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Shale gas and its shallow future
Letters to the Editor


I read, with great interest, the article written by Bhamy V Shenoy titled “Little effort to exploit rich reserves”. The writer had queried: “Why is Reliance not investing in Indian, but is investing in US shale gas assets?

    One reason could be that the Indian shale gas permeability characteristics may be different. Current fracking technologies are designed for rigid and brittle shale, rich in organic material and in gas. Indian shale may be younger, softer and more ductile.

In the US, most of the shale gas is located in low intensity of land use, whereas, in India, it is found in agriculture intensive areas.  In the US, mineral rights rest with the property owner. In India, the problems in land acquisition are part of folklore. Fracking requires large quantities of water. The US has fewer water problems than India has.

Reliance is following the corporate India‘s policy of ‘Quit India’.  Government needs to move from business-friendly policy to market - determined policy, which will stop this ‘Quit India’ movement.

In India, 50 per cent of the time from discovery-to-delivery is wasted in lengthy processes of getting various clearances. Out of 117 NELP discoveries as of April 2012, development plan has been approved only for 11 per cent of the discoveries. Very few discoveries are under production, even as we spend Rs 1800 crore in importing oil every day.  The key is to reduce the discovery-to-delivery time.

Does the government have the will to take judicious and speedy decisions to foster India‘s energy independence?

– Uppili R


Author’s response:

Uppili has raised some relevant questions regarding the reluctance of Reliance to look for shale gas. He has also raised a few issues of a general nature relating to India’s energy independence.

True, geologic formation of Indian shale reserves may be different from the one found in other parts of the world. Thus, there will be some need for tweaking shale gas technology to develop shale reserves in India. But this may not be the factor preventing Reliance.

While conventional oil and gas needs less than one well per square

kilometre, shale gas needs about 2-6 wells. While in the US and in China the population density is 33.7 and 139.6 per square kilometre, India’s is 370. Similarly, where total renewable water sources of India is 1908 cubic km, the same for China and USA are 2829 and 3069 cubic km respectively. So India is naturally less endowed in this front also. According to the ONGC CMD, India also faces many other challenges like not having access to sophisticated drilling rigs, different services involved in conducting seismic and drilling operations, lags in fracking services, specialised logging, lax standards to prevent the potential leakage of fracking chemicals into water bodies... However, all these are not insurmountable problems.

Even the US faces problems from a strong environmental lobby where shale revolution has been a game changer. Still oil companies, including Reliance, are investing to develop shale  gas production due to huge returns.

Any student of international oil industry will quickly learn that no obstacle is insurmountable for the international oil industry if there are ample oil and gas reserves, a good legal framework and sufficient opportunities to earn an adequate rate of return. While India seems to meet the first criterion of shale reserves, there are big question marks on the latter two criteria. In my view, if the government can create an environment where investors have ample opportunity to earn an attractive return, oil companies, including Reliance, can overcome any obstacle.

Regarding the energy independence suggested by Uppili, our Petroleum Minister has been making outlandish predictions. Earlier in Mangalore on 11 Nov 2012 he had announced that his ministry is planning to reduce oil imports from the current 80 per cent level to 30 to 40 per cent within five years. Then he became even bolder and predicted that India will achieve oil sufficiency by 2020. Instead of making misleading prophecies, Moily should foster speedy decision making to improve oil and gas supply-demand balance.  On that point, I agree with Uppili.

– Dr Bhamy Shenoy

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