PROFESSIONAL

SMC-2014

CIRCLE

ENSURING FUEL
SECURITY FOR

ECONOMIC GROWTH :
DEMAND DRIVER OF THE POWER
125
SECTOR
Indias
per capita consumption

PEAK POWER SUPPLY

POSITION(GW)

125
124
123
122

of electricity is abysmally low,

which is 29% of world average.

123

FY 2012-13

CAPACITY

PEAKREQUIREMENT

The peak power deficit and

total electricity deficit at the
end of FY13 in our country is
9%(12GW)
and
8.7%(87BU)
respectively

ELECTRICITY
DEFICIT(B U)

998
1000
950
900
850

12

911

FY 2 012 -1 3

DEMAND

TH

100
50
0

PLAN CAPEX

88.54

SUPPLY

ALL INDIA

NTPC

14.06
12TH FiY(2012-17)

Source: Planning commission

Present high peak and energy

deficits in the country have
necessitated
a
rapid
augmentation of our Generation
capacities.

By 2032, NTPC targets a capacity of 128 GW with 28%

capacity from non-fossil sources
2014
>42GW

2017
~75 GW

Coal

Gas

Nuclear

Hydro

2032
~128 GW

Renewables

Source: Corporate Intranet

Dependency on Coal will continue as the primary &

most reliable source for power generation in NTPC
3

OUTLINE OF THE
PRESENTATION
COAL FUEL SECURITY1

44
4
AVAILABILTY,TRANSPORTATION,CASE
44
4
4
STUDY,RECOMMENDATION
4
32

24

2
24

2
2
4
4

32

3
3 2

GAS FUEL2 SECURITY

PRESENT,FUTURE,RECOMMENDATION

GRADUAL FUEL SWITCHING

COST CUTTING AND REVENUE

GENERATING

COAL RESERVE & DEMAND

SUPPLY-GAP
PROJECTION FOR ALL NTPC
At present rate of
STATIONS
production of 540
MillionTon/Year,
proven reserves will
last for more than 200
Years.
There is total reserve
of 258 BT of coal in
our
In country
order to meet our
272
300
231
future
generation
215
201
191
200
target and all our
future CAPEX to be a
100
viable generator, we
32
20
20
12
10
need to ensure coal
0
availability
on
2012-13 2013-14 2014-15 2015-16 2016-17
sustainable basis
DEMAND (MMT)
SUPPLY THROUGH ACQ/LOA
For this we will
CAPTIVE SUPPLY(MMT)
largely depend on
SUPPLY TRRO E-AUCTION/MOU(MMT)
captive coal &
DEFICIT(MMT)
IMPORT
imported coal apart

CAUSES OF COAL
SHORTAGE
Demand supply mismatch in coal production
Logistic constraints The railway network is heavily
overloaded which often leads to less materialization
Delay in captive mining
Issues of MGR system and high rake cycle time
Coal quality
Issues with imported coal: a) Price volatility b) Railway constraints c) Port
constraints
The CSA is at 90-91% PLF, but many of NTPC stations are
operating at higher PLF of more than 95 %.

CAPTIVE COAL MINING

Develop captive coal mines by mine developers inorganically so as to avail
coal of desired Quality ,Quantity & Size on sustainable basis.
Until now 10 coal blocks are allotted to NTPC coal reserves of 5.7
billon tons with annual mining potential of ~100MTPA

ISSUES IN CAPTIVE COAL

MINING

1.Allotment of undeveloped or remote coal blocks.

2.Agencies doing geological investigation & mining plan are not
independent.
3.Forest clearance& E.C are very time consuming and tedious.
4.Deallocation of mines on basis of unrealistic time target of start of
coal production from mines as set by MOC.

1.Different business models in contract mining

2.Type of mining method depending on depth and SR.

1.Steps in coal mine development are

Detailed exploration and preparation of GR, Mining Plan preparation
and approval, Land Acquisition, Obtaining of Statutory Clearances ,
Infrastructure Development, OB Removal & Coal Production
2.Coal evacuation logistics
3. R & R issues

NTPCS EXPERIENCE IN
FOREST CLEARANCE
PakriBarwad
ih

Chatt Kerand
iari
Baria
tu

Important Prerequisites
Approval of Mining Plan
NOC on jungle-jhari

Talaipa
lli

Dulang
a
*

Time taken in months

7

11

4.5

26

22

32

28

NA

Process
Time taken in months
Processing of Stage I
proposal by State Govt.

