Shale gas fields will be next on the block

Encouraged by the US’ success in the area, India is stepping on shale gas, a potentially abundant, yet untapped source of energy. It is preparing to start auctioning the fields which could be rich in this resource for exploration.

“The government’s intention and endeavour is to put in place a policy framework for effective exploration and production of shale gas in about a year’s time,” Union petroleum minister Murli Deora said on Wednesday. Shale gas is natural gas found in shale rock formations.

India’s shale gas reserves are estimated to be higher than its conventional gas reserves, although no definite assessment of the extractable quantity is available. Reliance Industries (RIL), the first among Indian companies to take exposure to the business through its investment in US shale gas acreages, is believed to be best-placed to play a leading role when India starts offering shale gas blocks for exploitation. Multinational energy giants like Exxon Mobil and Royal Dutch Shell are also expected to join the shale gas fray in India.

“The government will appoint an expert by early July to assess potential reserves and then create rules to tap unconventional energy sources before auctioning areas in about a year,” Bloomberg reported on Wednesday, quoting

SK Srivastava, director-general of hydrocarbons, India’s upstream hydrocarbon regulator.

Preliminary estimates show India’s shale-gas reserves may be larger than its proven conventional gas deposits, said PK Bhowmick, president of the country’s Association of Petroleum Geologists. India plans to join a boom in shale-gas exploration that has fueled more than $39 billion of acquisitions in the US by global energy companies.

India’s biggest energy explorer ONGC awarded a $26-million contract to Schlumberger in April to explore shale gas in east India, according to chairman RS Sharma. Drilling wells to assess reserves may be completed by the end of this year, he said. Shale rocks have been found in Gujarat, Assam, Jharkhand.

Shale gas has proven to be a game-changer in the US energy market, significantly reducing the country’s dependence on imported LNG. It can help India as well to bolster its energy security. Shale gas reserves in the US have been known for a long time. However, drilling technology to facilitate commercial exploitation of shale gas was developed only recently.

The Indian economy is projected to grow at 8-10% a year over the long term. The country will need to ensure its energy security if it is to maintain its economic growth. Shale gas offers hope in this regard.

Coal accounts for over 50% of India’s primary energy consumption. Coal remains the predominant fuel for the domestic power sector. India has decided to reduce its carbon emissions on a voluntary basis as part of its commitment to contribute to the global efforts against climate change. If the country has to meet its global commitment, it must shift its energy consumption pattern toward gas, which is a clean source of energy.

Before shale gas production started in the US, the country used to be a big importer of LNG. Global LNG market is vulnerable to volatility in crude oil prices. When crude oil prices surged during 2005-2008, LNG prices skyrocketed. The price of LNG in the spot market then had hit $22 per mmbtu....

Source: Financial Express

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