenistan-
Afghanistan-Pakistan-India (TAPI) pipeline.
Turkmenistan would be exporting 90 MSCMD through this pipeline of which 14 MSCMD
would be taken by Afghanistan and 38 MSCMD each by India and Pakistan. The pipeline
will be built at an estimated investment of $ 7.6 billion approximately.
Afghanistan’s President Hamid Karzai called it “a highly important project” and assured
that he would “put in efforts to ensure security both during construction and after
completing the project”.
Security of the pipeline inside Afghanistan has been questioned as the route would go
through a number of turbulent regions, including the Helmand and Kandahar provinces
which have become epicenters of violence.
The pipeline would also go through Quetta and end in Fazilka, an Indian city near the
India-Pakistan border.
“We are witnessing a historic project,” said Haruhiko Kuroda, president of the Asian
Development Bank which will fund the project. “It is not easy to make it happen. Efforts
must be made to ensure its security and the ADB is ready to help realize it.”
Turkmenistan, which is believed to hold the world’s fourth largest reserves of natural gas,
has been working to diversify away from its reliance on Soviet pipelines and has had rows
with Moscow over the projected trans-Caspian pipeline to Europe, Nabucco. Ashgabat has
also opened export routes to China and increased gas supply to Iran in the recent years.
Recently Mr. Reddy, the GSPA, signed by national oil companies of the four nations, was
witnessed by Turkmenistan Oil Minister, B. Nedirov, Pakistan's Petroleum Minister Asim
Hussain and Afghanistan's Minister of Mines Wahidullah Shahrani.
“Without a doubt, the economic benefits of the TAPI gas pipeline will be immense for our
energy-starved economies. The flow of natural gas will bring in industrial and economic
development in our countries,” Mr. Reddy said.
The Bangladesh government recently expressed its willingness to Afghanistan government
and sent a proposal in this regard. The Energy and Mineral Resources Division last month
sent a letter to Economic Relations Division (ERD) to move for connecting the country
with the multi-billion dollar project through the foreign affairs ministry. Later, the foreign
46
affairs ministry forwarded the government’s expression of interest letter to the Afghan
energy ministry, the official said.
7.7.2 Iran–Pakistan–India pipeline-
The Iran–Pakistan–India (IPI) pipeline was proposed more than a decade ago to transport
gas from the Persian Gulf through southern Iran and Pakistan to link with existing pipeline
infrastructure in north western India. Gas would be sourced from the South Pars/North
Dome gas field, which straddles the territory of Iran and Qatar in the Persian Gulf. The
current proposed pipeline route is around 2800 kilo meters in length.
The Iranian share of the gas field is estimated to contain around 13 trillion cubic meters of
gas. The volume of gas supplied by the IPI pipeline could reach 55 billion cubic meters a
year. India has sought around 37 billion cubic meters (equivalent to 27 million tonnes of
LNG), roughly equal to its current supply from domestic sources, while Pakistan would
take around 18 billion cubic meters.
The Indian Government is optimistic that the IPI pipeline could begin delivering gas to
India by around 2015. However, since the inception of the project, a number of factors
have caused substantial delays in its commencement. These include disagreements related
to gas pricing between India and Iran, as well as capital cost increases to around US$7
billion. In addition, geopolitical tensions in India–Pakistan relations, international concerns
47
over trade with Iran, as well as domestic opposition in Iran to gas exports, have also
hindered progress. The significant hurdles associated with the project, the potential for
further delays, the lengthy construction period and high capital costs heighten the
uncertainty surrounding a potential startup date. In this study, it is assumed that the project
will not be operational until sometime after 2020.
The prospects of IPI ever becoming a reality are also very bleak, despite the fact that
Pakistan has repeatedly expressed its resolve to go ahead with the venture. The US is
deadly against the IPI and has been applying continuous pressure on Pakistan to abandon
this project, going as far as threatening of dire consequences. Secretary of State Hillary
Clinton responding to questions in the House Appropriations Sub Committee on State and
Foreign Operations on 1, March 2012 warned that Pakistan could face US sanctions if it
pressed ahead with its proposed gas pipeline project with Iran. She said that the US
administration recognizes Islamabad’s essential energy needs. However, she added,
construction of a gas pipeline from Iran to Pakistan would mean a violation of US
legislation on sanctions against Iran.
7.7.3 Myanmar-Bangladesh-India Pipeline-
The lack of convergence in the energy security policies of India and Bangladesh has
impacted the outcome of the Myanmar-Bangladesh-India (MBI) pipeline project. This
project, envisaged as an important aspect of the energy security policy of India, has in the
48
past failed to accommodate the needs of Bangladesh; this has resulted in an indefinite delay
in project implementation. However, recent changes in the energy scenario of Bangladesh
have enabled greater convergence in the energy policies of both countries leading once
again to prospects of a revival of the project. Project implementation has also been stalled
by the construction of the Myanmar-China pipeline project which consists of dual oil and
gas pipelines originate at Kyaukryu port on the west coast of Myanmar and enter China at
Yunnan's border city of Ruili. Competition between the two projects stems from
uncertainty regarding just how much gas Myanmar actually has for export.
The respective national energy security policies of India and Bangladesh constitute the
main determinants of the success or failure of this project. The extent to which these
policies have been able to accommodate each other and the effect this has had on the
Myanmar-Bangladesh-India pipeline project is the crux of the following analysis.
Interestingly changes in the importance of natural gas and of natural gas pipelines to both
countries are important drivers in the evolution of the energy security policies of both
countries.
Myanmar-Bangladesh-India Pipeline Route
To be sure this is not a new project but trails back through current history to an initial lack
of convergence in the energy security policies of both countries which led to a breakdown
in negotiations in 2005; however changes in Bangladesh’s energy policies since then have
enabled the establishment of some common ground in the energy security policies of both
states leading to prospects of renewed collaboration over the last 24 months. Recently our
Prime Minister Mr. Manmohan Singh visits to Myanmar, once again creates hope for
revival of this project.
49
7.8 Liquefied Natural Gas (LNG) –
India began importing liquefied natural gas (LNG) in 2004. In 2009, India imported 434
Bcf of LNG, nearly 65 percent of it from Qatar, making it the sixth largest importer of
LNG in the world.
Currently, India has two operational LNG import terminals, Dahej and Hazira. India
received its first LNG shipments in January 2004 with the start-up of the Dahej terminal in
Gujarat state. Petronet LNG, a consortium of state-owned Indian companies and
international investors, owns and operates the Dahej LNG facility with a capacity of 6.5
million tons per year (mtpa) (975 Bcf/y). India's second terminal, Hazira LNG, started
operations in April 2005, and is owned by a joint venture of Shell and Total. The facility
has a capacity of 3.6 mtpa (488 Bcf/y). New terminals at Kochi and Dabhol are scheduled
to come online in 2012.
Demand for LNG will only expand to the extent that domestic production plans fall short of
stated goals. Further, plentiful and cheap domestic gas that sells at a discount to imported
LNG makes the international spot market a marginal option and complicates negotiations
for long-term supply contracts.
LNG is a clear, colorless, non-toxic liquid that can be transported and stored more easily
than natural gas because it occupies up to 600 times less space.
When LNG reaches its destination, it is returned to a gas at regasification facilities. It is
then piped to homes, businesses and industries.
LNG Terminal Capacity (MMTPA)
Dahej 5
DahejExp 5
Kochi 2.5
Shell Hazira 2.5
Dabhol 2.5
Mangalore 5
Kakinada 2.5
Total 25
Reference- http://petrofed.winwinhosting.net/upload/19-21_Oct_11/Session%20II_RKGarg.pdf
7.8.1 Regasification Capacity of India-
India’s LNG re-gasification capacity is expected to increase fourfold in the next five years.
Currently, the country has an LNG re-gasification capacity of 13.6 MMTPA, which is
expected to gallop to 53.5 MMTPA by 2016-17 as new terminals are commissioned.
50
On a yearly basis, the LNG import terminal capacity is projected to increase from 13.6
MMTPA in 2011-12 to 19.8 MMTPA in 2012-13, to 28.5 MMTPA in 2013-14, to 31
MMTPA in 2014-15, to 46 MMTPA in 2015-16 and further to 53.5 MMTPA in 2016-17.
In 2011-12, the LNG re-gasification capacity in the country stood at 13.6 MMTPA,
comprising 10 MMTPA at PLL’s terminal at Dahej and 3.6 MMTPA at Shell’s terminal at
Hazira.
7.9 Coal gasification in India-
Integrated Gasification Combined Cycle (IGCC), an advanced coal-based power generation
technology, may be an important technology to help India meet its future power needs. It
has the potential to provide higher generating efficiency, can be adapted to efficiently burn
India's high-ash coal, and has the potential to do so with greatly reduced emissions and
offers the longer term potential to assist India to manage its C02 emissions. Efficient
gasification technology also offers India the potential to produce a variety of fuels,
particularly transportation fuels, and chemicals. These potential benefits would be useful in
a country that has coal shortages, runs inefficient power plants, and imports the majority of
its transportation fuels. Driven by these potential benefits the Central Government-owned
power generating equipment manufacturing company (BHEL) is developing a fluid-bed
gasifier designed for Indian coals, but has not yet demonstrated it at a size larger than 6
MW. Outside of BHEL, there are many factors holding this technology back. First, the
technology is projected to be more expensive than pulverized coal (PC) power generation.
In the Indian environment, the capital costs are estimated to be 1.5 times higher, and the
levelized cost of electricity is estimated to be 33 % higher than for PC power generation.
13.6
19.8
28.5 31
46
53.5
0
10
20
30
40
50
60
2011-12 2012-13 2013-14 2014-15 2015-16 2016-17
M
M
T
P
A
Year
Regasification Capacity
Regasification Capacity
51
Gasification is a general term for various processes that converts fuels such as coal into
synthesis gas (Syngas) by reacting them with air/oxygen and steam at elevated
temperatures. Syngas is primarily made up of CO, H2 and CH4.
Due to high ash content in Indian coal, there is no suitable technology for coal gasification.
Still it is on pilot scale demonstration projects. ONGC drilled two pilot wells near Mehsana
city in north Gujarat. India’s first fluidized bed coal gasification pilot plant established in
Nashik, Maharastra by Chimeto technologies ltd.
Gail-Coal India plan coal gasification project
Gail (India) Ltd and Coal India Ltd have entered into a memorandum of understanding for
setting up a surface coal gasification project for production of synthesis gas for fertilizer
production. Recently, Gail had signed a similar MoU with Rashtriya Chemicals and
Fertilizers Ltd (Project monitor, January 7-13, 2008).
The coal gasification project will entail an investment of around Rs 2,400 crore. The two
companies will form a joint working group to evaluate detailed feasibility report prepared
by Gail to evaluate the viability of the project in terms of techno-economic feasibility for
the project.
