scorecardresearch

India's shale exploration policy is moving at a glacial pace

India's shale exploration policy is moving at a glacial pace, and the delay could prove costly.

In January 2011, Oil and Natural Gas Corporation and US oilfield services company Schlumberger discovered shale reserves in Ichapur, West Bengal, a town whose claim to fame until then was gun manufacturing. A year and four wells later, the story has not moved forward.

Also last year, US-based Joshi Technologies Ltd reported a shale find at its conventional gas well in Gujarat's Cambay basin. It is still awaiting the government's approval for exploration.

In formulating a shale gas policy, the government seems to have hit the snooze button. Global energy tracker Platts says Indian reserves of the gas - extracted by drilling horizontally under layers of rock - are between 600 and 2,000 trillion cubic feet (tcf). The estimated potential of the Reliance Industries-operated D6 block of the Krishna-Godavari basin, India's most promising discovery of natural gas so far, is 11.3 tcf. Given current energy trends, Indian reserves would last 33 years.

In the US, the world's largest shale gas producer, 18 per cent of gas comes from shale. Poland and Romania are exploring potential. "China started producing shale gas in 2004, and is second largest producer," says former petroleum minister Mani Shankar Aiyar. India, by contrast, is inert.

After assessment of resources is complete, the government will invite the first round of bids for exploration in the 12th Five-year Plan, says S.K. Srivastava, Director General of Hydrocarbons. Vivek Kumar, Joint Secretary in the petroleum ministry, says: "By March 2013, we would be able to allocate shale blocks."

Deepak Mahurkar, Associate Director at global consultant company PwC, says delays will hurt India. Seven countries already produce shale gas, and others are exploring. The rush for equipment and technology will only worsen, he says.

Bureaucratic sluggishness is just one hitch. Land acquisition would be another. Also, many reserves are in politically sensitive areas. And at 1,700 metres underground, the gas would be costlier to extract here than in the US, where most reserves are a few hundred metres deep.

Besides, hydraulic fracturing - a waterintensive, chemical-laden extraction process - is controversial in the US, and banned in Bulgaria and France. "There is a threat of groundwater contamination and exposure to radioactive material," says R.K. Batra, Distinguished Fellow at The Energy Research Institute.