Should India Dive into the Shale

Boom?

By Geopolitical Monitor
Posted on Thu, 08 May 2014 19:32 | 1
The energy economics of the world is now at a crossroads, giving rise
to a fiery debate among experts whether it will bring about a
momentous change in the worlds strategic balance. The Ukraine crisis
has given an impetus to it by threatening a cut in the supply of
Russian oil and gas to Europe; the West is now on the lookout for an
alternative source of energy. With the United States making rapid
progress in the area of shale oil and gas technology, and several largescale shale reserves being discovered in Western Europe and Latin
America, dependence on hydrocarbon supplies from the Middle East
and the Persian Gulf will decrease, which will ultimately lead to a lapse
in big power involvement in the region. This has all come as a boon to
American companies involved in the exploitation of shale resources,
and they are leaving no stone unturned in sweeping away the
impediments to their business expansion.
Now the big question is whether India can take advantage of these
technological advancements, as she also has commercially viable
shale reserves.
But there is a flip side to the shale revolution. Environmentalists
worldwide have protested against the exploitation of shale resources,
arguing that it may cause serious ecological harm as the process
involves use of poisonous chemicals. Even officials in Indias Ministry
of Environment and Forests voiced opposition in inter-ministerial
meetings convened to consider the draft policy on the use of shale
technology. There are also allegations in the United States that many
of these companies engaged in shale exploitation are not divulging
their modus operandi, making it difficult to know the true extent of
environmental impact.

Related Article: Shale Revolution Spreads to the South

More transparency can help if shale is to solve the worlds
longstanding energy problems and geopolitical overreliance on the
Middle East. Last year the World Bank was hopeful that oil prices
would fall under $102 per barrel. Although the projection seemed a bit
optimistic, it cannot be denied that the Western world has moved
towards energy self-sufficiency, and the emerging energy situation
may not be as bleak as it has been made out to be. While the US has
been increasing its domestic crude oil production recording a jump of
1.4 percent in 2012 - Canada is sitting on a massive reserve of two
trillion barrels. Production has also been growing in various other
Central and South American countries like Brazil, Columbia and
Mexico.
Where does shale gas stand in this unfolding scenario? In 2010, shale
gas constituted 23 percent of total natural gas production. It is
estimated that by 2035 its share will rise to 49 percent. The amount of
global shale gas reserves indicate that it can meet the energy
demands of the world for a long time to come. While the US has 24.4
trillion cubic meters (TCM) of reserve, Argentina possesses 21.9 TCM,
Europe has 18.1 TCM, China has 36.1 TCM, and Australia has 11.2 TCM.
Indias share stands at 6.3 TCM.
According to the experts, there are many basins in India with rich
shale energy reserves. But only six such basins have been identified
wherefrom extraction is possible. They are Cambay, Assam-Arakan,
Gondwana, Krishna-Godavari, Kaveri, and the Indo-Gangetic plain.
Oil and gas reserves can be found in shale formations at average
depths of 2,000 meters, and sometimes beyond 3,000 meters. The
amount of worldwide reserves no doubt holds high hopes for energy

Extracting of shale gas or oil is considered as unconventional oil and gas drilling, from
"fracking" because it requires large amounts of water and chemicals being pumped into the
earth at high pressure, so as to release gas or oil from shale rocks. This "dirty" water
remains and reportedly causes contamination of ground water in the area. Because of this,
both France and Bulgaria have banned the technology!
Because of this, the European Union wants common rules for shale gas "fracking" and
wants its 28 member states to accept common environment and health rules if they use
this "controversial fracking" to develop shale gas resources! They further contend that
shale gas extraction leads to higher "cumulative" environmental risks and impacts,
compared to conventional gas extraction.
What has all this got to do with India? Top Indian firms, such Reliance Industries, GAIL,
Oil India and Indian Oil have joint ventures abroad with Carrizo, a Houston, Texas-based
company, in the shale acreages in the USA. Carrizo is also reported to be exploring shale
opportunities in India. The International Energy Agency projects that India's shale gas
production might be able to reach 35 billion cubic metres by 2035 if basic resources are
made available.
Currently India does not have a policy regime in place for simultaneous extraction of coal
bed methane and coal, and in the meantime, the developments in shale (gas/oil) have to be
also considered when a final policy is drawn up. However, Vivek Rao, Oil Secretary,
Petroleum and Natural Gas, has acknowledged that India has better coal bed methane
opportunities than shale.
In the meantime it was ONGC that took the lead in striking shale gas in a pilot project at
Itchapur in West Bengal couple of years ago. However, it was in Cambay Basin, ONGC
dedicated its shale discovery, duly assisted by ConoCo Phillips of USA. ConoCo Phillips are
studying the shale prospects in Cambay, KG, Cauvery and Damodar basins. India's shale
gas reserves are estimated to be 96 trillion cubic feet, as per US Energy Information
Administration.
The NELP X is around the corner and participants can explore all fuel resources including
shale. Before the Government embarks on this venture, they need to recognize the latest
information that has been detailed in the Financial Times last week, on the shale scene in
the USA,
According to this report, water shortages have put the US oil and gas industry on a
"collision course" with other users because of the large volume needed for hydraulic
fracturing, a group of leading investors has warned.
Almost 40% of the oil and gas wells drilled since 2011 are in areas in "extremely high"

water stress, according to Ceres, a network of investors on environmental and social issues.
It has been stated that a little more than 2 million gallons of water per well is required,
which is mixed with sand and chemicals before being pumped under pressure at high
speed for opening cracks in the shale rocks so that oil and gas flow more freely. They also
admit that fracking accounts for a relatively small proportion of water demand, less than
1% even in Texas, according to a University of Texas study compared to 56% for irrigation,
but protracted drought conditions can cause undue harm to the agriculture industry!
As far as India is concerned, we are a Monsoon based agricultural country.
Sometimes heavy rains cause untold misery and floods, completely wiping out our
agriculture; at other times, drought conditions result in millions suffering, leading to food
imports! While admitting that our MOEF (Ministry of Environment and Forests) are
already over burdened and understaffed in dealing with our mining issues, we do not think
for a moment that they have technology and resources to take the additional burden of
handling Shale!
Before anyone else is encouraged to jump into the band wagon and start investing on shale
discovery, a thorough report on what is really happening with the present ONGC discovery
needs to be analysed by a competent technical group.
For the time being, let India keep off shale! We have no water to drink in thousands of
villages, where people have to walk for miles to get a pot or two!
(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of
commerce. He was also associated with various committees of the Council. His
international career took him to places like Beirut, Kuwait and Dubai at a time when these
were small trading outposts; and later to the US.
Should India keep off shale oil & gas?

1 comments

+ COMMENT
AK RAMDAS | 13/02/2014 03:47 PM |

There is grim shale news from the US, due to

water issues. India too needs to rethink on this new fuel source which requires large
volume of water for hydraulic fracturing
The US took the lead, a few years ago, in the discovery and the development of shale oil
and gas resources which resulted in the country becoming a net exporter from being the
largest energy importer.
As a result, the great American shale boom began due to availability of land and water,
pipeline network, fracking and horizontal drilling specialists and competitive prices of the
gas thus obtained. According to Energy Information Administration, US shale gas output

jumped from 1,293 billion cubic feet in 2007 to 7,994 billion cubic feet in 2011. In 2012,
shale accounted for 39% of all natural gas produced in the US, compared to 15% in Canada
and 1% in China!
At the current rate of production, the US will be top shale oil producer in the world and by
2015 surpass Russia, as per International Energy Agency, who estimates that, by 2035,
crude prices may advance to $135 a barrel and a continued 16% increase in consumption!