7.5

Site inspection and

forwarding of report to
MOEF

FAC meeting and Stage I

9
4
2
5
PC approval
lost 13 months for Dulanga coal block due to No-Go area iss

MOC
months
to
all these
Stageschedule
II clearancestipulates 8-10
4
9
- complete
activities
Unrealistic in present
scenario
Clearance for tree felling
6
-

Steps in forest clearances

NTPCs experience in environment

clearance
PakriBarwad
ih

Chatt Kerand
iari
Baria
tu

Key processes causing

delays

Talaip
alli

Dulan
ga

Time taken in months

Conductance of public
hearing and NOC from SPCB

19

38

7.5

EAC meeting and grant of

clearance

21

17

21

10

18

ENVIRONMENT CLEARANCE
FLOW CHART
Site
Clearance /
TOR

Geological
Report
Mining plan

Submission
to SPCB
Public
Hearing
NOC from
SPCB

Preparation
of EIA/EMP
Submission
of
Comprehens
ive EIA/EMP
along with
Schedule II
Performa to
MOEF

Approv
al
Engagement
of Agency

Clearanc
e by
Expert
Committ
ee

Stage I
Forest
Clearance

Environm
ent
Clearanc
e

MOC schedule stipulates 6 months to complete all these

activities Unrealistic in present scenario

COMMERCIALLY VIABLE COAL

MINING MODEL
NTPC

FUEL
SUPPLY(MDO)
AGREEMENT

NTPC
FUEL
SUPPLY

CMC

MINE

MINE DEV. &

OPERATION

MDO
MODEL
COAL MINING

COMPANY(CMC)
PROVIDES ALL THE
CAPITAL AND BEARS
ALL THE RISK
CMC & NTPC(MINE
OWNER) HAS TO AGREE
TO A FIXED RATE FOR
SUPPLIED COAL
CMC DEMANDS A
SIGNIFICANT PREMIUM

AGREEME
NT

CMC
EQUITY
PARTICIPATI
ON

JV
COMPAN
Y
MINE DEV. &
OPERATION

MINE
JV COMPANY
MODEL

NTPC
COMPLETE
ACQUISITIO
N

FUEL
SUPPLY

CMC
MINE DEV. &
OPERATION

MINE
A&M MODEL

LACK OF EXPERTISE
SEPARATE JV COMPANY
NECESSIATES APPOINTING
CREATED BETWEEN NTPC
BANKERS & CONSULTING
& CMC
COMPANIES FOR HUNTING
CAPITAL IS TO
PROSPECTIVE CMCS
CONTRIBUTED BY BOTH IN LACK OF PROSPECTIVE
PROPORTION TO THEIR
COMPANIES IN OUR
EQUITY
COUNTRY AND LACK OF
RISKS SHARED BETWEEN
CLARITY IN M&A RULES OF
BOTH CMC & NTPC
FOREIGN CMCS MAKES
ADDITIONAL TAX
THIS MODEL INITIALLY

NTPCS COAL IMPORT : BIRDS EYEVIEW

ANALYSIS
OF SOURCES
COUNTRIES
PROS
CONS
Superior quality of coal
AUSTRALLIA
reserve
(Galilee, Surat
and Gunnedah Availability of state-of-art
technology and human
)

resources

INDONESIA
(Kalimantan
Sumatra)

MOZAMBIQUE
(Vale,Riversda
le
)

Lowest freight charges to

India
Low cost of mining due to
opencast reserve
River network for
transportation
FDI allowed in coal mining

Nearness to India
Favourable FDI policy in
coal mining
Beira port rail link and
Nacala port being
developed by
IRCON&RITES

Constraints in ports,
railway capacity
Landed cost of thermal coal
from Australia to India is
apparently high
Introduction of carbon tax
@30%
Meeting domestic market
obligation (DMO)
Uncertainty in Legal
framework & taxation
rules(wind fall gain tax)
High logistic cost from
Sumatra
Constraints in Railway
capacity
Ports cannot handle large
size vessels
High ash percentage in
ROM coal
Railway hauling distance is

IMPORTED COAL :COST ANALYSIS

FREIGHT AND CHARTER RATE(IN USD/MT as on 14/02/2014) OF
IMPORTED COAL FROM DIFFERENT PORTS TO ECI PORTS

20
15

17.75
14.5
11.15

10

11.35
9.85
7.35

5
0

Carrying coal in CAPESIZE ship is most

economical, but it requires a berth of
larger depth(>18m).
Only Dhamara, Gangavarm, Mundra port
are capable of handling CAPESIZE ship.

