The future of Indias energy sector does not look that bleak after all. Schlumberger, a global leader in oilfield services, has pegged the reserves of gas in shale deposits across the country at 300 times higher than Reliances Krishna Godavari (D6) basin, by far the largest gas field in the country.
According to sources, the New York-listed Schlumberger, which is carrying out a comprehensive shale gas pilot project for state-owned ONGC in the Damodar Valley basin, has made an initial gas-in-place estimate of 300-2,100 trillion cubic feet (tcf) in Indian shale gas basins. In comparison, Reliances KG D6 field has proven reserves of just 7-8 tcf.
Such resources have the potential to move the Indian gas market from gas-constrained to gas-balanced, if not turn the country into a gas-surplus one, an official with Schlumberger told FE.
Shale is a rock formation that contains extractable gas and it is found in abundance across the country, especially in the Gangetic plain, Gujarat and Assam.
This relatively new source of energy is already in vogue in the US and Canada, and has the potential to reduce gas prices to less than half the current rates. India's natural gas output grew to 140 million metric standard cubic meters a day (mmscmd) from 80 mmscmd once production started from the D6 field in 2009.
India, the second fastest-growing major economy in the world, now needs increased gas output to feed its new power plants. The country also expects more fertiliser plants to use gas instead of naphtha in order to reduce fertiliser subsidy.
Recovering shale gas from such massive reserves may not be that easy though. According to a leading energy expert, land acquisition would be a challenge. Land is the most precious resource in India now. Unlike conventional oil exploration, shale gas exploration is continuously mobile and moves from one spot to another, requiring more land for exploration.
Besides, there is the fear that the pursuit for shale gas would cause irrevocable damage to the environment as it involves pumping chemicals into rocks with water. It is not going to be as easy as it is in the US, the expert said requesting anonymity because he is advising a leading energy company.
Shale gas contributes to nearly 17% of the total gas production in US. Although many other nations are pursuing shale gas, commercial success is so far limited to US and Canada, said an official with ONGC. ONGC has marked a beginning by spudding its first shale gas well at Durgapur in West Bengal last September and plans to drill three more in Damodar by next year.
Moreover, the government has to strike a balance between the need for new energy sources and the price to pay for it. Securing a licence to tap resources below the surface is not an easy task in India, the expert said. The companies that would eventually win rights to explore shale gas in the country also need access to technology that reduces demand for water and controls effluents.
Schlumberger says that to in order to realise its shale gas potential, India needs to create a conducive regulatory environment and the local oilfield services industry has to double or triple in size so that producers can tap the resource economically.
Service providers will have to step up rig availability three-fold to 300 units across the eight shale gas basins including Cambay and Damodar. That is not an insurmountable task but service providers would need a clear market signal to make the investment, Schlumberger said.
During the recent visit of US President Barack Obama, India signed a deal on shale gas resources which seeks America's co-operation in assessing India's shale resources and in framing a regulatory regime with safeguards for sustainable development of this unconventional energy source.
India hopes to auction the rights to explore for shale gas some time this year.