Gail had earlier commissioned a study by Udhe India Ltd for examining the potential of the
project and it is estimated that the project will consume around 5,000 tonnes per day of coal
to produce 7.76 mmscmd of synthesis gas (equivalent to 3,000 tpd of ammonia) for
production of 3,500 tpd of urea. Gail will focus on the production and marketing of
synthesis gas.
Reference- http://dspace.mit.edu/handle/1721.1/38569,
http://fossil.energy.gov/international/Publications/ucg_1106_cmri.pdf
8 Factors affecting Natural gas pricing:- Natural gas pricing in India
Hennery Hub Pricing
Globalization of Natural Gas Market
Transportation cost
Alternate fuel pricing
Exchange Rate
8.1 Natural gas pricing in India-
Pricing and Allocation of Upstream and Midstream Gas
Natural gas is a scarce resource in India and Govt. of India plays an important role in its
allocation. Historically, gas has been allocated in priority to end-users such as fertilizer
producers and power plants. In 2007, the Govt. of India started working on a new Gas
utilization Policy. This was mostly a consequence of the dispute between the Ambani
brothers and the related issues on gas pricing and utilization, which created a very hot
debate in India. In2007, a price was agreed between RIL and the government
52
under the PSC so that RIL was to sell gas at USD 4.20/BTU for first five year of the production.
This price level, often reported, reflects the calculation under a formula linking the price of gas to
the price of oil:
GP= 2.5 + (OP– 25)^0.15
Where, OP is the annual average Brent crude price for the previous FY, with a cap of USD
60/bbl and a floor of USD 25/bbl. Since 2007, the annual Brent price has always been above
USD60.
This and the large gap between demand and available supplies prompted the government to
develop a Gas Utilization Policy and to go back to administrative control over prices (Govt. of
India introduced a price formula for all discoveries under the first six NELP rounds) and over
volumes to be allocated to end-consumers. Therefore, in 2008, the government introduced
Natural Gas in India new guidelines called the Gas Utilization Policy, which effectively took
away gas producers' rights to sell the gas they discover on the open market. These guidelines
would be applicable for the next five years and be reviewed afterwards. The recent ruling of
the Supreme Court in May 2010 regarding the dispute between RIL (Reliance Industries Ltd.)
and RNRL (Reliance Natural Resources Ltd.), reaffirms the role of the government in the
allocation and pricing of gas. Currently, the rules of the General Policy for the gas market
imply that gas will be allocated according to industry-wise priorities set up by the
government. This does not imply that the gas is “reserved”: if one customer is not in a
position to take the gas, the next one on the list becomes eligible. Existing users have priority
over Greenfield users. The gas is allocated as follows:
For Existing customers:
•Fertilizer producers
•LPG and petrochemicals
•Power plants
•City Gas Distribution (CGD)
•Refineries
•Others.
For Greenfield users, the priorities are:
•Fertilizer producers
•Petrochemicals
•CGD
•Refineries
•Power plants.
The above lists clearly show the preference for fertilizer producers, petrochemicals and power
plants as first category customers. CGD usually comes in second position. Govt. of India gave
priority to power generators and fertilizer producers, making them the major customers supplied
at the lowest rate (Administered Pricing Mechanism prices decided by the government) by the
state-owned oil and gas companies. Industrial users, which are interested in switching to gas, do
53
not have access to low-priced gas resources and have to pay higher prices to private companies
and LNG importers. This makes sense when gas is more economical than the fuel they use (for
example naphtha). This situation has changed with the increase of APM (Administered Pricing
Mechanism) prices to USD 4.2/ Million British thermal units in May2010.
Regulations for Pricing Downstream Gas
Historically, gas markets were entirely serviced by PSU with prices determined by the central
government. From 1987 to 2005, production and transport prices were fixed by the
Empowered Group of Ministers (EoGM). The APM mechanism for oil was formally phased
out in 2002, but most of the gas produced by ONGC and OIL and distributed by GAIL
continues to be sold at APM prices. In 2006, the regulator PNGRB was created to set up the
bases for a competitive market and has been developing regulations since then.
In the transmission sector, Govt. of India wishes to develop a policy concerning the approval
of pipeline construction that would be consistent, market-friendly, and would help avoid
duplication of gas transport routes. In December 2006, the monopoly on transmission
networks for GAIL was abolished enabling other companies to build and operate networks.
The regulator PNGRB setup the Access Code requiring third-party access for one third of the
capacity and setting the tariffs of transportation for third parties. PNGRB has therefore to
determine tariffs for existing pipelines as well as for pipelines authorized by the government
(before PNGRB was created). Typically, transport along the Hazira-Bijaipur-Jagdishpur
pipeline costs USD 0.58/Million British thermal units; GAIL proposed to charge USD
0.88/ MBtu for its 572 km-long Dahej-Uran-Panvel pipeline. For its 1400 km-long East-West
pipeline (EWPL), RGTIL (Reliance Gas Transportation Infrastructure Ltd.) opted for a two-
zone tariff and wanted to charge USD 0.3-0.4 /MBtu for the first zone and USD 1.25 /MBtu
for the second zone.
Current Pricing Mechanism in India
The natural gas pricing scenario in India is complex and heterogeneous in nature. There are
wide varieties of gas price in the country. At present, there are broadly two pricing regimes
for gas in the country-gas priced under APM and non-APM or free market gas. The price of
APM gas is set by the Government. As regards non-APM/ free market gas, this could also be
broadly divided into two categories, namely, domestically produced gas from JV fields and
imported LNG. The pricing of JV gas is governed in terms of the PSC (Production Sharing
Contract) provisions. It is expected that substantial gas production would commence from the
gas fields awarded by the Government under the New Exploration Licensing Policy (NELP).
As regards LNG, while the price of LNG imported under term contracts is governed by the
SPA (Special Purchase Agreement) between the LNG seller and the buyer, the spot cargoes
are purchased on mutually agreeable commercial terms.
54
8.1.1 APM (Administered Pricing Mechanism) Gas Pricing:-
APM gas refers to gas produced by entities awarded gas fields prior to the PSC regime. The
prices of gas from these fields are administered by Govt. of India. In 2005, the price of APM
gas of ONGC and OIL was revised. Based on recommendations of the Tariff Commission, the
Cabinet Committee on Economic Affairs decided that APM gas prices would be increased.
All available APM gas would be dedicated to power generators, fertilizers as well as specific
end users covered by Court orders and small-scale consumers having allocations upto 0.05
MCM/day. At that time, ONGC and OIL produced about 55 MCM/day APM gas from
nominated fields. The Government raised the consumer price be revised from Rs.
2,800/ MSCM to Rs. 3,200/ MSCM with effective from July 1st 2005 for the following
categories of consumers. It was also decided that all the APM gas will be supplied to only
these categories.
•Power sector consumers
•Fertilizers sector consumers
•Consumers covered under court orders
•Consumers having allocations of less than 0.05MMSCMD
This increase was on an adhoc basis and it was decided that the Tariff Commission would
examine the issue of producer price of natural gas. The Tariff Commission (TC) has since
submitted its report and has recommended Producer price of Rs. 3710/MSCM and Rs.
4150/MSCM for ONGC and OIL respectively. TC has also recommended that the consumer
price should be somewhat higher than the producer price, considering the substantial
difference between the recommended producer price and the price of market gas /alternative
fuels. Govt. of India also decided that the price of gas supplied to small consumers and
transport sector (CNG) would be increased over the next 3 to 5 years to the level of the market
price. With effect from May 6th
2005, the APM gas price to small consumers and CNG sector
has been increased by 20% to bring it to Rs.3840 / MSCM.
The price of natural gas for customers in the North-East has been kept at 60% of the price in
the rest of the country. Accordingly, the price for power and fertilizers sector in the North-
East is Rs. 1920/MSCM and that for court-mandated and small scale consumers in the region
is Rs.2304/MSCM.
APM gas prices for the transport sector (CNG), small industries and consumers would be
progressively increased from INR 3200/1000m3 (USD 1.79/MBtu) over the following years
to reflect the market price. As they became the second category after fertilizers and power
producers, small users/CNG saw prices increasing from INR 3 200/1000m3(USD 1.79/MBtu)
to INR 3 840/1 000m3
(USD 2.15/MBtu) in 2006 (INR 2 304/1 000m3 in the North East).
55
8.1.2 Pricing of Gas under Pre-NELP Production Sharing Contracts (PSC)
Production Sharing Contracts (PSCs) were executed by GOI with Ravva consortium and PMT
(Panna Mukta Tapti) consortium on October 28, 1994 and December 12, 1994 respectively.
The price of natural gas is determined by the provisions of PSC signed by the consortium with
GOI. Around 17.3 MMSCMD, 1 MMSCMD and 0.9 MMSCMD are supplied from PMT
fields, Ravva fields and Ravva Satellite fields respectively under the pre- NELPPSCs. Out of
this, GAIL supplies 5 MMSCMD from PMT fields and the production (1
MMSCMD) from Ravva fields at APM rate to APM consumers; the difference between PSC
price and APM price is being made up through the gas pool account mechanism.
8.1.3 Pricing of Gas with reference to NELP Provisions-
As regards the gas from NELP fields, the Government constituted an Empowered Group of
Ministers to consider interlaid issues relating to pricing of natural gas, produced under the
NELP regime. It has been decided there in that the provisions of the NELPPSC should be
honored. The following price basis/ formula for the purpose of valuation of natural gas has
been approved by the Government in case of KG-D6 Block of RIL/Niko.
Selling price (in US$/MMBTU)= 2.5 + (CP-25)0.15 (in US$/MMBTU),
Where CP= crude price in US $/barrel, with cap of CP=US $60/barrel. The price basis
formula comes to US $4.2/MMBTU for crude price greater or equal to US $60/barrel. It was
decided that price discovery process on arm's length basis will be adopted in the future NELP
contracts, only after the approval of the price basis formula by the Government.
Reference- http://petroleum.nic.in/nelp6.pdf
8.2 Imported Gas (LNG) Pricing-
A contract was signed with Ras Gas, Qatar for supply of 5 MMTPALNG (equivalent to about
18 MMSCMD) by Petronet LNG Limited (PLL) and supplies commenced from April 2004.
This quantity has subsequently increased to 7.5 MMTPA effective from January 2010. The
price for LNG has been linked to JCC crude oil under an agreed formula. However, the FOB
price for the period up to December 2008 has been agreed at a constant price of
$ 2.53/MMBTU. This price translates to RLNG price of $ 3.63/MMBTU ex-Dahej terminal.