RICHARDS BAY(S.A)

70

CAPE SIZE(18M)

70
60
50
40
30
20
10
0

KEY CONSIDERATIONS:

65

KALIMANTAN(I)

PANAMAX(15M)

HANDYMAX(12M)

COMPONENTS OF LANDED COST OF

COAL (IN %) IN ECI PORTS FROM
INDONESIA

25
10

FOB

15

SEA FREIGHT

Source: MMTC,SCI,ADANI E.L

15

IN LAND H.C

FOB cost is the major part in Imported

coal cost,this can be reduced further.

Most of the ports do not have a

dedicated coal terminal which leads to
increase in in-land handling charge &
delay in coal evacuation.
Legal & taxation hurdles in Indonesia
and port constraints in S.A posses threat
to coal import plan of NTPC.
Earlier thermal coal was exempted from
customs duty and taxed only with a CVD
of 1%. But after the 2013 budget , it is
taxed with 2% of customs duty and 2% of
CVD.
Imported coal cost is affected by the

CIL COALVSCAPTIVE COALVSIMPORTED

Source: Fuel
management,CC
COAL :INDICATIVE COST ANALYSIS
CIL COAL
PRICE/TON

SOURCE

NOTIFIED ROM(G9G10)

860

TRANSPORTATION(/
10-20 KM)

77

CRUSHING(-50 MM)

77

ST. EXCIZE DUTY

10

RAPID LOADING

20
TOTAL=X=1094

CLEAN ENERGY
CESS

50

CENTRAL EXCIZE @
6.18% OF X

68

VAT @ 2% OF Y

23

AD-VALOREM @14%

120

TOTAL=Y=1.0618X
=1162

CAPTIVE
COAL

CIL COAL
(GCV=5800
-6400)

IMPORTED
COAL
(GCV=58006500)

3145(AVG
OF G4&G5)

PROJEC
T

COST

C
O
S
904
T

77

TSTPS

5905

77

FARAKK
A

6578

S.Tax(12.3
6%)
= N 112

10

DADRI

7318

20

RIHAND

7551

KAHALG
AON

7008

209

VINDHY
ANCHAL

7625

72

SIMADR
I

5082

440

UNCHA

7398

M
D
O

T
P
C

TOTAL=X=3379

50
TOTAL=Y=1.0618X
=3587

C
O
275
S
T

120

The choice between the supplies from

domestic and imported coal should mainly
be governed by timely availability of coal
from
domestic
sources,
quality
requirements and the economics of landed
Cost of coal at the end-use plant.

COAL TRANSPORTATION
LOGISTICS

10 stations have MGR systems : Singrauli, Rihand,

Ramagundam, Korba, Vindhyachal, Sipat, Farakka,Kahalgaon,

RAILWAYS; 40%
MGR; 60%

Talcher-Kaniha, Talcher-Termal

6 stations are Rail fed:

Dadri, Badarpur, Simhadri, Unchahar, Tanda, Mouda.

NTPC COAL TRANSPORT

Major Issues in MGR:

I. Unloading infrastructure at power station

II. Low operational efficiency at some
stations
III. Inadequate Railway infrastructure in some
zones
IV. Increasing Demurrage charges by
Railways
V. Shortage of skilled manpower in MGR
EX: Loco-Pilots, stations masters,
technicians, points man etc.
VI. Lack of wagon tipplers for unloading of IR
coal as most of imported coal are transported
through BOX N rakes

