Shale Gas – A Promising Unconventional Resource in India
Given the global impetus on exploration of unconventional gas in order to meet the growing energy demand, India too recognizes the strategic importance of developing its shale gas resources. Shale gas could help meet the rapidly growing needs of a large and developing population while mitigating the need to increase imported natural gas via liquefied natural gas (LNG) or pipeline. India has significant governance, market, and industry hurdles to overcome before shale gas production can make a significant contribution to India’s energy mix. Most analysts believe India is farther behind than China in almost all aspects of creating the right commercial frameworks for developing its shale gas potential. The past decade has seen the natural gas price peak, renewing the interest in development of ‘unconventional’ gas resources, such as coal-bed methane, tight gas, and shale gas. In India too, energy ‘demand vs. supply’ gap has increased the focus on developing all possible energy sources.
Unconventional gas resources, including shale gas has the potential to contribute significantly for a few decades. Shale is the common name for rock that was once layers of clay or mud. Due to geological circumstances, these layers were compressed into a fine-grained sedimentary rock. The gas which is trapped in this rock formation is called shale gas. In terms of its chemical makeup, shale gas is typically a dry gas primarily composed of methane. In many organic shale reservoirs, the natural gas is stored as free gas in fractures. All rocks have pore space that can hold water or gases. In Shale, the grains fit together so tightly that there is little movement of water or gas through the rock. In order to release the gas, especially in commercial quantities, the shale must either have natural fractures, or fractures must be created in the rocks to provide suitable permeability. Gas was found in the shale all around the world for a long time, but its extraction was considered economically unviable because of the low permeability of shale. Due to the low permeability, gas would not flow easily and therefore extraction was difficult. A large share of the focus in the past century was on exploring the highly permeable seams of sandstone and limestone.
India has a huge potential for Shale Gas and Oil. The shale gas formations are spread across sedimentary basins like Cambay, Gondwana, Krishna – Godavari and Cauvery Island. To initiate exploration and exploitation of Shale Gas and Oil government has issued “ Policy Guidelines for Exploration and Exploitation of Shale Gas and Oil by National Oil Companies under Nomination Regime” on 14th October 2013. According to this policy the exploration and exploitation of Shale Oil and Gas lie with the NOCs like ONGC and OIL and they have taken systematic approach to identify, characterize and prioritize the basins.
Similarly DGH has entrusted ONGC to prepare a Information Docket (ID) for all the identified basin along with the creation of prospective area map and estimation of potential resource and the work has been completed for Cambay, KG, Cauvery, A&AA and Ganaga and Rajasthan – Jaisalmer Basin, Kutch and Vindyan Basin to DGH. Indian companies like Reliance, OIL India, Indian Oil, GAIL have their Shale acreages abroad. This may help the country to bring a better understanding about the recent technologies and best practices in the Industry for its domestic exploration. With the recent slump in oil prices, many multinational companies have reduced their operational expenditure which offers opportunity for Indian companies to make use of the situation to access technology from abroad at a cheaper rate. Government is also looking forward to finalize the Shale Oil and Gas Policy for other acreages which may open doors for private parties who are interested in venturing into Indian basins for shale gas exploration.
Potential Shale Gas Reserves in India
Though Shale gas has been on the global energy map since the 1950s, it has only been technologically and economically accessible since the 90s. Higher Natural gas prices in the years following 2000 and advances in hydraulic fracturing and horizontal drilling have made shale gas profitable in the past decade.
In theory, a number of sedimentary basins (Gangetic plain, Gujarat, Rajasthan, Andhra Pradesh & other coastal areas) in India, including the hydrocarbon bearing ones – Cambay, Assam-Arakan, & Damodar – have large shale deposits. Though all the shale deposits are not ideal for shale gas exploration, substantial potential for gas is expected from these basins. Technological collaboration will help in using sophisticated models to pick out most prolific places to start drilling. The resource wise major basins for share gas exploration and production are:
- Cambay Basin (Older & Younger Cambay Shale)
- Krishna Godavari Basin ( Kommugudem & Raghavpuram Shale)
- Cauvery Basin ( Andimadam & Sattapadi Shale)
- Damodar Basin (Barren Measure)
The reserves for each of the basin indicated above is depicted in Exhibit 03. These are the technically recoverable resources that can actually be utilized by end user.
Development of Shale Gas in India
Shale gas development in India is slowly gaining momentum with the country announcing the draft “Shale Gas Policy” in 2013. Further, the Directorate General of Hydrocarbons (DGH) has already initiated concrete steps to execute the following:
- Identification of prospective areas of Shale gas exploration and acquisition of additional
- Formulation of Policy on Shale Gas Exploration & Production
- Launching of first round of Shale Oil & Gas round
It is ironical for a country like India, which is having huge energy demand courtesy the fast paced economic growth the impetus for exploiting unconventional oil and gas reserves despite having limited conventional resources is less. This is basis the reason that the exploration and production companies are not allowed to produce shale gas despite they have discovered huge seams of coal and shale.
Business Case for Service Providers and OEMs
The Government of India, along with Indian companies, is undertaking various initiatives to accelerate the development of shale gas reserves in the country. India was to launch the bidding for shale gas exploration toward the end of 2013. As a part of this initiative, the government has set up a multi-organizational team (MOT) comprising the Directorate General of Hydrocarbons (DGH), Oil and Natural Gas Corporation (ONGC), Oil India Limited (OIL), and GAIL (India) Limited for analyzing the existing data set and suggesting a methodology for shale gas development in the country. In April 2012, the DGH submitted its draft policy on exploitation of shale gas to the Ministry of Petroleum and Natural Gas (MoPNG).
ONGC and OIL are aggressively implementing pilot projects to assess the shale gas potential in the country. In addition, Reliance Industries Limited (RIL) and GAIL have entered the US shale industry to gain technical expertise and may apply that expertise in developing shale gas reserves in India. The opportunities which can be associated with Shale gas in India are highlighted as under:
- Shale gas will reduce the dependence of India on importing energy and would be ideal for saving the cost incurred on costly imports
- Will provide ample opportunities to business stakeholders like exploration support services, environmental services, delineation and pilot testing and field development.
- Will provide opportunity to develop gas based power stations, which currently in India are either lying idle or generating much less than the rated capacity
- Global technology tie-up opportunities especially with US companies to assist in shale gas exploration and production in India
- Will enable India to meet its growing energy demand and add to the energy security of the country
- Provides opportunity to earn carbon credits under the Clean Development mechanism
- Provides opportunities for investment in gas transportation infrastructure
- Provides the opportunity for R&D and development of new CBM technologies
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