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Slow start for Indian shale gas

Decade to exploit huge shale-gas potential says Gail head

The head of Indian gas firm Gail does not expect the country to exploit its huge shale-gas potential within the next decade. BC Tripathi said India’s unconventional-gas sector must first overcome a series of hurdles before commercial production can start.

One significant problem is land acquisition. Unlike the US, landholding patterns in India are quite different. Shale gas requires large areas of acreage, which are difficult to acquire in India, Tripathi said.

Nevertheless, state-owned Gail will participate in the widely anticipated first bidding round for shale-gas concessions, which will be launched once a licensing policy has been developed. India hopes the round will tap into increasing interest among domestic players, such as Reliance Industries, Bharat Petroleum and Gail, which having been securing unconventional assets overseas.

India is drawing up a framework plan for shale-gas exploration in the wake of the country’s first discovery, in January. Speaking at an industry event in Mumbai last month, oil secretary GC Chaturvedi said the plan would likely be completed within the next six months.

Earlier this year, senior officials at the Directorate General of Hydrocarbons said they had identified six basins suitable for first-phase resource assessment. And a task force has been working on a policy framework to tackle issues such as land use, environmental concerns and simultaneous exploitation of conventional oil and gas, the country’s upstream regulator said.

Huge potential

India has huge potential shale resources in the eastern part of the country, with an estimated 15 billion tonnes of recoverable shale oil and gas reserves of 137 billion tonnes in place, given an expected recovery rate of between 10% and 15%. The US Energy Information Administration puts the country’s recoverable shale gas resources at 63 trillion cubic feet.

In the east, coal-bed methane (CBM) and shale deposits have been reported on the Assam shelf, the Naga Schuppen shelf and the Assam-Arakkan foldbelt, in Assam and Nagaland. Shale gas deposits are also present in the basins of Gondwana in central India, Cambay in Gujarat, Rajasthan and the prolific Krishna Godavari basin.

And Indian state-owned companies have already started work on shale-gas pilot projects. ONGC has spudded the first shale-gas well, and made the country’s first find near Durgapur in Burdwan district of West Bengal. The well, with a target depth of 2,000 metres, targeted the shale-gas potential of a 700 metre thick shale zone, which is estimated to be up to 300 million years old. The well was the first of a four-well pilot project in consultation with oil services company Schlumberger.

Oil India is also planning to exploit the country’s shale-gas potential. During the last few decades, it has collected in-depth seismic, drilling and log data. This year, it started shale-gas studies at its oilfields in the northeastern state of Assam. A team is collecting and studying data available from the company's fields, also in consultation with Schlumberger.

Overseas investments

The US shale-gas boom has generated huge interest among the Indian players, which have been seeking overseas assets in an effort to develop their domestic capabilities. Only last week, Gail took its first stake in the US shale play, snapping up a 20% share in Carrizo Oil and Gas’ Eagle Ford acreage for $95 million. The deal will provide expertise it hopes to lever domestically.

Indian companies will increasingly benefit from their exposure to the US shale-gas sector, where a number of them have bought into joint ventures with established producers. Privately owned Reliance has been particularly active in the US, picking up acreage in the Eagle Ford through a joint venture with Pioneer Natural Resources, as well as gaining access to the Marcellus in the US northeast, through an agreement with Atlas Energy.

Hindustan Petroleum is on the hunt to buy an Australian company with expertise to develop CBM and shale gas. While, compatriot Bharat Petroleum has already taken positions in Australia’s shale acreage.

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