COAL TRANSPORTATION: Reduction of High

Rake cycle time
MAJOR REASONS
Presence
of
big
boulders with coal and
Wet and sticky coal
particularly in Imported
coal
-Bunching of Rakes &
delay due to manual
unloading
of
BOXN
rakes at track hoppers
-Delay in evacuation of
coal
through
conveyors due to CHP
problem such as lack
of
experienced
manpower and modern
equipment.
-Lack of sufficient no of
BOBR wagons
with
Railways

STRATEGIES TO REDUCE
-Discussion
with
Coal
companies to supply sized
coal and provision of
penalty for not meeting
quality and size of coal
-Follow- up with stations,
Engg. and other agencies
to install Wagon Tipplers
and
other
required
infrastructure for timely
-Policy
unloading
ofreviews
BOXN rakesfor
adequate staffing in MGR
with skilled Ex Railway
employees like Loco Pilots,
Stations
masters
and
better equipments and
hence
reducing
rake
cycle time.

-Leasing
wagons
railways

out
to

BOBR
Indian

Inland Waterways
Transportation Block

The New Kid in

FEASIBILITY AND COST

BENEFIT ANALYSIS
Kahalgaon
Barh
Farakka

Particulars

Haladia
to
Farakka

Haladia
to
Kahalga
on

Barge

96.00

162.00

Tran shipper

46.00

69.00

Farakka NTPC
terminal

17.21

Kahalgaon
Terminal

16.01

62.91

142.81

222.12

389.82

Pre-Operative
Cost

2.00

1.00

Interest during
consturction

5.55

9.02

Mtrl Handling
eqpmnt
Sub Total

Sub Total
229.67
399.84
Success of Farakka needs
to
be
replicated
in
Contingency @5%
11.10
19.49
simhadri, Kudgi
Total Project
240.77

419.33

Inland Waterways

The New Kid in

Transportation Block

Coal transportation through in-land waterways 1 ,4 & 5 be widely

explored
We should play the role of a nodal agency along with
IWAI and Govt.
of Odisha in developing
NW-5 in
connecting Brahmani & Mahanadi river system with Bay
of Bengal.
We can transport domestic coal from MCL Talcher to our plants in

S
H
O
R
T
T
E
R
M
P
L
A
N

Fuel Security-Coal:
Recommendation
Procurement of more coal through Bi Lateral

MOU With state owned companies (CIL & SCCL)

Transportation through inland Waterways
Higher coal procurement through e auction

Speedy development of captive mines

1.Clubbing smaller mines in one large mine, where
ever possible.
2.Partnering with Forest department for regular
updating of land & forest records, creation of land
bank in advance for compensatory afforestation,
creation of more FACs & EACs so as to reduce FC,EC
time.
3.Lobbying & ensuring active support & involvement
of respective State Govt.
4.MOC considering Reserve Price for coal blocks
Milestone-based payment to State Govt.
5.Special Task Force for IT based monitoring the
project implementation.

Fuel Security-Coal:
Recommendation
L
O
N
G

New units with modern technology should come

in place Of Generating units which have
completed more than 30 years with high heat
rate .
Implementation of solar thermal for all coal fired
plants

T
E Importing coal from Mozambique shall be pursued
right
R
M earnestly, Partnership with RITES & IRCON may be
pursued.

P
L
A
N

Formation of new coal mining company having its

HQ at either Ranchi /Raipur/Talcher for better
administrative and operational control

GAS BASED GENERATION

AT NTPC
Total Gas/Liquid fuel Based Capacity
: 3955 MW
Gas Requirement @ 90% PLF
: ~ 17.35MMSCMD
Gas Availability during 2012-13 : 10.67 MMSCMD
Future gas based expansion projects
: 10650 MW
Gas Requirement @90%PLF
:
54.025 MMSCMD

2009-10

2010-11

2011-12

2012-13

DC(%)

90.44

93.11

93.86

92.6

PLF(%)

78.51

72.9

69.45

60

Gen.
loss(MUs)

4059

6437

7867

8604

ISSUES OF CONCERN FOR GAS

BASED STATIONS
Continuous decrease in PLF and increase in loss of generation.
Viability is at serious threat in view of CERC draft tariff mechanism 2014-19.
Domestic Gas projections in country in near future are not very
optimistic.
Although there is huge natural gas demand, Price affordability
remains an issue particularly for LNG
CPSUs like NTPC can not proceed ahead for investment
approval by the Board for implementation of these projects
without domestic gas allocation

Considering the depleting Domestic Gas

Supplies & difficulties in sourcing
gases/RLNG from abroad, Shale Gas
emerges as the Future option for our gas

INDIAS PROSPECTIVE- SHALE

GAS SCENARIO
As per the initial studies, basins like Cambay, KG, Cauvery &
Damodar, are found to be promising w.r.t. Shale Gas resource of
the order of 250 TCF, of which 63 TCF is technically recoverable.