The price would vary on monthly basis from January 2009. Further, in July 2007, PLL has
signed another contract with Ras Gas, Qatar for supply of 1.25 MMTPA LNG from July 2007
to September 2009 to meet the requirement of Ratnagiri Power Project in Maharashtra.
In order to make the price of spot RLNG affordable, EGoM has decided in the meeting held
on January 11th
2007 for pooling of prices of spot cargoes with LNG being imported on term
contract basis. This Ministry accordingly issued orders on March 6th
2007 in compliance with
the decision of EGoM. In addition to the above term contracts, LNG is also being
56
Sourced from spot market by PLL and Hazira LNG Pvt. Ltd. During 2007-08, an average
quantity of about 5.7 MMSCMD was brought into the country as spot cargos.
Table 3:Summary of Prices prevailing across India
Long-term contract with Qatar’s Ras Gas (Dahej)
For the first five years, Petronet paid a fixed-price agreed in the contract (USD 2.53/MBtu for
5mtpa). In January 2009, this price was raised to USD 3.12/MBtu while volumes increased to
7.5 mtpa in Q4 2009.
Short-term contracts
Petronet negotiated with Ras Gas until December 2008 for 1.5 mtpa, Petronet paid USD
8.50/MBtu, but the price for end-consumers was pooled with the USD 2.53/MBtu Petronet
paid for LNG under the long-term contract.
57
Spot cargoes
During the summer of 2009, several companies including Petronet and GAIL contracted spot
cargoes for Dahej. Delivered prices were at USD 4.50-4.75/MBtu. Similar prices were
observed for Hazira, a sharp drop compared to the cargos imported in October 2008 at USD
2022/MBtu.
Petronet’s terminal in Kochi to be commissioned by 2012 has contracted to receive LNG from
Exxon Mobil’s 25% stake in Australia’s Gorgon project in all likelihood at much higher
prices than existing LNG contracts. LNG supplies will start in 2014-15. The previous wide
disparity between APM prices and non-APM prices, whether for gas from pre-NELP or
NELP, has narrowed. Under long-term contract, LNG is at an idle point between APM and
non-APM prices but gas sold under the new long-term contracts is likely to be more
expensive. Spot LNG prices are usually the highest but depend on global market conditions:
they were effectively at the same level as non-APM prices during the summer of 2009 (see
Table 4).
Table 4: Gas Price Differentiation in Indian Market (2010)
8.3 Pricing Issue:-
The pricing issue in India has always been quite complex. Firstly, APM gas supplies have
been declining while non-APM gas saw a dramatic increase in volume and share.
Furthermore, APM gas has been allocated in priority to power producers and fertilizers, two
sectors expected to see their demand increasing over the coming decade. While the Ministry
of Petroleum and Natural Gas has been pushing for higher prices to limit losses from the PSU,
this has met with strong resistance from the Ministry of Power and Ministry of Chemicals and
fertilizers. The subsidies to fertilizers have already multiplied by five over the last five years
to reach INR 75849 crore (USD 16.6 billion) in 2008/09.
Supply Side Issue:-
From the supply side, keeping artificially low APM prices of ten sends the wrong signals
indeed, gas prices have to be high enough in order to attract upstream investments, and cover
production costs and the recovery of capital in order to limit under-recoveries from PSUs (the
difference between the international market prices and the domestic retail price). These,
unsurprisingly, complained that low prices had been resulting in substantial losses for them.
58
Furthermore, India is likely to need increasing LNG supplies and has to be able to contract
additional LNG supplies on global markets or spot LNG cargoes when these are available to
meet a growing supply-demand gap. Even if the slope in long-term contracts is no longer at
the 0.17 seen in the Asian region in 2008, it is certainly likely to result in higher prices that the
USD 3/MBtu price with Qatar.
Demand Side Issue:-
On the demand side, the challenge is to perform a transition to prices closer to market prices
while maintaining the consumer’s competitiveness. KG-D6gas price for the first five years of
production, namely USD 4.21/MBtu, will soon represent around half of India’s supplies.This
price, more than twice the former APM price level fixed by the government, has
unsurprisingly become a reference point. Being a private sector company, RIL cannot sell gas
at under cost; therefore their clients have to be able to pay cost-plus for any of their gas. Indeed
gas availability and affordability for customers are crucial for gas development in India.
Demand for gas is infinite at USD 2-3/MBtu but limited at USD 7-8/MBtu for Indian major,
priority customers– fertilizer production and power generation.
There are two direct competing fuels for gas in these two sectors: Coal (in the power sector)
and Naphtha, as well as the option to produce fertilizers off shore. Gas represents currently a
small portion of total power capacity. In most cases, coal-fired generation will be cheaper than
gas, but when one compares a coal-fired plant is located far from coal fields or using imported
coal with a gas-fired plant near the existing gas transmission infrastructure, this will not be the
case. Certainly, these two sectors will be tested by the increase of APM prices. The fertilizer
industry represents a big issue as increasing the gas price is likely require some policy
solution: this could be increasing the subsidies of these customers, something that the finance
ministry is unlikely to accept easily, or produce fertilizer in other countries which would face
opposition from the fertilizer producers themselves and would also affect India’s self-
sufficiency with respect to agricultural production.
Road Ahead:-
There have been many attempts under taken by Indian governments to liberalize revise the
dual system until the decision was taken in May 2010. Several suggestions had been made:
one was to increase the price paid to ONGC and OIL to USD 2.3/MBtu in 2010, to link it to a
59
Wholesale Price Index in the future, or to increase it progressively to USD 4.2/MBtu by
2013. Another idea developed by the Ministry was a uniform domestic price instead of a
multitude of prices. This would be achieved through a removal of the dual APM market
pricing by gas pooling, which should stabilize prices and thus serve as a benchmark.
The government has made a big leap forward by increasing APM prices directly to USD
4.2/MBtu, creating a reference price representing currently to an estimated two thirds of gas
supplies. Additional changes may happen. The idea of pooling gas prices is still under study.
The question is now to see how this will affect the market in the future and how gas users,
which had been allocated cheaper gas than the new reference price, will be adversely affected.
Whatever the choice, a new future pricing mechanism would need to incentivize gas
production, attract new LNG supplies, while being transparent to attract foreign or private
investors.
8.4 Framework of New Pool Pricing Mechanism:-
8.4.1 Need for Pool Pricing:-
The Indian gas market needs to match customer expectations, gas infrastructure expansion
with providing flexibility for new and marginal suppliers to enter the market. Price pooling is
a mechanism where the potential for balancing the customer and developer expectation with
that of suppliers.
The need and benefits of pooling for the Indian gas markets need to be considered in the
context of the market development objectives. These could be summarized as follows:
1. Introducing new gas sources in the market;
2. Ensuring stable price signals for long gestation investments based on gas;
3. Deepening the pipeline network to expand the gas markets geographically;
4. Sending appropriate price signals for efficient use of gas;
The Indian gas markets are relatively small as compared to the size of the economy, but are
expanding rapidly. However, as commented earlier, the expansion has not kept pace with the
demand. Domestic gas finds, while substantial, are inadequate to meet the burgeoning demand
for gas. In particular, the demand from bulk consuming sectors like power and fertilizer is
growing at a rapid pace. At the other end, the demand from city gas is also expected to
increase rapidly in the coming years. As a result of this expansion of demand, the country is
looking seriously at LNG as a potential source of supply expansion.
LNG, as an internationally traded commodity presents two challenges. Firstly, the price of
LNG is generally linked to the price of crude oil, especially for long term supplies. The
resultant prices of RLNG are typically significantly higher than the prices of domestic gas,
60
including from the NELP fields. Secondly, the prices of such supplies being linked to crude are
inherently volatile. The combination of relatively high prices and high volatility make it
difficult for user industries like power and fertilizer to plan investments based on LNG.
Price pooling can serve the objectives of introducing substantial quantities of new LNG
supplies. The existing base of the pool would serve to reduce the price volatility, and given
the impetus for infrastructure development. The graphic below illustrates the impact of 5
MMTPA of new LNG supplies (approximately adequate for 5000 MW of new power
projects), on the existing cost pool in India, at various supply price points.
Figure1: Pool Price at Various LNG Prices for 5 MMTPA New Supply
8.4.2 Proposed Roadmap of Pool Pricing Mechanism:-
The pooling options have been broadly divided into two major categories viz. Cost Based
pool and Bid Based pool. Cost based pool has been further divided into General pool and
Sectoral pool. The following section defines the various pools considered for this study.
General Pool- In this type of pooling arrangement all the gas producers or traders participate in the pool.
Gas is supplied to all the customers through the pool administrators. This could feature two
basic options as variants.
(i) Mandatory or compulsory pool- In mandatory pool all the gas producers or traders
have to participate in the pool and subsequently all the sale of gas will happen
through the pool. Similarly, all demand would be required to contract through the
pool for supplies.
(ii) Facilitated pool - Facilitated pool does not make it compulsory for the gas
producers or gas suppliers to participate in the pool. The gas producers or traders
can participate in the pool and exit from the pool as per the defined rules of the
pool. The same would apply for buyers from the pool.
61
Figure2: Pooling Options in India
(Source: Reporton Common Pool Pricing 2010, MoPNG)
Sectoral Pool
Sectoral pool is specifically for pre-identified sectors. As regards this study, this has been
considered for Power and Fertilizer segments, although variants could extend to other sectors
as well. Two basic forms of sectoral pools have been considered.
(i) Combined pool- In combined pooling arrangement there is a single pool for Power
and Fertilizer. The gas at pooled price is supplied to customers from both the
sectors through an identified mechanism.
(ii) Individual pool- In this type of pooling arrangement there will two different pools
for Power and Fertilizer separately. The pool operator may or may not be same.
The gas at pooled price is supplied to the respective customers through on
identified mechanism. The pooled price may or may not be same for both the
pools.
62
The above options have been discussed in the subsequent sections. It needs to be noted
that in all options presented herein, the existing cost structures of the gas supply from
producers (or importers) remain unchanged, and the revenues to be generated would
correspond to these costs, plus the transportation costs, taxes and duties as at present.
Hence there is no impact on subsidies as a whole, although the cost of gas to individual
consumer costs would be rationalized as a result of the pooling arrangements. In
subsequent years, with expansion of supplies in the pool, this would be altered based on
the cost and quantum of additional gas supplies. Hence, irrespective of the option
selected, specific pool rules would need to be agreed on the cost and quantity limits and
implemented by the pool operator accordingly.
8.5 Effect of Globalization of Gas market on gas prices:-
Potential for energy independence as fuel switching to natural gas, efficiency, and domestic
production lessen our dependence on oil imports from unstable regions. We are now in the
45 to 50 % range, trending down from above 60.
