Bengal find spurs cheap gas hope
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- Published 31.01.11
New Delhi, Jan. 30: Shale gas found in Durgapur is expected to cost the user $2 per million British thermal unit (mBtu), which is much lower than natural gas and coal-bed methane and can change the pricing norms for the gas industry.
“The shale gas production is expected to cost around $2 per mBtu compared with $4.2 per mBtu for natural gas and coal-bed methane,” D.K. Pande, director for exploration of ONGC, said.
In the US, shale gas has significantly reduced the country’s dependence on LNG. In India, too, the gas can help to strengthen the country’s energy security and set new pricing standards.
Gas prices vary depending on the source. For instance, gas sourced from the KG basin block operated by Reliance Industries is sold at $4.20 per mBtu, while gas from the Panna, Mukta and Tapti fields run by British Gas is priced at $5.73 per mBtu.
Companies pay $5.50 per mBtu for gas from Cairn India’s Ravva field in Andhra Pradesh. Gas from ONGC’s C-series field is priced at $5.25 per mBtu.
Firms have to pay more than $10 per mBtu for imported LNG.
ONGC has tapped shale gas from a 2,000-metre well at Icchapur village near Durgapur in Bengal’s Burdwan district — the first in the country. “The breakthrough is significant as India is the first Asian country where gas has been discovered from shale besides the US and Canada,” Pande said.
ONGC will soon start studying the commercial viability of the gas along with the environmental impact on production.
“Apart from the issues of land, there are concerns over the environmental impact which will be studied before we seek permission of the government for the commercial exploitation of shale gas,” Pande said.
Shale gas production requires large tracts of land as it involves horizontal drilling. Shale gas is natural gas, or methane, trapped in layers of hard rocks called shale that are found thousands of metres below the earth’s surface. A process known as hydraulic fracturing, or “fracking”, is used in the extraction, under which water mixed with chemicals are blasted into a well to break the rocks and release the gas.
There are concerns that this technology can have negative impacts on the environment such as groundwater contamination and air pollution.
A report by Washington-based World Watch Institute says “a robust regulatory oversight is an important ingredient to assure environmental and public protection” if any country wants to exploit shale gas.
According to the report, chemicals used in fracking could seep into the surrounding groundwater and cause serious health problems. Safe disposal of huge volumes of waste water and loss of green space are the other concerns.
India has signed a shale gas pact with the US to assess the resource available at home and prepare for the auctioning of gas blocks.
The petroleum ministry is expected to consult the environmental ministry before putting the blocks on sale.
India plans to auction its first shale gas block by the end of this year.
According to preliminary estimates, shale gas reserves may be larger than proven conventional gas deposits. India has reserves of 1,074 billion cubic metres of natural gas, according to the oil ministry.
Several basins in India are known to hold the gas. The focus is on three basins — Cambay (Gujarat), Assam-Arakan (Northeast) and Gondwana (central India).
The government plans to come out with policies and a production sharing mechanism, including the sharing of profits with state governments, before the first round of blocks are auctioned, officials said.