US offers to help India explore shale gas

India claims the US has offered to help it explore shale gas reserves, a move that will aid the former's efforts to strengthen its energy security program. The development, which Mint couldn't independently confirm with the appropriate US agencies over the weekend, comes even as India is finalizing the contours of a policy framework for commercial exploitation of domestic shale gas reserves.

Shale is fine-grained sedimentary rock containing organic material, called kerogen, which, when distilled, can produce oil and gas. There are no official estimates of shale gas reserves in India; the north-eastern states and the Cambay basin are thought to have shale reserves.

India is seeking the assistance of the US Geological Survey to identify areas where shale gas reserves exist, transfer the technology required to tap them and finalize a policy to explore them.

An Indian team comprising representatives of the Directorate General of Hydrocarbons (DGH), Oil and Natural Gas Corp. Ltd (ONGC) and the petroleum ministry is expected to visit the US next month to discuss the proposal, said government officials aware of the development, who did not want to be identified. The US state department's coordinator for international energy affairs will oversee the bilateral efforts on behalf of the US government, they added.

"The US is the biggest producer of shale gas. It is better to learn their proven technology than trying to develop something of our own," said a senior DGH official, who did not want to be identified.

"We have received an invitation from the US government and are following it up," said a senior government official, who also requested anonymity.

Around 32,500 trillion cu. ft of shale gas has been identified globally. The US has been the leading producer, with shale gas accounting for 17% of its domestic gas production. Countries such as Estonia, Brazil, China and Australia are also looking at the commercial production of shale gas.
Signaling the government's intent to tap shale reserves, petroleum minister Murli Deora had said on 30 June, "We have initiated action to develop a framework for assessment of resource potential, which would lead to exploitation of this resource."

Given India's growing dependence on energy imports, there is emerging interest in tapping alternative energy sources such as shale gas and gas hydrates. ONGC's Keshava Deva Malviya Institute of Petroleum Exploration has a shale gas research agreement with the University of Utah and has been allowed to undertake studies in two coal bed methane blocks in Raniganj and North Karanpura coalfields.

Recently, Reliance Industries Ltd, India's most valuable firm, picked up a 45% stake in Texas-based Pioneer Natural Resources Co. for $1.32 billion (around Rs6,165 crore today)--its second such acquisition of shale assets in the US in less than three months. In April, it had acquired a 40% stake in Atlas Energy Inc.'s Marcellus shale assets for $1.7 billion.

"Shale gas offers a more immediate opportunity for cross-border investment between India and the US. Reliance has already led India's investment in shale acreages in the US. Bilateral co-operation involving technology transfer will enable inflow of investment and skills for development of shale assets in India, by both domestic and international players," said Gokul Chaudhri, partner at audit and consulting firm BMR Advisors.