The Cabinet Committee on Economic Affairs (CCEA) has approved the long-awaited shale gas and oil exploration programme to boost domestic output.
"This policy will allow national oil companies (NOCs) to carry out exploration and exploitation of unconventional hydrocarbon resources particularly shale gas and oil in their already awarded onland Petroleum Exploration License/Petroleum Mining Lease (PEL/PML) acreages under the nomination regime," an official statement issued after the CCEA meeting said.
Shale gas, or natural gas trapped in sedimentary rocks (shale formations) below the earth's surface, is the new focus area in the US, Canada and China as an alternative to conventional oil and gas for meeting growing energy needs.
According to available data, six basins - Cambay (in Gujarat), Assam-Arakan (in the North-East), Gondawana (in central India), KG onshore (in Andhra Pradesh), Cauvery onshore and Indo-Gangetic basins - hold shale gas potential.
Various studies have estimated recoverable reserves of shale gas at between 6 trillion cubic feet and 63 trillion cubic feet.
In the first phase, state-owned Oil and Natural Gas Corp (ONGC) and Oil India Ltd (OIL) have been permitted to explore for and produce shale oil and gas from onland blocks that were allotted on a nomination basis before advent of the New Exploration Licensing Policy in 1999.
The government will offer shale oil and gas blocks to other companies through an auction planned after such a policy is taken to the Cabinet for approval in next few weeks.
The statement said NOCs shall apply for grant of shale gas and oil rights in their interested PEL/PML acreages and are required to undertake a mandatory minimum work programme. They will be permitted three assessment phases of a maximum period of three years each. Royalty, cess and taxes would be payable at par with conventional oil/gas being produced from the respective areas.
Production requirements and profile for shale oil and gas is different from conventional gas and oil, the statement said. "In view of this and the fact that the technologies required for production have been developed in the recent past, it was felt that a policy be put in place to achieve early development of these resources and to address issues arising out of E&P activities in shale gas and oil," it added.