Source: IEA data

Fuel Security-Gas:
Recommendation

Entering into Alliance with GAIL for tapping

the Shale Gas to gain early bird advantage.
A Group in NTPC (may be NETRA) could be
created to keep abreast with Technological
Developments in shale & CBM gas
Policy lobbying with Govt of India to pursue
two-pronged approach to Shale gas- to
acquire assets abroad and energizing its
domestic exploration
Policy lobbying with Govt of India for
formulating a stable shale & CBM gas policy
and a market driven pricing model for it.

Infrastructure Development- Pipeline

Network & Regasification Capacity

GRADUAL FUEL
SWITCHING
SOLAR
GEO
THERMAL

HYDRO

NUCLEA
R

WIND

FUEL SWITCHING-SOLAR

FLOATING SOLAR PV

Thousands of square km of water

surfaces
are available in high insolation areas
Power Utilities
Lakes/Rivers,Sea
Solar on Water potential is Hundreds
of GW.
BENEFITS
Avoid using valuable land
Capitalize on a previously non
revenue generating area; water.
Lower solar panel temperatures and
increase power production
Reduce water evaporation by up to
70%
Improve water quality by reducing
water temperature
Save money on your utility bill

Become a good steward to the

environment
70 mw Kagoshima solar plant by

Kyocera corporation, Japan

ASH DYKE COVERED SOLAR

PLANT
Since land is precious and at times not available , we can use the ash dyke
area for solar power plant in two ways:

1. Already filled and now abandoned

ash dykes be covered with
solar panels
2.In green field projects , the solar plant
can be planned early over 15-20 m
above the proposed ash dyke with
columns and iron pipe grids.
Benefits:
It will have a longer life of 10-15 years.
It can be used to provide construction
power and later power to the township
of the main thermal power plant .

CASE STUDY-NTPC DADRI

THERMAL
Solar Field 15 MW (Thermal)
Conversion efficiency 24.39%
Additional output :
3.66MW(Electrical)
Coal Saving 3,250 MT/year
CO2 reduction 4060 MT/year

REDUCTION OF FOSSIL FUEL

DEPENDENCY
3 Major Roadblocks with Renewable
Energy Today:

Renewable Energy Infrastructure &

Technology Barriers
Efficiency and Reliability Issues
with Renewable Energy
Money, Money, Money

Drivers:
Government initiatives
Cost competitiveness
Global shift to clean energy

COST CUTTING AND REVENUE

GENERATING PROPOSALS
EDCs should be started operating as
revenue generating centre.
PMI
Implementing steps:
1. Head of EDC should report to HEAD OF O&M
2.Starting courses on cost basis for engineering
students such as
EDC

Vocational training
Study/Industrial tour
Providing part time ITIs(through PMI)
Providing training to other power professionals
HEAD
Proper marketing

OF O&M

 Opportunities of Power trading through NVVN

be widely expanded and other govt. and private
power generators may be included.
Hospital Restructuring
Scope of consultant doctors be largely pursued wherever
possible.
External Medical diagnosis & certain tests should be allowed
with 3 stage permission(computer based) from hospital
authority in order to reduce referral bill.