Potential for economic growth in the petro -chemical sector as production returns to the
US, attracted by current feedstock pricing. The Sierra club and other NGO’s are concerned
exports will drive more aggressive shale development. Industrial gas consumers and some
gas utilities who prefer today’s price.
Balance that with legitimate questions from the free trade lobby:
One would hope we take full advantage of this resource. Canadians are investing in natural
gas transportation fuel infrastructure just north of our border; combined heat and power
distributed generation enjoys improving economics; and the gas industry and regulators
must assure gas generation facilitates rather than discourages development of renewable
power.
The price difference between a commodity that is 5% oversupplied (the approximate level
of oversupply of NG in North America today) and one that is 5% under supplied is literally
unimaginable. Recall that as recently as mid-year 2008, at the onset of the most severe
portion of the recession, natural gas sold for $13+ per million BTUs. Some of the fall to
today’s approximately $2/MMBTU was due to lost demand, but much of that has been
recovered. For example, there was exactly zero fertilizer industry in the U.S. at those NG
prices. Most of those plants are now back on line. The real driver was/is on the supply side.
Natural gas is a North American commodity. As such, it is priced by commodity-on-
commodity competition. LNG is a global market. It is priced proportional to crude oil, the
price of which is dictated primarily by the national oil companies and traders. There is
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absolutely no reason to believe that prices will not retrace the 85% price drop seen in the
last four years if enough LNG export is allowed. Going the other way, that translates to a
550% increase in price. Say goodbye to the fertilizer industry. And to the displacement of
coal-fired power generation.
The current, ultra-low prices will not obtain for even the medium term. While there is an
enormous shale gas resource which can be drilled with very high technical probability of
success, only the liquids-rich areas like the Marcellus Shale are currently under
development in North America. As the price rises, which it inevitably will, that other,
lower liquids content shale gas opportunities will become economic. That will provide a
governor on the domestic price of natural gas for literally decades.
Unless we export LNG. The current North American oversupply of natural gas is due to
excessive enthusiasm on the parts of its developers. Now they wish that we the People to
socialize their shortfall via exports, bringing them up to world prices.
There are three distinct regional gas markets, each of which sets natural gas prices
differently. The US has gas-on-gas competition, Europe sets prices indexed to certain oil
products although nascent gas hubs are starting to change this pricing structure, and Asia
indexes its natural gas prices to crude oil, enforce in very long term contracts; this means
that Asian prices are around $16 per mmbtu, making LNG exports from the US a very
attractive option. There is limited trade between these three regional markets.
MIT modeled the price impacts in 2030 of a continuation of these regional markets
compared to a global market in gas where there is substantial trade between regions, like
today’s oil markets. The price impacts in the US were substantial, around a 30% drop in
prices for US consumers (I am remembering the numbers, not looking at them, they can be
seen in the MIT Future of Natural Gas study). Surprisingly, US production didn’t drop in
this scenario, it remained steady. This was due to the fact that overall demand for natural
gas increased in the US because prices were low. US entry into LNG exports would
certainly hasten the development of this global market.
Although I have very high regard for Lew’s work and observations, I do not find the story
line of a sensational movie to be a compelling reason to oppose either LNG exports or
imports. I believe that Sandia National Laboratory did a lot of LNG safety research after
9/11. I will try and find some links to this work but I don’t think the conclusions remotely
tracked the apparent thrust of this film. I am generally leery of Hollywood efforts to
present “facts” on energy and point to the China Syndrome as exhibit A, Gas land as
exhibit B. One is entertainment, one is advocacy, and both distort or conflate the real and
sometimes serious impacts of the ways we produce energy (none of which is benign,
including renewables). These films should not guide our responses to these impacts;
analysis, observation and data should.
Brookings just released a study on gas exports from the US (disclaimer: I was a member of
the study’s advisory group) and concluded that the USG should do nothing to either
64
encourage or discourage exports. I tend to agree although I expressed reservations about
the political reaction to exports; this is borne out by the listing above of Sierra Club,
industry, etc. opposition to exporting gas, all of which is generated by advocacy positions,
which should be considered as such.
At the rollout of the Brookings study, I highlighted the investment uncertainty associated
with converting current LNG import sites in the US to liquefaction and export facilities
(not a small capital investment by any means). I noted that, as an investor, I might be
concerned about the development of global shale resources and its overall impacts on LNG
demand. China for example has 1275 Tcf of technically recoverable shale resources and
only consumes around 3Tcf of gas per year.
The US import market is a prime example of how shale gas can affect LNG import
opportunities. In the Bush Administration, the US increased LNG import capacity by an
order of magnitude (including Mexico and Canada volumes, destined for US markets),
from around 2 bcfd to 22 bcfd. In 2010, we imported just over 1 bcfd, leaving significant
stranded assets out there around the country. This is a cautionary tale for potential
investment in exports, and to me, suggests that any export volumes of LNG from the US
would likely be relatively small and self-limiting.
Finally, the US has a horrible track record on natural gas policy. Example 1 is the LNG
import debacle noted above. I also remind people, as example 2, that the Congress
outlawed the use of natural gas in power generation in 1978 (based on a completely flawed
understanding of what was really going on in US gas markets at the time). This coupled
with Three Mile Island (accompanied by the hysteria generated by the movie, The China
Syndrome), gave us the ancient, creaky, CO2 emitting coal fleet we have in the US today;
this underscores the fact that the energy infrastructure choices we make today will likely be
with us for the next 40-50 years.
Finally, I encourage everyone to consider Example 3, namely theoverbuild of NGCC
merchant plants when wholesale electricity markets were de-regulated in the mid-90s. We
have a fleet of highly efficient gas generation units that are operating at 41% capacity
factors, when they are designed to operate at 85-87%. Volatility in gas prices has ensured
that old, inefficient coal generation tends to get dispatched first over more efficient, much
lower CO2 and other criteria pollutants + non-mercury emitting NGCC plants. Shale gas
production has greatly diminished this price volatility, making the NGCC overbuild a good
luck/bad luck story — slowly but surely our old coal plants are being retired and we don’t
require new builds to replace them because we have so much surplus NGCC capacity. It
has however, taken 15 years or so to start correcting this market miscue, and perhaps the
capital that was stranded over that time period might have been put to better use.
The MIT group’s finding that N. American natural gas prices would enjoy a 30% drop
given the establishment of a global LNG trading market is very interesting. However,
given the already-85% drop in wholesale prices, perhaps some of its assumptions deserve
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revisiting. Moreover, the excess LNG import capacity provides the U.S. an option on the
benefits of such a market. Should MIT’s indicated results obtain, imports would once again
be competitive. Should the the situation suggest that export of LNG would be an act
beneficial to the national economy, such a policy could be pursued at that time.
Import/export control has historically been an element of the policy initiatives of most
nations. In this case, simply declining to enable LNG exports would be a relatively passive
policy imposition.
Secondly, you should be a bit cautious in applying the term “stranded assets” to either the
unused LNG import facilities or the oversupply of NG-fired combined cycle plants. The
term has previously been applied to electric utility assets that existed because of actions
within the framework of a regulatory compact. They became an issue in the context of
deregulation of that industry under the assumption that rate-of-return based retail rates
were going to be abandoned in the onslaught of deregulation (they weren’t). By contrast,
both of the over investment situations you cite above result from private decisions
regarding the deployment of capital. As such, the possibility of having employed that
capital differently is a subject utterly NOT a governmental policy question in a capitalist
system. I repeat, there is every reason to avoid socializing those failed investment decisions
on the part(s) of private enterprise(s) and every reason – except the desire to benefit a
select group of investors – to keep cheap NG prices at home. Salient among them, retiring
that “ancient, creaky, CO2 emitting coal fleet we have in the US today”. Don’t export LNG
at this time.
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9 Shale Gas:-
9.1 Shale gas historical back ground and development:-
Shale gas was first extracted as a resource in Fredonia, NY in 1825, in shallow, low-
pressure fractures. Work on industrial-scale shale gas production did not begin until the
1970s, when declining production potential from conventional gas deposits in the United
States spurred the federal government to invest in R&D and demonstration projects[18]
that
ultimately led to directional and horizontal drilling, micro seismic imaging, and massive
hydraulic fracturing. Up until the public and private R&D and demonstration projects of
the 1970s and 1980s, drilling in shale was not considered to be commercially viable.
Early federal government investments in shale gas began with the Eastern Gas Shale
Project in 1976 and the annual FERC-approved research budget of the Gas Research
Institute. The Department of Energy later partnered with private gas companies to
complete the first successful air-drilled multi-fracture horizontal well in shale in 1986. The
federal government further incentivized drilling in shale via the Section 29 tax credit for
unconventional gas from 1980-2000. Micro seismic imaging, a crucial input to both
hydraulic fracturing in shale and offshore oil drilling, originated from coal beds research
at Sandia National Laboratories. In 1991 the Department of Energy subsidized Texas gas
company Mitchell Energy's first horizontal drill in the Barnett Shale in north Texas.
Mitchell Energy utilized all these component technologies and techniques to achieve the
first economical shale fracture in 1998 using an innovative process called slick-water
fracturing. Since then, natural gas from shale has been the fastest growing contributor to
total primary energy (TPE) in the United States, and has led many other countries to pursue
shale deposits. According to the IEA, the economical extraction of shale gas more than
doubles the projected production potential of natural gas, from 125 years to over 250 years.
In 1996, shale gas wells in the United States produced 0.3 trillion cubic feet (8.5 billion)
cubic meters), 1.6% of US gas production; by 2006, production had more than tripled to
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1821: Natural gas is first extracted from shale in Fredonia, NY
1970s: Domestic gas production on the decline; Morgantown Energy Research Center (MERC) initiates the Eastern Gas Shales Project.
1976: Two MERC engineers patent early technique for directional drilling in shale.
1977: DOE successfully demonstrates massive hydraulic fracturing in shale(MHF).
1980: Congress creates Section 29 production tax credit for unconventional gas (lasts until 2002).
1986: First successful multi-fracture horizontal well drilled by joint DOE-private venture in Wayne County, West Virginia.
1991: GRI subsidizes Mitchell Energy’s first successful horizontal well in the Texas Barnett shale.
1998: Mitchell Energy engineers achieve commercial shale gas extraction.
2000s: Natural gas generation grows faster than any other energy source; shale gas boom pushes prices to record lows.
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1.1 trillion cubic feet (31 billion cubic meters) per year, 5.9% of US gas production. By
2005 there were 14,990 shale gas wells in the US. A record 4,185 shale gas wells were
completed in the US in 2007.
In January 2008, a joint study between Pennsylvania State University and State University
of New York at Fredonia professors Terry Engelder and Gary Lash increased estimates as
much as 250 times over the previous estimate for the Marcellus shale by the U.S.
