In a move that will help boost the domestic oil and gas production, the government on Tuesday approved the long-awaited shale gas and oil exploration policy.
Shale gas, or natural gas trapped in sedimentary rocks (shale formations) below the earth's surface, is the new focus area in the US, Canada and China as an alternative to conventional oil and gas for meeting growing energy needs.
The process of extracting shale gas has many possible environmental and geophysical fallouts, which has led to several protests against exploitation of this resource.
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India, the world's fourth-largest consumer of energy, could be sitting on as much as 96 trillion cubic feet (tcf) of recoverable shale gas reserves, equivalent to about 26 years of the country's gas demand, according to the US Energy Information Administration.
But production from shale remains a long way off for India, which relies on imports for much of its energy needs.
As per available data, six basins - Cambay (in Gujarat), Assam-Arakan (in the North-East), Gondawana (in central India), KG onshore (in Andhra Pradesh), Cauvery onshore and Indo-Gangetic basins, hold shale gas potential.
Production requirements and profile for shale oil and gas is different from conventional gas and oil. While they may be massive untapped energy sources, the risks of extracting them have drawn calls for tighter regulation or an all-out ban.
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The government's policy initially permits state-run Oil and Natural Gas Corp (ONGC) and Oil India Ltd (OIL) to explore shale resources from onland blocks that were allotted to them on a nomination basis before the advent of the New Exploration Licensing Policy in 1999 - under which exploration blocks are offered on a bidding basis.
In the second phase, the government will offer shale oil and gas blocks to other companies through another Cabinet approval that is likely in next few weeks.
"This policy will allow national oil companies (NOCs) to carry out exploration and exploitation of unconventional hydrocarbon resources particularly shale gas and oil in their already awarded onland Petroleum Exploration License/Petroleum Mining Lease (PEL/PML) acreages under the nomination regime," an official statement issued after the Cabinet Committee on Economic Affairs (CCEA) meeting said.
The statement said NOCs shall apply for grant of shale gas and oil rights in their interested PEL/PML acreages and will be required to undertake a mandatory minimum work programme.
They will be permitted three assessment phases of a maximum period of three years each. Royalty, cess and taxes will be payable at par with conventional oil/gas being produced from the respective areas.
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With inputs from Agencies