Organisational Restructuring for increasing

average utilisation hour/employee.
EEMG & MTP departments be merged to form a new deptt.
PAP.
Certain departments in projects in a region such as
Vigilance, Rajbhasa,B.E should be put in RHQ operating for
all projects in that region

BIBLIOGRAPHY:
1. Websites of
MOC,CIL,SCCL,MOP,MOP&NG,MMTC,STC,CEA,CERC,NPTI,PLANNIG
COMMISION ,WORLD COAL,THIESS,RIO-TINTO,BHOBILLITON,KPMG,PwC
2. Power Supply Position, Central Electricity Authority, April 2011March 2012
3. Annual report-2013 of CIL,MOC,NTPC , Central Electricity
Authority, April 2012
4. BP statistical review, 2012
5. Coal Imports, Press Information Bureau,14 May 2012
6. Websites of transporting companies such as SCI,MMTC, ADANI E.L.
7. Presidential directive to CIL on supply to power cos, Financial
Express, 4 April 2012
8. Websites of U.S. Energy Information Administration, U.S.
Department of Energy (DOE)
9. KPMG in India Analysis, considering the difference between
domestic and international coal prices and calorific values
10. INTRANETS OF-CC FUEL MANAGEMENT,COAL

mining

COAL DEMAND-SUPPLY
SCENARIO
2012-2013
IN THE POWER SECTOR

SL NO

DETAILS

1.

INDIGENOUS COAL REQUIREMENT

2.

INDIGENOUS COAL AVAILABILITY FROM

(Fig in Million Tonn

2016-2017

455

842

I)CIL

347

415

II)SCCL

35

35

III)CAPTIVE MINES

25

100

3.

TOTAL AVAILABILITY OF INDIGENOUS COAL

402

550

4.

SHORTFALL IN INDIGENOUS COAL

AVAILABILITY(1-3)

53

242

Coal mine development schedule as per MOC

1

1
0

1
1

1
2

1
3

1
4

1
5

1
6

1
7

1
8

1
9

2
0

2
1

2
2

2
3

2
4

2
5

2
6

2
7

2
8

2
9

3
0

3
1

3
2

3
3

3
4

3
5

3
6

3
7

3
8

3
9

4
0

Purchase of geological report (10 months) (date of allottment 11/10/2004)

Preparation and submission of mining plan
Approval of mining plan(preparation and approval takes 12 months )
Approval for environment clearance & forest application

Land
Environment & forest clearance (st-1 3 year 10 months & st-2acquisition
4year 2 months
Application of land acquisition

Permission for mine opening 20/06/2013

For non forest

area=36months,

mine opening
coal production

For forest
area=42months

4
1

Stages in Development of Coal Mine

STAGE - I
PLANNING / FEASIBILITY

Exploration / Preparation
of Geological Report

Surface Master Plan

Conducting Studies
Hydrogeological studies
Socio Economic studies
Transport studies
Environmental studies

Mining Plan - Approval

Land Requirement

Applications for Clearances

STAGE - II

STAGE - III

OBTAINING CLEARANCES
Forest Clearance

Environment Clearance

LAND ACQUISITION AND

REHABILITATION &
RESETTLEMENT OF PAPs

CREATION OF
INFRASTRUCTURE

Rail Link
Coal Handling Plant
Approach Roads

Issuance of Notifications
Calculation of Compensation
Disbursement of Compensation
MINE DEVELOPMENT
Rehabilitation Action Plan
Physical Possession of Land
Removal of OB
& Rehabilitation of PAPs

Coal Production
APPOINTMENT OF MDO

SALIENT FEATURES OF COAL BLOCKS ALLOTED

TO NTPC

S.No.
Description
1 Location - District
State
2

Area of Block (SqKm)

Land (in Ac)

Total

Grade of Coal Seams

Mineable Reserve (MT)

10 Max. working Depth (m)

12 Stripping Ratio (Cum. Of
OB per Ton of Coal)
13 Production - MT /Yr
14 Mining Method

Pakri-Barwahdih

Chatti-Bariatu

Kerandhari `A'

Dulanga

Talaipalli

Hazaribagh
Jharkhand

Hazaribagh
Jharkhand

Hazaribagh
Jharkhand

Sundergarh
Odisha

Raigarh
Chhattisgarh

46.26 -Total
39.43 - (E+W)

6.46

6.54

6.54 - Rev MP

21.13

8031.9

1589.8

2683.11

2112.5

5763

D - E (Average : E) D - G (Average : F) C - G (Average : E & F) B - G (Average : F - G) Opencast : E -F