Geological Survey. The report circulated throughout the industry. In 2008, Engelder and
Nash had noted a gas rush was occurring and the New York Times' "There’s Gas in Those
Hills" was an in-depth look at the development, noting investments by Texas-based Range
Resources and increased leasing amongst Anadarko Petroleum, Chesapeake
Energy and Cabot Oil & Gas.
Reference- http://geology.com/energy/world-shale-gas/
9.2 Shale Gas Reserve:-
The development of shale gas plays has become a "game changer" for the U.S. natural gas
market. The proliferation of activity into new shale plays has increased shale gas
production in the United States from 0.39 trillion cubic feet in 2000 to 4.87 trillion cubic
feet in 2010, or 23 percent of U.S. dry gas production. Shale gas reserves have increased to
about 60.6 trillion cubic feet by year-end 2009, when they comprised about 21 percent of
overall U.S. natural gas reserves, now at the highest level since 1971. [3]
The growing importance of U.S. shale gas resources is also reflected in EIA's Annual
Energy Outlook 2011 (AEO2011) energy projections, with technically recoverable U.S.
shale gas resources now estimated at 862 trillion cubic feet. Given a total natural gas
resource base of 2,543 trillion cubic feet in the AEO2011 Reference case, shale gas
resources constitute 34 percent of the domestic natural gas resource base represented in the
AEO2011 projections and 50 percent of lower 48 onshore resources. As a result, shale gas
is the largest contributor to the projected growth in production, and by 2035 shale gas
production accounts for 46 percent of U.S. natural gas production.
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Annexure -2
In total, the report assessed 48 shale gas basins in 32 countries, containing almost 70 shale
gas formations. These assessments cover the most prospective shale gas resources in a
select group of countries that demonstrate some level of relatively near-term promise and
for basins that have a sufficient amount of geologic data for resource analysis.
9.3 Hydraulic fracking- breakthrough in shale gas:-
Hydraulic fracturing (fracking) is the method used to make hard shale rock more porous,
thus allowing natural gas to flow through the shale to the wellbore. First, producers drill
into the earth several thousand feet until they reach the natural gas reservoir. Next, steel
casings are inserted to a depth of 1,000 to 3,000 feet, and the space between the casing and
the drilled hole is filled with cement to stabilize the well and prevent any leakage. After the
cement has set, this process is repeated, using a series of successively smaller casings until
the reservoir is reached, usually a distance of 6,000 to 10,000 feet. There are numerous
state and federal regulations that govern the casing and cementing process. Once the
drilling and casing is complete, typically 3 to 5 million gallons of water, mixed with sand
and fractional amounts of chemical additives, are pumped into the wellhead at high
pressure, creating cracks in the rock beds. Several videos provide a detailed explanation of
the fracking process. The hydraulic fracturing mixture is 95 percent water, 4.5 percent sand
and 0.5 percent chemical additives formulated to promote gelling and cleaning according
to the Ground Water Protection Council and U.S
0
200
400
600
800
1000
1200
1400 Shale Gas Reserves Reserves
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Over the past 50 years, there have been significant advances in hydraulic fracturing
technology. Different types of fracture treatments have been developed ranging from
packer and pumping equipment to variations in treatment fluids and prop pants. Each
natural gas reservoir is unique due to the variability in geology and geo mechanics.
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As a result, there will be different types of hydraulic fracturing treatments used depending
on what result is needed in the end and what the parameters of the zone are. Recent
developments of fracture technology coupled with horizontal drilling have allowed
numerous tight gas reservoirs to yield economic volumes on natural gas. These
technological breakthroughs have enabled significant natural gas resources to be added to
the country’s energy resource base and extending the potential supply by over 100 years.
9.4 Issues with Hydraulic fracking:-
This potentially poisonous method of natural gas drilling is now being used nationwide to
release rock bound natural gas formations and has been exempt from U.S. federal oversight
by the E.P.A. These natural gas drilling and exploration firms were also allowed to keep
secret the list of toxic chemicals they are using to inject into the ground....many of these
chemicals have seeped into wells and ground water formations near fracking operations
and poisoned people, caused gas explosions and poisoned/killed livestock.
Although state governmental agencies are required to regulate "fracking" for natural gas
being done by various firms. The drilling method seems to be going largely unregulated
with a wink and a nod by regulators.....perhaps because of the enormous profits/income to
be reaped by various individuals in the private and public sector. Up until recently these
fracking operations were done, largely, in remote, sparsely populated rural areas out west,
but now, in the eastern U.S., fracking is being done in close proximity to urban drinking
water supplies.
Reference-http://www.thepetitionsite.com/1/fracking-for-natural-gas-poisoning-us-water/
http://www.scientificamerican.com/article.cfm?id=fracking-linked-water-contamination-federal-
agency
9.5 Implication of shale gas reserve on traditional gas
producers in US:-
In the last 10 years – during which shale gas became commercial in the US – its use
has grown from near zero to about 20% of the already enormous US gas stream.
Booked shale gas reserves, at present rates of production, may still be onstream 100
years into the future, a figure that will increase if gas begins to approach oil on a
price parity basis.
In the case of shale gas, other countries are inverting that approach and bringing
capital in US, investing billions in the expertise and reserves of US shale gas
companies: Statoil of Norway, CNOOC of China, Mitsui of Japan, Reliance of
India, and Total of France, to name a few.
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US developing and converting gas import terminals into export terminals.
The distribution of shale gas is so widespread that locally produced shale gas may
become the standard fuel in many places. Traditional gas imports (by pipeline or as
LNG) may become incremental sources.
This unexpected development hits global LNG prices three ways: One, US demand
no longer supports extreme gas prices. Two, we may compete for LNG customers –
or help other nations establish their own production. Three, the economics of gas-
to-liquid projects have seemingly been immutably changed. Gas exporting
countries will still be suppliers but likely not as they anticipated.
9.6 Implication on Indian gas market:-
The Ministry of external affairs taken up the matter with the US, requesting
approval of shale gas/LNG export from all LNG exporter terminals in the US. This
is coming in way of GAIL’s efforts to finalize liquid shale gas export from USA to
India.
Reliance (India) is signing JV deals with US to gain experience and replicate the
shale gas success in home country. And Reliance Industries has invested $3.5
billion in US shale gas assets.
Washington, however, allows gas exports only to free-trade partners. India do not
have a FTA (free trade agreement) are not allowed to tap into the US energy
lifeline. So FTA with US will be helpful for India to import shale gas from US.
9.7 China planned for shale gas development:-
China has released its first five-year plan for the development of shale gas, setting
ambitious production targets and emphasizing the need for foreign co-operation and better
technology in developing the sector.
The world’s biggest consumer of energy, China is estimated to have huge shale gas
reserves but it is still unclear whether the country will be able to develop them on a
commercial scale due to geological and technological challenges.
Shale gas is natural gas that is trapped inside shale rock and is extracted by using highly
pressurized water mixed with chemicals to crack open the rock.
Its increased prominence has revolutionized the energy sector in the US and sent natural
gas prices there to the lowest for a decade.
Chinese policymakers are seeking to replicate the success of shale gas in the US, and the
blueprint released on Friday is the first official detailed statement about policies during the
2011-15 periods.
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It sets a goal of 6.5bn cubic meters of shale gas production by 2015, which is equivalent to
2-3 per cent of projected 2015 Chinese gas production, and more than 60bn cu m of shale
gas production by 2020. While those numbers are small compared with the scale of US
shale gas production, analysts say the 2020 target will be very difficult to attain given the
nascent state of China’s shale gas industry.
China does not have any commercial production of shale gas, but exploratory drilling for
shale has increased greatly in the past year.
The new blueprint emphasizes the need for foreign co-operation to develop shale gas
technologies, and companies including BP, ConocoPhillips, Chevron and Royal Dutch
Shell are involved in shale gas exploration joint ventures in China.
The five-year plan also states that competition within the shale gas sector will be
encouraged and market entry conditions will be clearly defined for companies wishing to
work in shale gas; these companies will be also highly encouraged to work with foreign
partners.
The plan also promised supportive financial policies and subsidies for shale gas, including
price subsidies, preferential tax treatment and land subsidies.
However, analysts have pointed out that as long as China’s state-controlled prices for
natural gas remain at their current levels, companies will not have an incentive to develop
shale gas resources because they can make more money from oil.
“There is a lot of talk about shale, but not a lot of action by the government in terms of
natural gas pricing reform,” said Gordon Kwan, an analyst at Mirae Asset Securities,
adding that natural gas prices needed to rise in order to make shale profitable.
China and India join forces in Exploration & Production:-
This MoU signed between ONGC and CNPC marks the intention of the fast emerging
countries India and China to establish and consolidate their energy portfolios globally
instead of competing to get access to oil and gas reserves, and in the development of
technologies to catch up with Majors IOCs.
The companies have already set up a robust relationship, mainly in the areas of upstream
exploration and production business.
With this MoU, the companies have agreed to foster their cooperation either directly or
through their subsidiaries by expanding cooperation in:
- Upstream exploration and production areas including LNG.
- Midstream including construction and operation of oil and gas pipelines.
- Downstream projects from refining or processing of crude oil and natural gas up to
marketing and distribution of petroleum products.
The areas of cooperation between ONGC and CNPC will also extend to joint participation
in suitable hydrocarbon projects in other countries of interest by exchanging information
and working for mutual growth and benefit by extending cooperation in hydrocarbon
sectors globally.
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This MoU has been initiated upon the positive and productive experience of ONGC
working with CNPC in ONGC Videsh Ltd (OVL), the overseas arm of ONGC,
in international operations in Syria, Sudan and the Myanmar Pipeline Project where CNPC
is a key participant.
OVL invested $2.5 billion in petroleum exploration and production in undivided Sudan as
part of Greater Nile Petroleum Operating Co., in which it owns a 25% stake.
Its partners are CNPC (40%), Petron as Carigali Overseas SdnBhd (30%) and Sudapet Co.
Ltd (5%).The last years co-operation through affiliates between both companies was also
marked by ONGC’s great achievements in E&P infrastructure at a level where only a few
companies worldwide can be proud of. CNPC and ONGC did have an earlier arrangement,
but limited to hydrocarbon exploration and production.
The primary purpose of the new agreement, however, seems to be to ensure that bidding
for global energy assets doesn’t get out of hand as it has in the past.
10 Energy Security in India:-
Indian energy consumption profile is varied. We use bio mass like agricultural waste and
animal waste like cow dung and wood, char coal for heating and cooking purposes as well
as refinery products like kerosene and LPG. While a small amount of electrified
transportation has been adopted by the railways most other transportation by road and
water is dependent on diesel and to a lesser extent petrol both of which are refinery
products. Industry depends on electricity as well as coal and fuel oil or diesel for its energy
needs.
