Should India keep off shale oil & gas?

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!

 

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.)

Comments
Nalin Patel
1 decade ago
very true be forewarned than repent later.
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