19/6/2014

Can shale power India? | Business Line

Can shale power India?

Jyotsna Ravishankar

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Shale has been a game-changer in the US. But replicating the success in India is easier said than done.

India is at a stage when people are looking for a magic wand to solve all of the countrys seemingly insurmountable
problems. One of the biggest is powering the 1.2 billion population 24x7.
A 2012 report by the US International Energy Agency (IEA) estimated that nearly 25 per cent of Indias population
lacks basic access to electricity, while electrified areas suffer from rolling electricity blackouts.
The Government seeks to balance the need for electricity with environmental concerns from the use of coal and other
energy sources used to produce that electricity. Coal is a hot topic in India today as, with huge reserves, the country
still is fending off private and foreign investors from accessing the lucrative sector. So, the next available and clean
resource that can help keep power plants running is natural gas.

Idle stations
Surprisingly, despite the country reeling under a power crisis, gas power stations are idling for lack of feedstock.
Power stations using gas accounted for nearly 10 per cent of Indias 225 gigawatts (GW) of electricity generated in
June, while coals share was nearly 60 per cent.
India has 64 gas-fired power stations, according to the Global Energy Observatory website. The Government has
frozen the construction of new gas plants until 2015-16 because of gas shortages, and existing plants are operating
below capacity on expensive imported liquefied natural gas (LNG).
Approximately 22,000 MW (megawatts) of gas-based power generation plants are at present idling, said Amulya
Charan, an independent adviser on energy infrastructure and finance in a Reuters interview recently.
Importing expensive LNG from countries such as Qatar and then subsidising power for households and agriculture is
obviously not a sustainable model.
So what can the country do apart from turning to coal at this crucial growth phase? Will shale gas save the economy
like it did in the US?
Many reports in the last month have suggested having an investor-friendly regime to invite international players to
look for shale in India. But is it going to be worth our while, or are we wasting our time here? Indias shale reserves,
according to the EIA (US Energy Information Administration), stands at 96 trillion feet, estimated to translate into
around 26 years of the countrys gas demand.

Technical expertise
Gas demand in the country is expected to jump to 473 million cubic metres a day (mmscmd) by 2016-17 from 286
mmscmd in 2012-13. But shale gas can only be explored by state-owned oil and gas exploration agencies, who havent
demonstrated any particular technical expertise in drilling for shale. Shale gas exploration requires advanced
technical expertise in hydraulic fracking, the most commonly used method for recovery of the gas.
The technology was developed in the 1940s and has since helped produce more than 600 trillion cubic feet of natural
gas and 7 billion barrels of oil. The technique is used to create spaces in the rock pores deep underground to release
oil and natural gas so it can be brought to the surface.
Hydraulic fracking has been greatly successful in the USt mainly for two reasons.
One, in the US, the natural gas department is exempt from scrutiny for chemical injection in the ground (it exempts
companies from disclosing the chemicals used during hydraulic fracturing) and two, the citizen or resident owns the
resources that lie beneath the ground.
The US is a special case because in no other country is a citizen allowed to own the minerals that lie beneath the
ground.
These favourable loopholes make it easy for companies to frack even close to residential localities, which could
explain the stupendous success shale gas operators in the US have found.
Other countries such as the UK and Saudi Arabia are pushing ahead with shale exploration but have had little or no
success so far. This is despite technology majors such as Halliburton and Schlumberger setting up technology centres
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19/6/2014

Can shale power India? | Business Line

in Saudi Arabia. China, another power hungry nation, is struggling to commercialise its shale reserves.
Shale may have been a game-changer in the US but the technology and method for recovery are highly complex and,
at times, questionable.

What lies beneath

Hydraulic fracking, as the name suggests, requires millions of gallons of water for gas recovery. Indias environmental
agencies may not allow the usage of such large quantities of water. Besides, companies need expertise in the
technology to be able to recover shale gas profitably.
In India, if the legislation over the next couple of months does allow for hydraulic fracking, how is it going to done?
Where exactly are the shale gas deposits in India is the first obvious question to ask. There is not much publicly
available information on this.
It is only the EIA that throws some light on this: it says most shale gas could be in the basins of the Cambay and the
Cauvery.
Overall, in upstream exploration, the Oil & Natural Gas Corp (ONGC) and Oil India Limited hold 356 blocks, of which
176 possibly could have shale gas deposits.
Are these companies going to invest in their own technology to look for shale? Are international oil majors who have
had limited success with shale in other countries barring the US going to show interest in Indias rather difficult shale
terrain?
These are issues that require a lot of discussion over the next couple of months.
Given Indias rising energy demands, it seems a little naive to wait around for a shale gas boom when abundant coal
reserves lie literally beneath the ground.
(This article was published on September 18, 2013)

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