The union government has asked upstream regulator, Directorate General of Hydrocarbons (DGH), to draft

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an approach paper for shale gas exploitation in India. The present production sh­aring contract (PSC) for oil, gas assets and coal bed me­thane blocks doesn’t allow a company to exploit the cl­ean fuel found in rock formations under the ground.

Shale gas has emerged as a new source of energy and currently commercial production is done in North America. Canada is also in advanced stages of producing shale gas. “We want to explore if the same can be replicated in India,” said a petroleum ministry official.

“Price of gas will be the most important factor. There will be many buyers if shale gas would cost less than imported LNG,” he added. According to preliminary reports, shale gas may cost anything between $3 and $7 per million British thermal units (mBtu). India has large shale gas deposits in north-eastern states, Gujarat and Rajasthan. This is against the prevailing natural gas that costs about $4.2 to $7 per mBtu.

The petroleum ministry has also asked DGH to appoint a nodal officer to work full time on shale gas policy and identification of deposits. After consultation with firms and other minis­tries, petroleum minister Murli Deora will move a pr­oposal before the cabinet for an exploration policy for shale gas and subsequent amendment in the petroleum and natural gas rules. “After the policy is formulated, shale gas blocks will be offered for exploration in an open bidding process along with oil, gas and CBM blocks,” the official said. The PSC for shale gas is likely to be on lines with that of CBM exploration.

United States has offered India to help in shale gas exploitation. The partnership was discussed between Deora and US deputy secretary of energy Daniel Poneman in March this year.

India is likely to sign an MoU with the US for technology transfer, know how and adoption of best practices for economically viable production of cleaner fuel.

“India depends on imports for nearly 25 per cent of its gas requirement that is expected to double by 2020. India is estimated to possess large shale deposits in the Gangetic plain, Gujarat and other coastal areas, which, with access to right technology and clear policy framework, can help contain the growing gas demand-supply gap,” said Ajay Arora, partner and national leader (oil and gas practices) at Ernst & Young, India.