CBM (Coal Bed Methane) Tender

Coal Bed Methane (CBM) tenders cover the procurement of exploration, development, and production services for methane gas extracted from coal seams, an unconventional gas resource that India is actively developing to supplement its natural gas production. CBM exploration and development contracts in India have been awarded through competitive bidding rounds, with the Ministry of Petroleum and Natural Gas (MoPNG) administering the licensing process.

What are CBM (Coal Bed Methane) Tenders in government procurement?

CBM is methane gas that is trapped within coal seams, adsorbed onto coal matrix. Producing CBM requires: drilling vertical or horizontal wells into the coal seam, dewatering the seam (pumping out formation water to reduce pressure and allow methane to desorb), and producing the gas through surface gas gathering and compression systems. The technology is complex and different from conventional gas production.

India's CBM development has been managed through competitive bidding rounds (CBM Round I through IV, conducted between 2001 and 2011) in which exploration blocks across Jharkhand, West Bengal, Madhya Pradesh, Uttar Pradesh, and other coal-bearing states were awarded to companies on competitive bidding of work program commitments and financial terms.

Award winners, currently including ONGC, RPDL (Reliance), Great Eastern, Essar Oil, and several smaller players, then procure goods and services for their CBM projects through their own competitive tendering. These include: drilling rigs for CBM wells (shallower than conventional gas, typically 400-1200m, but requiring specialised deviated and horizontal drilling), dewatering pumps and associated electrical infrastructure, wellhead equipment, gas gathering lines and gas processing facilities, and gas evacuation (pipeline or CNG compression).

MoPNG manages the CBM policy framework and has issued revised Model Revenue Sharing Contracts for CBM exploration. State governments receive royalty on CBM production from blocks within their territory.

The National Gas Grid expansion and the government's ambition to increase gas in India's energy mix from the current 6% to 15% by 2030 has renewed interest in CBM. The Ministry's focus on fast-tracking CBM production from blocks already awarded creates immediate procurement demand for companies holding blocks.

Why it matters for bidders

For drilling and oilfield services companies, CBM is a distinct market from conventional oil and gas. CBM wells require: coiled tubing services for de-watering acceleration, hydraulic fracturing for low-permeability coal seams, measurement-while-drilling tools adapted for deviated CBM well profiles, and surface pumping equipment for water disposal.

For surface engineering contractors, CBM field development creates demand for: wellhead gathering systems, compression stations, gas processing (dehydration and H2S removal if present), and pipeline connection to the gas grid. These are smaller-scale than offshore gas developments but follow similar process engineering principles.

For investors and developers evaluating entry into CBM, the bidding for new CBM blocks (when MoPNG issues new bid rounds) involves competitive work commitment bids, committing to drill specific numbers of wells in defined timeframes. Companies with CBM technology experience (from international operations in Australia, USA, or other CBM-producing countries) have an advantage in formulating credible work programs.

Example

ONGC's CBM project in the Jharia coalfields in Jharkhand floats a tender for hydraulic fracturing services for 15 CBM pilot wells. The scope includes: perforating the coal seam at specified depth intervals, pumping a specified hydraulic fracturing fluid at defined rates and pressures, placing proppant to keep fractures open, and post-frac flow testing. Only companies with CBM fracturing experience and equipment mobilised to India can bid. A global oilfield services company with CBM fracturing experience in Rajmahal coalfields wins. The fracturing programme is completed over 6 months, enhancing gas flow rates in the pilot wells significantly.

Key rules / thresholds

CBM exploration and production is governed by the Petroleum and Natural Gas Rules 1959 and specific CBM Policy provisions. Royalty on CBM production is paid to the state government at rates specified in the CBM contract. Environmental Impact Assessment under the EIA Notification 2006 is mandatory before CBM drilling in any new block. Water disposal from CBM dewatering operations must comply with CPCB guidelines, produced water cannot be discharged without treatment meeting specified quality parameters.