Oilmin Proposes Body for Shale Gas Exploration

India is set to join a select group of countries having a specialised agency mapping its shale gas potential. A proposal to this effect has already been worked out by the oil ministry. The proposed agency will fall under the central government. It will have the mandate to map the presence of shale gas across various states in the Gangetic plain, Assam, Rajasthan and many coastal areas.

The agency will conduct studies on the basis of geological, geophysical and geochemical aspects of shale gas exploration, micro-seismic imaging, drilling, completion and production technologies and environmental hazards in shale gas exploitation. New Delhi-based National Geophysical Research Institute and the Geological Survey of India have been carrying out studies to identify new sources of shale gas.

According to the oil ministry, the country has a potential resource base of 300-1,200 trillion cubic metres of shale gas and 92 trillion cubic feet of coal bed methane (CBM). The government has identified Cambay, Assam-Arakan, Gondawana, KG onshore, Cauvery onshore and the Indo-Gangatic basins for carving out blocks to tap the unconventional fuel. The draft policy favours market-determined pricing of shale gas.

Similar entities exist in developed nations such as the US and Canada. Mirroring the gas market and following the emergence of shale gas, wholesale electricity prices have dropped more than 50% on average in the US since 2008. Taking a cue from the global success, the ministry of petroleum and natural gas will be taking up the policy on shale gas extraction to the cabinet in the next two weeks, a senior oil ministry official said.

The global impact of shale gas discoveries could also be significant. For example, under the old assumption that domestic supplies would be limited, companies built LNG import facilities in the US. That trend has now reversed, and there is more interest in conversion to LNG export terminals. In India, the government is taking up all initiatives to be self-sufficient in energy as the country imports around 80% of its natural resources. "Our import bill has reached a whopping $140 billion. This is not a happy situation. With policy initiatives, we hope to cut our import dependence by 75% by 2025," the oil minister said.

The US Energy Information Administration's "Annual Energy Outlook 2013" estimated that US' natural gas production will increase from 23 trillion cubic feet in 2011 to 33.1 trillion cubic feet in 2040, a 44% increase. Almost all of this increase in domestic natural gas production is due to the projected growth in shale gas production, likely to grow from 7.8 trillion cubic feet in 2011 to 16.7 trn cu ft in 2040.

Despite its geographic abundance and enormous production potential, shale gas presents many challenges, starting with the lack of an agreed-upon definition of what exactly comprises shale.

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