Every now and then, the world needs a new icon to worship. And in the energy sector, that now is shale gas. "Exciting," "promising," "game-changing" and "rocking" are some of the adjectives used to describe it.
Though digging through shale for oil and gas began more than 100 years ago, it has only recently become something that people flock to, not very different from the gold rush of days gone by. Looking at the success of the US, where shale gas is expected to rise from 42% of total gas production to 64% by 2020, the whole world is looking at shale with new eyes. Australia, Europe, China and India are all looking to shale to deliver their own golden eggs. But is it really possible to duplicate the success seen in the US elsewhere in the world?
This was the question that people asked and sought to answer at the recent Petrotech 2010 oil and gas conference held in New Delhi. Even as experts spoke about the prospect of shale gas exploration in the five basins identified by the India's ONGC -- the Gondwana Basin, Krishna Godavari Basin, Cauvery Basin, Cambay Basin and the Indo-Gangetic Basin -- there were voices of caution from the audience and the speakers themselves.
One thing that many speakers emphasized was that drilling for shale gas needs a lot of land. Unlike in the US, where land is not an issue, it can become almost insurmountable in India with its high density of population. And acquiring land for drilling is not easy. Even where the exploration is underway, in the Damodar Valley where ONGC is working with Schlumberger, it was possible because the land was already available as part of hydropower and coalbed methane projects.
The other issue is water, large amounts of which are needed and often in areas where it is scarce. The figures being thrown about -- 65,000-600,000 gallons to drill one well, according to Chesapeake Energy -- are important for water-starved regions of India, where it is not going to be easy tog get permission to use water to extract gas when clean drinking water is still a problem in many areas.
Disposal of the water used for hydrofracking is also going to see environmental supporters rise up in arms. Where will it be disposed off? Questions already have been raised in the US about both Marcellus and Barnett shale plays. So it is only natural that they will be raised in other parts of the world too. (Note that in the US, efforts to reclaim the water are underway).
But will these concerns and questions keep the country away from a source of energy that promises to be cheap and abundant? Or will the need for prosperity and growth brush them aside or even run roughshod over them?
Reliance Industries, the only Indian company to have ventured into shale gas investments, is already looking at India's Cambay Basin where it prospects now for oil and gas. In April, RIL acquired a 40% interest in Atlas Energy's Marcellus position (120,000 net acres) in southwestern Pennsylvania for $1.07 billion. In July, it entered into a $1.35 billion joint venture in the Eagle Ford shale with Pioneer Natural Resources and its partner Newpek, under which it obtained a 45% stake in about 212,000 net acres. In August, it formed a 60:40 JV with Carrizo Oil & Gas in the Marcellus Shale for $392 million.
So it is ready to jump into the Indian shale gas scene whenever the Director General of Hydrocarbons offers blocks, which the DGH hopes to do by the end of 2011. Confident of its experience in shale plays, RIL expects to technology to help it overcome all the other problems such as water availability. "Maybe we will build in-house expertise so that no water will be need for fracturing," says RIL geoscientist Sudipto Basu. How that plays out only time will tell.
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