Gazprom’s proposals on measures to boost gas production from coal beds are quite reasonable

All the initiatives aimed at boosting methane production from coal beds are crucial now. CBM should be extracted by all means, because it’s the main cause of blowouts in coal mines.

In Russia coal beds are mainly developed under severe operating conditions in coal mines. The mines are classified into three groups by hazards associated with gas blowouts, coal dust blowouts and mountain bumps. Non-gassy mines are only 12 per cent of total number. Companies take actions on coal mines degassing. According to the safety rules, if mine ventilation is impossible, other degassing techniques should be applied, which means methane extraction prior to coal beds development and during mining operations, for instance, through formation fracturing and methane suction. These measures are being taken, but they are featured by small scale, low efficiency and cost-intensity.

Degassing operations in coal mines are unsatisfactory if people are losing lives. There can be no other evaluation for this.

Comprehensive degassing should be carried out at coal mines in order to prevent incidents. This means early methane extraction and degassing activities during coal production. Such activities may and should be implemented in cooperation with gas workers. As we know, Gazprom has recently launched methane production from coal beds in Kuzbass. Coal production will be less dangerous in these regions once methane is extracted. No doubt that it is necessary to expand these activities. Therefore, the governmentally-approved measures to boost gas production from coal beds are desirable.

Gazprom’s proposals on measures to boost gas production from coal beds are quite reasonable. Moreover, the procedure of coalbed methane (CBM) inclusion into the Russian Classified Index of Natural Resources and Underground Waters is almost completed. The Natural Resources and Ecology Ministry has filed the relevant proposals. We only have to wait until changes are registered by the Ministry of Justice. I think this will be done within a month. Afterwards, it will be possible to obtain subsurface use licenses particularly for CBM.

The Company’s proposal to introduce a zero tax rate for this mineral resource production is reasonable as well. Since CBM production projects are very capital-intensive, their execution is economically inexpedient within the existing tax system. Thus, zeroing the tax rate can be a kind of motivation for investors to tie up funds for such projects.

I believe we can speak of other measures as well. I mean, in particular, the measures of customs stimulation such as zero import duties on CBM production equipment, which is not manufactured in Russia. A subsidized interest rate may also be introduced when granting loans for CBM projects. These are absolutely viable mechanisms, however, they are at the stage of discussions yet.

Other countries, such as Ukraine, have specific legislation that governs CBM production. It precisely defines the requirements for methane utilization. However, CBM is a real source of energy in these countries, an alternative to export supplies. For Russia, with its abundant reserves cheaper conventional gas, CBM production, in my opinion, is rather a matter of safety nowadays. It will prevent methane explosion during coal production.