Today we are importing over 80% of our oil needs which gets refined into kerosene, LPG,
petrol, diesel, fuel oil, naphtha etc. hence not only all our energy needs but also fertilizers
and plastics needs are susceptible to international crude prices. Even though India has
recoverable coal of about 70-80 billion tons, our needs are rising and our annual coal
consumption has crossed 800 million tons. Due to various restrictions on coal mining due
to environmental or forest issues or bottlenecks in railways for internal transportation;
imports of coal from South Africa, Australia and Indonesia are rising and many Indian
companies are buying mines in these countries to secure these supplies and building plants
in India along the western and eastern coastline. Imported coal is expensive but it has
already reached over 110 million tons this year and is expected to rise dramatically as
energy needs increase. Thus our economy is not only dependent on international crude
prices but also coal prices which are again getting linked to crude prices as natural gas
prices already have.
Electrification is an important component of modernizing the country’s productive forces
and increasing the quality of life of people.
Interestingly, Lenin in the emerging Soviet Union realized it very clearly and accordingly
the GOELRO ("State Commission for Electrification of Russia") was set up as early as
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1920. He endorsed the slogan, ‘The age of steam is the age of the bourgeoisie, the age of
electricity is the age of socialism.’ He said in a report in Feb 1920, “We must show the
peasants that the organization of industry on the basis of modern, advanced technology, on
electrification which will provide a link between town and country, will put an end to the
division between town and country, will make it possible to raise the level of culture in the
countryside and to overcome, even in the most remote corners of the land, backwardness,
ignorance, poverty, disease and barbarism. We shall tackle the problem as soon as we have
dealt with our current, basic task, and we shall not allow ourselves to be deflected for a
single moment from the fundamental practical task.”
The Soviet Plan included construction of a network of 30 regional power plants, including
ten large hydroelectric power plants, and numerous electric-powered large industrial
enterprises. It was intended to increase the total national power output per year to 8.8
billion kWh, as compared to 1.9 billion kWh of the Imperial Russia in 1913.The Plan was
basically fulfilled by 1931.
India’s current per capita electricity consumption is less than 750 KWH per annum where
as it is already 1500 in China. It is to be noted that in almost all economic indicators like
electricity, steel, telecom etc. India and China were on par in 1991. The consumption in
advanced countries of Europe and North America is much higher, while the world average
itself is 2500 KWH per capita. There are still over 10% villages which are not electrified
and according to 2009 data 33% of rural households and 6% of urban households still do
not have access to electricity.
The demand in India for electricity far outstrips supply reportedly the shortage varies
between 8-12%, which amounts to a huge 15,000—20,000 MW of power. Leave alone
rural areas even large cities and giant metropolises are subjected to regular load shedding
that is brown outs and black outs. There have been many instances of riots in many
provinces especially during the sowing season due to these brown outs when they need
electricity for tube wells and pumps. India needs rapid electrification to raise the standard
of living as well as for agriculture and industry.
In terms of medium and long term planning, Indian coal needs to be mined efficiently.
However it has large amount of silica, which appears as large amount of fly ash in power
stations, when it is burnt. This ash needs to be disposed of in a way that does not harm the
surrounding air and rivers and lakes. However much needs to be done in this respect.
Imported coal has much higher calorific value but also has sulphur and nitrogenous content
which leads to large release of sulphuric and nitric acids during rain, that is dangerous to
forests and environment. The fact that open pit mining itself needs to be handled properly
to limit the damage to the environment is only recently being addressed in India.
According to scientific studies, the fly ash emitted by a power plant—a by-product from
burning coal for electricity—carries into the surrounding environment 100 times more
radiation than a nuclear power plant producing the same amount of energy. Some of the
ecologically disastrous effects of coal based thermal power plants are already visible in
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Chhattisgarh, where large clusters of pithead coal powered thermal power plants are
scheduled to come up.
From the long term energy security perspective Indian coal reserves will get exhausted in
less than 50 years. Even worldwide the coal reserves are shrinking. Increasing reliance on
imported coal will lead to Indian economy being more and more at the mercy of global
coal prices as it already is with respect to oil prices. This is in addition to the extraordinary
burden that will be borne by our ports and railways for carrying coal. The effect on
greenhouse gases and climate; effect of ash on pulmonary diseases and people’s health and
so on are additional things to be worried about. Coal already provides 65% of power
capacity and will likely play a major role in the future also.
Natural gas offers a much cleaner alternative and power stations can also be set up quickly.
However while some discoveries of natural gas have been made by ONGC and Reliance
they are still relatively small compared to the existing demand. Imported gas through
pipelines of Central Asia, Iran, Bangladesh and Myanmar will also be expensive since the
gas prices are linked today to oil prices, assuming of course that political relations with
these and intervening countries were permitting such pipelines. More over gas is required
for urea fertilizer, plastics and steel industry as well and there will be a scramble for the
same. Thus gas will play a small role as it does at present (10%).
Methane from Coal Beds is another source that is being explored in Eastern India. Many
blocks have been auctioned to various companies and it will add a significant but still small
amount to the current gas availability.
Recently ONGC has drilled a R&D well for Shale Gas in PaschimBanga (West Bengal)
and studies are continuing. Shale Gas has been a great new success story in energy and has
meteorically risen to provide 25% of gas in US. However new environmental concerns are
being raised about the chemicals that are used in hydraulic fracking to release the gas from
layers deep down. Like Coal Bed Methane, Shale Gas too promises to be another source of
much needed gas for India.
Geophysicists tell us that India sits on a large ocean of Gas Hydrates at great depths.
However the technology to exploit these is not yet available globally and they may provide
a valuable gas source in the future.
Hydroelectricity is a renewable source of energy, since we expect every rainy season to fill
up our dams. However due to our high population density such dams lead to large scale
submersion of villages and forests causing social displacement and social tension.
Himalayas have great hydroelectric potential and that is why dams are being built
feverishly in Bhutan, Arunachal Pradesh, Uttarakhand, Himachal Pradesh, Sikkim and
Jammu & Kashmir. But Himalayas are very young mountains and there is a lot of soil
erosion and the dams would be silted heavily very soon. More over the dams are affecting
forests and causing submersion of agricultural land and villages there too, though on a
smaller scale than in the plains as in the Narmada Basin. That is why there is already a
strong opposition to these dams in the hill states even though we have tapped a very small
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amount of this potential. Thus hydro’s contribution to power generation will remain at
about the current levels of 20% and falling.
Many NGO believes in the mantra of “small is beautiful”, say that mini and micro hydro
projects are the answers to India’s energy problems. However, the facts on the ground
show that such potential is hardly 2,500 MW and that too at a high cost per megawatt
making it hardly a panacea.
Recently wind farms have come up in several regions. However inherently wind in India is
not enough to produce power efficiently unlike in some Nordic countries. It has been
estimated that the efficiency of production from wind is around 35%-25% in Europe and
North America but only about 15% in the windy regions of India. More over wind farms
also require large amount of land which is a problem in land starved India. Of course one
has to keep in mind that wind can only add on to an existing steady base level of
production in the grid and cannot be relied upon for continuous supply. Though India has
impressive figures in wind energy installation, it is a known fact that it has become a
source for exploiting tax loop holes for corporations and not a serious source of electricity
supply to the grid.
Many people naively believe that India having been blessed with ample amounts of sun
light, Solar would be a natural choice as a major source of electricity. However, converting
sunlight to electricity is a very expensive process and it currently costs about 4 times the
conventional. Even though the technology is more than 100 years old, a lot more
advancement has to happen in basic research in new materials to convert sunlight to
electricity more efficiently (currently it is only 12-16%) and cheaply. People who claim
that solar is environmentally friendly do not understand that the silicon chip making
process uses some of the most toxic chemicals, which are then let out as effluents. Today
India is buying a lot of solar panels from China and if we decide to start fab for the same in
India to lower prices then we will come across the associated environmental issues as well.
Moreover, solar electricity needs to be stored in expensive and environmentally harmful
lead batteries, since there is no Sun in the night. Any large scale use of solar power would
lead to serious issues over disposing of the batteries. Thus environmental friendliness of
solar technology is a over simplification. It is expected that further advances in science and
technology of materials, efficiency and storage will happen in perhaps the next 50 years.
We should also recognize that solar plants of say even a modest 100 MW require several
square kilometers of land.
India has developed nuclear power reactors using natural uranium and has been improving
the technology in the last 40 years. India does not yet have the technology for large
enriched uranium reactors and is hence planning to import them from Russia, France and
US. Indian Uranium resources are of very small and of very low quality. However the
opening up of international trade in nuclear materials in 2008 by the Nuclear Suppliers
Group has allowed India to import Uranium from large Uranium producing countries like
Kazakhstan and Russia. In the future, it can also do so from Canada and Australia. India
has also developed the technology to process the radioactive waste from these reactors and
extract useful plutonium from the waste. This reprocessing of fuel has largely resolved the
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waste disposal problem, which is very serious in North America and Europe. Plutonium
thus obtained has been used for making bombs as well as to develop power generation in
Fast Breeder Reactors. In fact that is the reason the reprocessing technology has been
strictly controlled by US and other powers. The first large Fast Breeder Reactor designed
by India is soon coming online in Kalpakkam near Chennai and will take India to the
cutting edge of this technology globally. India is also blessed with large amounts of
Thorium. The first Thorium reactor of the world has also been designed by India and the
construction of a 300 MW Thorium reactor known as AHWR will start soon. The world
will be looking forward to these innovations.
Nuclear reactors are small in size but need a radius of few kilometers around them to be
ready for evacuation in order to diminish the danger to human life in the highly unlikely
case of an accident. So far, in the nearly 42 years of operation there have been no serious
accidents in Indian reactors. Today’s reactors have been designed to take care of many
accidental scenarios of earthquakes, tsunamis, terrorist attacks etc. that have the potential
to damage the reactor core. The reactors are being designed to safely shut down in an
emergency. Thus no radiation need be leaked to the environment.
Uranium mining, handling, reactor maintenance are all potential sources of radiation
exposure to workers. Thus extreme care has to be taken regarding prescribed safety
procedures during the entire cycle.
Many people ask, “Is it (nuclear power) dangerous?” Since radiation is invisible it leads to
many irrational fears. The short answer is, “Yes it is” and it needs scientifically trained
staff to handle it at all stages. However looking at the energy security of India in the future
and considering the strengths and weaknesses of other sources of electricity available to us,
which have been discussed above, nuclear remains an important source of energy security
for India as our planet’s fossil fuels dwindle and become extremely expensive. It is also
environmentally benign due to no carbon emission or fly ash disposal and other problems.
Nuclear power especially with Fast Breeders and Thorium Reactors will be an important
source that can provide electricity at competitive rates to the teaming Indians for more than
100 years based on our own Thorium reserves.