Underground : A - E
503.37

151.8

139.74

194.97

300
4.17

152
1.72

395
4.45

255
2.59

15

Opencast : Shovel- Opencast : Shovel- Opencast : ShovelDumper

Dumper
Dumper

Opencast : ShovelDumper & Surface

Miner

Opencast : 843.6
Underground : 17.57
404
4.48
Opencast : 18
Underground : 0.72
Opencast : ShovelDumper & Surface Miner

15 Estimated-Approximate
Capital Cost
Rs. Cr

3200

1200

1400

600

2300

16 Approximate-Estimated
Cost of Production (Rs./T)

1100

800

1200

800

1100

SEVERAL PRICING REGIME OF NATURAL GAS

Present Natural gas pricing
regimes in India:
Administered gas pricing
Non
APM gas Pricing
mechanism (APM)
LNG pricing
New Exploration Licensing Policy
(NELP) Pricing

Geological
Report

Environment
Clearance
Flow Chart
Site
Clearance /
TOR
Mining plan

Submission
to SPCB
Public
Hearing
NOC from
SPCB

Preparation
of EIA/EMP
Submission
of
Comprehens
ive EIA/EMP
along with
Schedule II
Performa to
MOEF

Approv
al
Engagement
of Agency

Clearanc
e by
Expert
Committ
ee

Stage I
Forest
Clearance

Environm
ent
Clearanc
e

MOC schedule stipulates 6 months to complete all these

activities Unrealistic in present scenario

Steps in forest clearances

NTPCs experience in forest clearance

PakriBarwad
ih

Chatt Kerand
iari
Baria
tu

Important Prerequisites
Approval of Mining Plan
NOC on jungle-jhari

Talaipa
lli

Dulang
a
*

Time taken in months

7

11

4.5

26

22

32

28

NA

Process
Time taken in months
Processing of Stage I
proposal by State Govt.

7.5

Site inspection and

forwarding of report to
MOEF

FAC meeting and Stage I

NTPCS FUTURE GAS BASED

EXPANSION PROJECTS

Increase in Gas/ RLNG Prices

Based on the above assumptions, the

breakeven gas price (BEGP), also referred
to as long-run marginal cost (LRMC), is
calculated to be $6.04/MMBtu at IRR =
10%, $6.58/MMBtu at IRR = 12% and
$7.45/MMBtu at IRR = 15%.

For China the shale gas LRMC of up to $10/MMBtu is still profitable because
the 2012 landed price of LNG in China is averaging more than
$10.77/MMBtu.4 The shale gas development cost of up to the $12/MMBtu
range will also encourage the countries that are burning liquid fuels for power
generation. At the current crude price the price per barrel comes to
approximately $15/MMBtu (~6 MMBtu/barrel and $90/Bbl crude price).

ISSUES ASSOCIATED WITH SHALE GAS EXPLORATION

1) Larger Environmental Footprints:
They are difficult to extract because they are trapped in very tight or low
permeability rock that impedes their flow. Hence, for a given volume of
unconventional output, much larger scale of the industrial operation is
required. Requirement of more no of wells associated with complex and
intensive preparation for production results in generally larger environmental
footprint.
2) Requirement Of Large Quantity Of Water
Very large volumes of water are used during the hydraulic fracturing process.
Water management for hydro fracturing jobs is crucial and require innovative
solution.
3) Treatment And Disposal Of Waste Water From Hydraulic Fracturing
Not only requirement of water an issue, 70% of water used in fracturing
returns back as as flow-back . Flow-back water is contaminated with
hazardous chemicals and may pose a potential threat to the local
environment unless handled properly. The various options to handle this

4) Risk Of Water Contamination

There is high risk for water contamination (surface or underground) during
unconventional gas production. Water supplies or underground water may get
contaminated due to accidental spills of fluids or solids at the surface, leakage of
fracturing fluids/ saline water/ hydrocarbons or chemicals, discharge of insufficiently
treated waste water into groundwater or, even, deep underground.
5) Methane And Other Air Emissions
The production of unconventional gas also contributes to the atmospheric
concentration of greenhouse gases and affects local air quality. However, the quantum
of risks associated are uncertain and depends critically on the way operations are
carried out. On the other hand, there are potential net benefits from unconventional gas
production, to the extent that, having been produced and transported to exacting
environmental standards, it leads to greater use of gas instead of more carbonintensive coal and oil. As per IEA analysis, emissions are 1.3% higher in 2035 in low
unconventional scenario which offsets the claim that a reduction in unconventional gas
output brings net environmental gains.
6) Implications For Local Community
Unconventional developments tend to extend across much larger geographic areas.
Moreover, areas with high unconventional potential are not always those with a strong
or recent tradition of oil and gas industry activity. This tends to exacerbate the problem
of public acceptance. It is very important for the industry to maintain or earn a social
licence to operate for harnessing the unconventional gas.

