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Further delay for Indian shale gas

India’s first shale-gas auction will be delayed by at least another year

The launch of the licensing round is now expected by the end of 2013, as the New Delhi government moves cautiously while fleshing out its shale-gas regulations.

India is assessing the potential of its shale-gas potential to formulate its policy for the sector. But before any blueprint can be finalised, the government wants to complete the resource assessment, carve out blocks and conclude exploration terms. Oil and gas secretary GC Chaturvedi says that mapping will be complete by March, while shale-gas policy is likely to be in place within three to six months, and the first bidding round targeted by end-2013.

The government originally planned to launch the auction by the end of last year, which was later pushed back to 2012. But numerous obstacles must be overcome before India’s shale-gas framework can be finalised.

Not only are environmental concerns surrounding the effects of the hydraulic fracturing (fracking)– cracking rocks with pressurised water, sand and chemicals to release trapped gas – hampering the process; but, tax and royalty regimes must also be streamlined as government-issued leases for conventional petroleum exploration do not include unconventional sources. And land acquisition remains a significant problem, because of unique landholding patterns in India.

On the bright side

On the bright side, the potential for shale-gas development in India is huge – if the regulatory issues can be ironed out. Most of the identified prospective shale resources lie in the east, 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 – 1.5 billion tonnes of oil equivalent.

In the east, coal-bed methane (CBM) and shale-gas 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.

But despite the potential, all eyes will be on the new regulations that will either make or break the sector. Recently, Prashant Modi, president of India’s Great Eastern Energy, warned that if the country’s shale policy is not formulated correctly or if blocks on offer do not lie near pipeline infrastructure, then India’s planned licensing round will struggle to succeed.

India is seeking to tap its shale-gas resources to meet rising gas demand from power plants, the petrochemicals sector and from domestic consumers. The nation’s gas demand has been forecast to rise from 10 billion cf/d in 2012-13 to 15 billion cf/d in 2016-17.

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