It is clear that India cannot rely on one source of electricity: be it coal (domestic or
imported); gas (domestic or imported); hydro or nuclear. The bouquet will have all these
components. The weight of different components in the bouquet can change as economic
costs and environmental costs vary in the future. This requires rational and pragmatic
planning and not dogmas and irrational prejudices.
The problems of land acquisition and rehabilitation exist in all large industrial and
urbanization projects and are not peculiar to nuclear projects as in Jaitapur. The state
apparatus needs to handle these sensitively. Any layman’s concerns on safety, technology
etc. can be addressed adequately. We need to see the energy scenario 20-50 years ahead
and prepare for it while trying to address the rising expectation of people in terms of living
standards and energy availability for the same.
79
11 Findings & Recommendations:-
With a burgeoning population, we have to recognize that resources are scarce
and plan accordingly.
End use efficiency, reduction of wastage and accountability has great potential
for improvement.
Solar PV and offshore wind energy resource can to some extent.
Yet the reality is that we have to rely for the next 20 years on fossil fuel i.e. coal
or natural gas.
Investment in coal base electricity needs critical appraisal because of
availability, land requirement, pollution, green house gas emission and ash
disposal and increasing cost of environment needs critical appraisal.
Natural gas based electricity generator are generally not approved because of
lack of domestic availability of natural gas besides domestic gas sector has
received a thrust with shale gas and Hydraulic fracking technology in US. A
relook into fuel import i. e. import of coal vis a vis import of natural gas is a
national imperative in view of the need for electricity keeping in view all other
collateral concerns.
S. No. Description Reserve Price
1. Domestic gas reserves 1075 BCM 4.3 $/MMBTU
2. Piped Natural gas
reserves-
A). TAPI pipeline
B). Iran-Pakistan-India
C). Myanmar-
Bangladesh-India
16 TM3
14 TM3
283.2 BM3
13 $/MMBTU
3. LNG Worldwide huge gas
reserve
16 $/MMBTU
4. Henery-hub gas market 10.15 $/MMBTU
80
Year
Projected Natural
Gas Demand at
10% GDP growth
rate(C)
Year
Projected Natural
Gas Demand at
10% GDP growth
rate
2011 189 2021 427.3259
2012 205.065 2022 460.6573
2013 222.4955 2023 496.5886
2014 241.4076 2024 535.3225
2015 261.9273 2025 577.0776
2016 284.1911 2026 622.0897
2017 308.3474 2027 670.6127
2018 334.5569 2028 722.9205
2019 362.9942 2029 779.3082
2020 393.8487 2030 840.0943
Domestic gas production is decreasing and not violable option for new power
projects.
ONGC also have recommended that domestic gas exploration is not viable bellow
$7 to $8/MMBTU.
Piped natural gas is better option for new power projects. Estimated timeline for gas
pipeline projects to be operational-
S. No. Pipeline Estimated time to be
operational
Capacity
1. TAPI pipeline 5years (By 2017) 38 MSCMD
2. Iran- Pakistan-India pipeline 8 years (By 2020)
21.5 MSCMD
3. Myanmar-Bangladesh-India
pipeline
4 years (By 2016) 7 MSCMD
81
Due to uncertainty of completion of pipeline gas project, LNG import is better
option of fuel supply for power plants.
Diesel generator can be replaced by natural gas plant- In India electricity generated
by DG set- 1200 MW at cost of Rs. 12/kwh and grid power at cost of Rs 3/kwh.
This market will grow at the rate of 20% for coming years.
Natural gas based power plant can be used to supply uninterrupted power to some
specified industries such as hospitality and healthcare.
Natural gas can be used for distributed power generation-Due to heavy distribution
and transmission losses (around 30%) distributed generation by natural gas is better
option as it can be produced at cost of Rs. 6 to 7 per kwh.
82
12 References:-
Report- The planning commission of India, Integrated Energy Policy (2006), Page no.-20
Paper- Brian O’Keefe (2012), Exxon big bets on Shale gas, Page no.- 43
Paper- Crish Rumely et. All (Dec. 2007), Natural gas in India, prospects for LNG
imports, Page no.- 27
http://www.cea.nic.in- “Monthly executive report”, (06/2012) Central Electricity
Authority, Ministry of Power retrieved on 5 June 2012 from
http://www.cea.nic.in/reports/monthly/executive_rep/jun12/8.pdf
Paper – Shivanand Kanevi, Energy security and India (8 Jan. 2012)
“Inventory of coal resources of India”, (2011) Ministry of Coal retrieved on 7 May 2012
from http://www.coal.nic.in/welcome.html.
“GDP growth annual” (n. d.) The World Bank from
http://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG .
Paper - Simpson, Lori Allison, Massachusetts Institute of Technology. Technology
and Policy Program, The suitability of coal gasification in India's energy sector
(2006)
Paper- Abrahm Lustgarten, Nicholas and ProPublica, EPA-Natural gas fracking linked to
water contamination, (Dec. 09)
-“Seventh offer of the block” (2007) Ministry of petroleum and Natural gas retrieved on 11
May 2012 from http://petroleum.nic.in/nelp6.pdf.
“Natural gas” (n. d.) Ministry of petroleum and Natural gas retrieved on 15 May 2012 from
http://petroleum.nic.in/ng.htm
“Monthly crude oil prices” (n. d.) retrieved on 10 May 2012 from
http://www.indexmundi.com/commodities/?commodity=petroleum-price-
index&months=60.
“World shale gas resources” (n. d.) News and information about Geology retrieved on 7
June 2012 from http://geology.com/energy/world-shale-gas/
“Monthly Thermal coal prices” (n. d.) retrieved on 17 May 2012 from
http://www.indexmundi.com/commodities/?commodity=coal-australian&months=60.
\
83
Annexure-1
Table- Indian GDP and Electricity Demand
Year
Indian GDP
growth rate
(%)
Electricity
Demand(MUs)
%
Change
1992 5.5 291250
1993 4.8 305266 4.812361
1994 6.7 323252 5.891911
1995 7.6 352260 8.973804
1996 7.6 389721 10.63447
1997 4.1 413490 6.098979
1998 6.2 424505 2.66391
1999 7.4 446584 5.201117
2000 4 480430 7.578865
2001 5.2 507216 5.575422
2002 3.8 522537 3.020607
2003 8.4 545983 4.486955
2004 8.3 559264 2.432493
2005 9.3 591373 5.741296
2006 9.3 631554 6.794527
2007 9.8 690587 9.347261
2008 7.6 737052 6.728334
2009 9.1 777039 5.425262
2010 8.8 830594 6.892189
2011 6.9 861,591 3.731908
Annexure -2
GONDWANA COALFIELDS (in Million Tonnes)
State Geological Resources of Coal
Proved Indicated Inferred Total
Andhra Pradesh 9296.85 9728.37 3029.36 22054.58
Assam 0 2.79 0 2.79
Bihar 0 0 160 160
Chhattisgarh 12878.99 32390.38 4010.88 49280.25
Jharkhand 39760.73 32591.56 6583.69 78935.98
Madhya Pradesh 8871.31 12191.72 2062.70 23125.73
Maharashtra 5489.61 3094.29 1949.51 10533.41
Orissa 24491.71 33986.96 10680.21 69158.88
Sikkim 0 58.25 42.98 101.23
84
Uttar Pradesh 866.05 195.75 0 1061.80
West Bengal 11752.54 13131.69 5070.69 29954.92
Total 113407.79 137371.76 33590.02 284369.57
Annexure -3
TERTIARY COALFIELDS (in Million Tonnes)
State Geological Resources of Coal
Proved Indicated Inferred
(Exploration)
Inferred(Mapping) Total
Arunachal Pradesh 31.23 40.11 12.89 6.00 90.23
Assam 464.78 42.72 0.50 2.52 510.52
Meghalaya 89.04 16.51 27.58 443.35 576.48
Nagaland 8.76 0 8.60 298.05 315.41
Total 593.81 99.34 49.57 749.92 1492.64
Annexure -4 Coal consumption pattern-
Year consumption change
year consumption change
1980 122,928.70 0 1996 326,294.10 0.90%
1981 144,012.60 17.15% 1997 351,419.10 7.70%
1982 150,294.60 4.36% 1998 362,411.30 3.13%
1983 157,906.10 5.06% 1999 388,133.80 7.10%
1984 186,706.20 18.24% 2000 403,408.50 3.94%
1985 194,065.20 3.94% 2001 417,498.20 3.49%
1986 208,829.60 7.61% 2002 424,971.90 1.79%
1987 210,933.90 1.01% 2003 437,462.20 2.94%
1988 221,892.00 5.20% 2004 483,579.60 10.54%
1989 236,378.50 6.53% 2005 504,908.20 4.41%
1990 247,863.50 4.86% 2006 539,485.50 6.85%
1991 269,813.80 8.86% 2007 587,255.30 8.85%
1992 281,854.40 4.46% 2008 640,524.50 9.07%
1993 295,959.60 5.00% 2009 705,204.80 10.10%
1994 312,526.20 5.60% 2010 721,986.40 2.38%
85
Annexture-5
Basic Price of Run of Mine Non-Long-Flame Non-Coking Coal
(In Rupees/Tonne)
Field/
Co.
A B C D E F G
ECL (for 12 units vide Annex II) 3690 3590 1290 1040 780 610 430
ECL/Mugma (for 19 units vide
Annex III)
IV)
3690
3590
1500
1240
990
740
480
ECL/Rajmahal (for 2 units
vide)
AnnexV
)
-
-
-
-
1020
870
700
BCC
L
3690 3590 1250 1040 830 660 470
CCL
3690
3590
1220
1000
790
630
450
NCL
3690
3590
1100
920
740
580
430
SECL 3690 3590 1050 880 730 570 430
MCL
3690
3590
1050
880
730
570
430
Annexure-6
Basic Price of Run of Mine of Other Non-Coking Coal
(In Rupees/ Tonne)
Field/ Co. A B C D E F G
ECL / Raniganj
(for 110 units vide
Annex I)
4100 3990 1820 1560 980 730 480
ECL / SP Mines
(for 3 units vide
Annex III)
4100 3990 1860 1610 1080 830 580
CCL (for 7 units
vide Annex VI) 4100 3990 1500 1250 990 750 510
CCL( for 16 units
vide Annex VII) 4100 3990 1410 1180 - - -
WCL 4100 3990 1410 1330 1090 860 650
SECL Premium
Collieries Coal
produced in Korea
Rewa Coalfields)
4100 3990 1300 1110 870 630 440
86
Annexure-7
Basic Price of Run of Mine Long-Flame Non-Coking Coal
(In Rupees/Tonne)
Field/
Co.
