India targeting first-ever offer of shale gas blocks in 2012

India is planning its first-ever offer of shale gas areas for exploration in 2012, even as it targets the launch of the ninth and possibility last auction of oil and gas blocks later this year. "Shale gas (gas locked in sedimentary rocks) is an emerging area. It has become an important source of energy in a few countries who have been able to commercially exploit this resource," Oil Minister Murli Deora said at the signing of contracts for blocks awarded under the eighth round of the New Exploration Licencing Policy (NELP). India has so far only explored for oil and gas. 

Shale gas is the new focus area in the US, Canada and China as an alternative to conventional oil and gas for meeting growing energy needs. These unconventional deposits have raised estimates for US gas reserves from 30 years to 100 years at current usage rates. 

Shale gas deposits weren't considered worth tapping before Houston billionaire George P Mitchell pioneered new extraction techniques in the 1990s. Action is on to "develop a framework for an assessment of resource potential, which would lead to exploitation of this resource. Our intention and endeavour is to put in place a policy framework in about an year''s time," Deora said. DGH Director-General S K Srivastava said the oil regulator is working on a shale gas policy. 

"Several basins in India are known to hold shale gas resources. Primarily, our focus is on three basins — Cambay (in Gujarat), Assam-Arakan (in the North-East) and Gondwana (in central India). 

He said the first offer of shale gas areas was likely in one-and-half years' time. "You can say in 2012." 

Deora said the ninth round of oil and gas block auctions under NELP was likely in the third quarter of 2010. NELP-VIII, which concluded in October last year, attracted a minimum investment commitment of USD 1.3 billion in 34 oil and gas blocks that were awarded out of the 70 offered. 

"The total investment under the earlier NELP rounds stands at USD 13.8 billion," he said. Production Sharing Contracts (PSCs) for 31 exploration blocks awarded to 23 companies under the eighth round of NELP were signed today. 

"Out of 31 blocks, 17 blocks are awarded to national oil companies — ONGC, Oil India and NTPC. Forteen exploration blocks are awarded to private and foreign companies, including BHP Billiton, BG Exploration and Cairn Energy," he said. He said the government intends to move towards an Open Acreage Licensing Policy (OALP) regime as soon as possible. 

Under OALP, companies can suggest any block for offer at any time, without waiting for the regular bid rounds under NELP. "The blocks will be awarded to the party giving the best bid," he said.

Source: Economic Times

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