SCENARIO OF SHALE GAS IN INDIA

Some issues relevant to growth of Shale Gas in India are
nology as
and
Infrastructure
under:
ility of shale specific sub-surface data is limited and operators need to invest
in exploration activities to identify sweet spots before moving to the commercia
tion.
as plays need large number of service providers to increase the availability and
tion to lower the cost.
no-Economics
f potential shales in priority basins is in the order of 2000-3000 + m, will further
e the cost of drilling and fracking.
Acquisition
umber of wells to be drilled, which will involve extensive use of land.
face rights are with Govt., therefore landowners are unlikely to be
d directly from development requring strategic considerations for making landow
o provide land for development.
ine Infrastructure
han KG and Cambay, basins may not be close to existing production sites. Transp
o market can become an expensive proposition. The available network of pipelin
is about 15,000 km only and require large infrastructure development and initiat
y Framework
India is in the process of finalization of Shale gas exploration policy. Earlier the p
d, it will give more clarity to the developers for planning their activities

POLICY
SUPPORT
Policies for effective utilization of available gas
MoP&NG has issued comprehensive guidelines on Swapping of natural
gas. The Swapping guidelines will be more beneficial for the customers
who do not have access to RLNG.
Recently, MoP&NG has issued guidelines for Clubbing/ Diversion of Gas
between Power Plants.
Optimization in Tax regime for Gas industry
Natural Gas/RLNG should be accorded status of Declared Goods so
that uniform
Central Sales Tax (CST) is applicable across the
states
Customs duty on LNG should be waived to make the RLNG more
competitive.
Transportation Tariff
The Regulator should ensure that the transportation charges are
reasonable for the last mile consumer in the gas pipeline so that uniform
development of gas market can take place.

IMPORT OF
COAL:RECOMMENDATIONS

The choice between the supplies from domestic and imported coal
should mainly be governed by timely availability of coal from
domestic sources, quality requirements and the economics of
landed cost of coal at the end-use plant.

POLICY
SUPPORT

Priority Allocation of Gas for Power Sector

In the Gas Utilization Policy by EGOM, Power Sector was
accorded 3rd
priority after Fertilizer & LPG
Domestic gas pricing
Recently, Dr. Rangarajan Committee on PSC recommended
that domestic
gas price would increase substantially (to the order to ~8.5
USD/MMBtu )
Advance
of price
Gas of
forUS$
Future
Gas Projects
from the Allocation
present Base
4.2 /MMbtu.
Asmay
per significantly
the Gas Utilization
gas will be
allocated
new
It
affect Policy,
the generation
from
the gastobased
projects,
plants. subject
to availability, when the projects are ready for
commissioning.
Tariff Reforms-Peaking Gas based Capacities
Tariff norms by CERC for Fixed cost , O&M cost, Heat Rate,
etc.
correspond to 85% PLF to be relaxed.

POLICY
SUPPORT
Policies for effective utilization of available gas
MoP&NG has issued comprehensive guidelines on Swapping of natural
gas. The Swapping guidelines will be more beneficial for the customers
who do not have access to RLNG.
Recently, MoP&NG has issued guidelines for Clubbing/ Diversion of Gas
between Power Plants.
Optimization in Tax regime for Gas industry
Natural Gas/RLNG should be accorded status of Declared Goods so
that uniform
Central Sales Tax (CST) is applicable across the
states
Customs duty on LNG should be waived to make the RLNG more
competitive.
Transportation Tariff
The Regulator should ensure that the transportation charges are
reasonable for the last mile consumer in the gas pipeline so that uniform
development of gas market can take place.

Introduction of horizontal drilling &

Hydrofracturing in Shale

Chemical Additives

(NYS Department of
Environmental Conservation,
2009)