A B C D E F G
ECL/Rajmahal
-
-
-
1330
-
-
-
BCCL Long Flame Coal 4100 3990 1430 1210 - - -
NCL Long Flame Coal
4100
3990
1280
1080
-
-
-
SECL Long Flame Coal of
Korba
&RaigarhCoalfields
4100
3990
1180
1010
-
-
-
MCL Long Flame Coal
4100
3990
1180
1010
-
-
-
Annexure-8
Coking Coal (Run of Mine)
(Rs./Tonne) Subsidiary
Steel
Grd I
Steel
Grd II
Washary
Grd I
Washary
Grd II
Washary
Grd III
Washary
Grd IV
BCCL(for 53
units vide
AnnexVIII)
3750
3140
2740
1980
1480
1370
BCCL
-
-
2020
1680
1240
1150
ECL - - 2390 1990 1470 1370 CCL
-
-
1960
1620
1200
1120
WCL - - 1710 1410 1290 - Annexure-9
Semi Coking & Weakly Coking Coal (Run Of Mine)
(Rs./Tonne)
Subsidiary Semi Coking GrdI Semi Coking GrdII
Eastern Coal fields Limited (Raniganj) 215
0
179
0 South Eastern Coal fields Limited
174
0
145
0
87
Annexure-10
Direct feed Coking Coal (Run of Mine)
(Rs//Tonne.)
Grade of Coal
Direct feed Coking Coal of Collieries Listed in
Annexure IX (14 Units) (Ash exceeding 20% but not exceeding 21%)
(Note: Bonus/penalty @ Rs. 130/te. Per
percent decrease/increase in Ash)
3720
Annexure-11
Assam Coal (Run of Mine)
(Rs./Tonne.)
Unit/ Grade of Coal UHV Range (K Cal/Kg.) Price North Eastern Coal
fields "A"
Exceeding 6200 K cal/Kg, But not exceeding
6299 K. Cal./Kg.
4100
North Eastern Coal
fields "B"
Exceeding 5600 K cal/Kg, But not exceeding
6200 K. Cal./Kg.
3900
Note:-In Grade "A" for every additional UHV of 100 KCal/Kg. exceeding 6299 KCal/Kg,
Additional Rs.145/MT one shall be added to the price of "A" Grade. For UHV exceeding 7099 kCal./kg. the price of coal shall be Rs. 6010 per tone for ROM Coal and the price difference among the steam, slack and run of mine coal shall remain same.
Annexure-12
Month
Crude oil
Price per
barrel
Coal price
per metric
ton Month
Crude oil
Price per
barrel
Coal price
per metric
ton
12-Apr 65.1 60.13 12-Nov 77.56 84.43
12-May 65.1 60 12-Dec 74.88 89.04
12-Jun 68.19 66 12-Jan 77.12 103.93
12-Jul 73.67 72.12 12-Feb 74.72 100.92
12-Aug 70.13 74.3 12-Mar 79.3 101.12
12-Sep 76.91 73.33 12-Apr 84.14 107.3
88
12-Oct 82.15 80.15 12-May 75.54 107.28
12-Nov 91.27 90.64 12-Jun 74.73 105.2
12-Dec 89.43 97.5 12-Jul 74.52 102.84
12-Jan 90.82 98.3 12-Aug 75.88 96.19
12-Feb 93.75 141.43 12-Sep 76.11 101.66
12-Mar 101.84 126.7 12-Oct 81.72 104.41
12-Apr 109.05 131.79 12-Nov 84.53 114.81
12-May 122.77 142.71 12-Dec 90.07 126.74
12-Jun 131.52 171.16 12-Jan 92.66 141.94
12-Jul 132.55 192.86 12-Feb 97.73 137.53
12-Aug 114.57 169.71 12-Mar 108.65 135.14
12-Sep 99.29 160.71 12-Apr 116.32 131.25
12-Oct 72.69 115.71 12-May 108.18 126.84
12-Nov 54.04 98.84 12-Jun 105.85 127.8
12-Dec 41.53 84.27 12-Jul 107.88 128.57
12-Jan 43.91 85.71 12-Aug 100.45 127.79
12-Feb 41.76 80.76 12-Sep 100.83 131.3
12-Mar 46.95 65.36 12-Oct 99.92 127.49
12-Apr 50.28 68.1 12-Nov 105.36 121.93
12-May 58.1 69.11 12-Dec 104.26 117.49
12-Jun 69.13 76.48 12-Jan 106.89 124.18
12-Jul 64.65 79.07 12-Feb 112.7 123.38
12-Aug 71.63 77.68 12-Mar 117.79 112.59
12-Sep 68.38 72.47 12-Apr 113.75 107.95
12-Oct 74.08 76.15
Annexure-13
Month Rupee exchange
rate
coal price per metric ton in
US $
Coal price per metric ton in
Indian rupees
Apr-07 42.0176 60.13 2526.518
May-07 40.5561 60 2433.366
Jun-07 40.5905 66 2678.973
Jul-07 40.28 72.12
2904.994
Aug-07 40.6791 74.3 3022.457
Sep-07 40.17 73.33 2945.666
Oct-07 39.366 80.15 3155.185
Nov-07 39.3168 90.64 3563.675
0
10
20
30
40
50
60
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
Ap
r-0
7
Sep
-07
Feb
-08
Jul-
08
Dec
-08
May
-09
Oct
-09
Mar
-10
Au
g-1
0
Jan
-11
Jun
-11
No
v-1
1
Ap
r-1
2
R
S
p
e
r
U
S
$
I
n
R
u
p
e
e
s
Coal price per metric ton in Indian rupees
Rupee exchange rate
89
Dec-07 39.3752 97.5 3839.082
Jan-08 39.2704 98.3 3860.28
Feb-08 39.6724 141.43 5610.868
Mar-08 40.1452 126.7 5086.397
Apr-08 39.9668 131.79 5267.225
May-08 41.8814 142.71 5976.895
Jun-08 42.7633 171.16 7319.366
Jul-08 42.723 192.86 8239.558
Aug-08 42.9248 169.71 7284.768
Sep-08 45.4264 160.71 7300.477
Oct-08 48.6196 115.71 5625.774
Nov-08 48.7905 98.84 4822.453
Dec-08 48.4804 84.27 4085.443
Jan-09 48.7326 85.71 4176.871
Feb-09 49.1914 80.76 3972.697
Mar-09 51.2062 65.36 3346.837
Apr-09 50.06 68.1 3409.086
May-09 48.55 69.11 3355.291
Jun-09 47.75 76.48 3651.92
Jul-09 48.4358 79.07 3829.819
Aug-09 48.3314 77.68 3754.383
Sep-09 48.3606 72.47 3504.693
Oct-09 46.7192 76.15 3557.667
Nov-09 46.5619 84.43 3931.221
Dec-09 46.5987 89.04 4149.148
Jan-10 45.9216 103.93 4772.632
Feb-10 46.3472 100.92 4677.359
Mar-10 45.4982 101.12 4600.778
Apr-10 44.4714 107.3 4771.781
May-10 45.8716 107.28 4921.105
Jun-10 46.5758 105.2 4899.774
Jul-10 46.8363 102.84 4816.645
Aug-10 46.5791 96.19 4480.444
Sep-10 45.9904 101.66 4675.384
Oct-10 44.425 104.41 4638.414
Nov-10 44.9986 114.81 5166.289
Dec-10 45.1192 126.74 5718.407
Jan-11 45.3975 141.94 6443.721
90
Feb-11 45.423 137.53 6247.025
Mar-11 44.9699 135.14 6077.232
Apr-11 44.3954 131.25 5826.896
May-11 44.9377 126.84 5699.898
Jun-11 44.8426 127.8 5730.884
Jul-11 44.4151 128.57 5710.449
Aug-11 45.365 127.79 5797.193
Sep-11 47.6585 131.3 6257.561
Oct-11 49.2856 127.49 6283.421
Nov-11 50.7911 121.93 6192.959
Dec-11 52.5228 117.49 6170.904
Jan-12 51.1976 124.18 6357.718
Feb-12 49.1978 123.38 6070.025
Mar-12 50.404 112.59 5674.986
Apr-12 51.7775 107.95 5589.381
Annexure- 14
India's largest photovoltaic (PV) power plants
Name of Plant DC Peak
Power
(MW)
GW·h
/year[7]
Capacity
factor
Notes
Mithapur Solar Power Plant - Mithapur,
Gujarat (Tata Power)[8]
25
Commissioned
February 2012
Waa Solar Power Plant - Surendranagar,
Gujarat (Madhav Power)[9]
10
Commissioned
December 2011
Gujarat Solar Park - Charanka, Gujarat 214
Commissioned April
2012
Adani Power Bitta,Gujarat 40
Commissioned
January 2012
Moser Baer Clean Energy Limited -
Banaskantha, Gujarat [12]
30
Commissioned
October 2011
Sivaganga Photovoltaic Plant 5
Completed December
2010
Kolar Photovoltaic Plant 3
Completed May 2010
Itnal Photovoltaic Plant, Belgaum 3
Completed April 2010
Azure Power - Photovoltaic Plant 2
2009
91
India's largest photovoltaic (PV) power plants
Name of Plant DC Peak
Power
(MW)
GW·h
/year[7]
Capacity
factor
Notes
Jamuria Photovoltaic Plant 2
2009
NDPC Photovoltaic Plant 1
2010
Thyagaraj stadium Plant-Delhi 1
April, 2010
Gandhinagar Solar Plant 1
January 21, 2011
Tata - Mulshi, Maharashtra 3
Commissioned April
2011
Azure Power - Sabarkantha, Gujarat 10
Commissioned June
2011
Tata - Mayiladuthurai, Tamil Nadu 1
Commissioned July
2011
REHPL - Sadeipali, (Bolangir) Orissa 1
Commissioned July
2011
TATA - Osmanabad, Maharastra 1
Commissioned 1st
Aug 2011
Green Infra Solar Energy Limited- Rajkot,
Gujarat [26]
10
Commissioned
November 2011
Total 363
Annexure-15
Technically Recoverable Shale Gas Resources by
Country
Country Reserves
Algeria 231
Argentina 774
Australia 396
Bolivia 48
Brazil 226
Canada 388
92
Chile 64
China 1,275
Colombia 19
Denmark 23
France 180
Germany 8
India 63
Libya 290
Lithuania 4
Mexico 681
Morocco 11
Netherlands 17
Norway 83
Pakistan 51
Paraguay 62
Poland 187
South Africa 485
Sweden 41
Tunisia 18
Turkey 15
Ukraine 42
U.K. 20
United States 862
Uruguay 21
Venezuela 11
Western Sahara 7
Total (rounded) 6,622
93
Company Certificate-