A new sense of energy
Recent corporate moves in shale gas have been particularly dramatic. Reliance Industries has struck three multi-billion dollar deals with US shale gas firms this year alone.india Updated: Jun 24, 2010 23:41 IST
The most striking transformation of India’s energy sector is taking place not in nuclear or solar power, but in natural gas. The Krishna-Godavari offshore gas finds, the making of a national pipeline grid and, now, the first Indian venture into shale gas will dramatically change the energy profile of the country. Recent corporate moves in shale gas have been particularly dramatic. Reliance Industries has struck three multi-billion dollar deals with US shale gas firms this year alone. Even public sector oil firms have tied up with foreign firms in search of shale gas know-how.
hale is a common rock formation often impregnated with oil and gas that, in the past, have been commercially too expensive to extract. This has changed following technological advances in the 1990s. A shale gas revolution has converted the US from gas importer into a gas-surplus country. American gas prices have fallen so rapidly that in energy equivalent terms US gas is now as cheap as $12 barrel oil and about half the price that India has fixed for Krishna-Godavari gas. Shale gas is already shaking up the global system. Europeans see it as the means to break their dependence on Russian gas.
One reason India is rightly refusing Iran’s pricing mechanism for its future pipeline is that Tehran’s yet to understand that global gas prices are set to go southward for decades. Iran’s insistence that its gas price should be pegged to that of oil’s is patently absurd. The US, leaders in this technology, are cognisant that shale gas would reduce carbon emissions by pushing out dirty coal and potentially tame oil-rich irritants like Venezuela and Iran. In April, it offered to provide assistance to any country seeking to exploit its shale gas reserves.
Not unexpectedly, a hidebound New Delhi doesn’t even have an estimate of our shale gas reserves. What is known is that there are enormous shale deposits across north India, from Rajasthan to Assam, and as far south as Andhra Pradesh. On the basis of these deposits, most geologists believe India may be among the five largest shale gas reserve-holders in the world. But New Delhi is an obstacle in another way. Present exploration policies separate bidding for normal oil and gas from bidding for non-conventional gas sources. This means that an energy firm looking for oil and gas that stumbles on shale gas has an incentive to ignore or even hide its discovery. India’s private sector is nimbly jumping on to the shale gas bandwagon. India’s government needs to wake up to an energy revolution. After all, this is a change that has been going on for 20 years.