Shale Gas In India

Industry Information Insights 2014

Table of Contents

Shale Rock and Gas

Shale Gas Value Chain

US Experience

Non Conventional Energy In India

Shale Gas Potential

Shale Gas Exploration

Shale Gas Policy

Status of Shale Gas

Shale Rock

Shale rock is a fine grained clastic sedimentary rock formed by the fine particles of mudbreaking into thin layers.

Organic matter is trapped in the thin layers as they are compacted and gradually convertedthrough heat and pressure into hydrocarbons (petroleum and natural gas).

Shales can be regarded as both cap rock by virtue of their impermeable nature andcompactness thus acting as a good seal and as the source rock due to richness of organicmaterial content, its maturity, generation potential and geographic spread over large areas.

Shale Gas

Shale gas is unconventional gas that is partially stored in the matrix of shale rocks asadsorbed gas and also as free gas in fractures or pores; unlike of conventional gas which isexpelled from the source , transported and stored.

Free Gas in place + Adsorbed gas in place = Original gas in Place

Shale gas risked recoverable reserve estimates of India are greater than 250 tcf and it is yet tobe explored and exploited.

Shale gas production pressures are generally low (6‐1500 cu.m./day) but length ofproduction period compensates for the volume.

Shale gas fields are mostly found in deep layers (> 2000 m), extreme temperature andpressure govern the hydrodynamic process.

Shale Gas Value Chain

US Experience

Shale gas in the United States is rapidly increasing as an available source of natural gas. Itsexploration and exploitation in USA has been an eye opener for the World. At present, USshale gas production is about 26 billion cubic ft. a day, which is 35% of total gas output of 74.5billion cubic ft. a day.

Shale gas has taken on coal as energy source for power generation; coal was providing 50% ofelectric power in 2005, now it has dropped to about 37%. Further, shale gas drive in US hasresulted in decline in carbon dioxide emissions to 1.4% per year since 2005.

In 1996, shale gas wells in the United States produced 0.3 trillion cubic feet (8.5 billion cubicmetres), 1.6% of US gas production; by 2006, production had more than tripled to 1.1 trillioncubic feet (31 billion cubic metres) per year, 5.9% of US gas production.

US Experience

Led by new applications of hydraulic fracturing technology and horizontal drilling,development of new sources of shale gas has offset declines in production from conventionalgas reservoirs, and has led to major increases in reserves of US natural gas.

USA has perfected the technology for shale gas exploration and exploitation.

The economic success of shale gas in the United States since 2000 has led to rapiddevelopment of shale gas in Canada, and, more recently, has spurred interest in shale gaspossibilities in Europe, Asia, and Australia.

Non-conventional Energy

India has typically three major sources of non conventional energy:

Gas Hydrate: Low production rate, absence of similar hydrates in any other part of world &environmental hazards make Gas Hydrate difficult for Methane extraction. Good amount ofR&D initiatives are undertaken to develop technology & commercialize it. However, it looksdifficult to commence production as per the Government’s deadline of 2015.

CBM: Coal bed Methane (CBM), an eco‐friendly natural gas, stored in coal seams, generatedduring the process of the coalification. Having the 3rd largest proven coal reserves, India hassignificant prospects for commercial recovery of CBM. Indian CBM policy, which wasimplemented in 2001, is one of the most investor friendly policies in the world with fourrounds of successful bidding till date.

Shale Oil & Gas: Oil Shales are usually fine‐grained sedimentary rocks containing relativelylarge amounts of organic matter from which significant quantities of shale oil andcombustible gas can be extracted by destructive distillation.

Shale Gas Potential

India has 28 sedimentary basins with large amount of shale rock in these basins which couldbe the good source for shale gas. Date in the table includes only four basins (Cambay,Damodar, KG and Cauvery basins).

There are another 24 basins which need the study of shale gas resources.

Potential Shale Gas Basins

• Assam‐Arakan

• Cambay

• Rajasthan

• Bengal

• Krishna‐Godavari

• Cauvery

• Gondwana

• Vindhyan

Shale Gas Potential

Various agencies have estimated the Shale Gas and Oil resource potential in selected sedimentary basins/sub-basins in India.

Energy Information Administration (EIA), USA in 2011: 290 TCF of Shale Gas in 4 basins (CambayOnland, Krishna-Godavari Onland, Cauvery Onland and Damodar) located in Gujarat, Andhra Pradesh,Tamil Nadu, West Bengal and Jharkhand.

Energy Information Administration (EIA), USA in 2013: 584 TCF of Shale Gas and 87 billion Barrels ofShale Oil in 4 basins (Cambay Onland, Krishna- Godavari Onland, Cauvery Onland and Damodar) locatedin Gujarat, Andhra Pradesh, Tamil Nadu, West Bengal and Jharkhand .

ONGC: 187.5 TCF of Shale Gas in 5 basins (Cambay Onland, Ganga Valley, Assam & Assam Arakan,Krishna-Godavari Onland & Cauvery Onland) located in Gujarat, UP , Andhra Pradesh, Tamil Nadu andAssam-Arunachal Pradesh .

Central Mine Planning and Design Institute (CMPDI): 45 TCF of Shale Gas in 6 sub basins (Jharia¸Bokaro, North Karanpura, South Karanpura, Raniganj and Sohagpur) located in West Bengal, Jharkhandand Madhya Pradesh.

United States Geological Survey (USGS) has also estimated technically recoverable Shale Gas resources of6.1 TCF in 3 basins (Cambay Onland, Krishna Godavari Onland & Cauvery Onland) located in Gujarat,Andhra Pradesh, and Tamil Nadu.

Sedimentary Basin Map

Category I

• Cambay

• Assam Shelf

• Bombay Offshore

• Krishna Godavari

• Cauvery

• Assam-Arakan

• Rajasthan

Category II

• Kutch

• Andaman-Nicobar

Category III

• Himalayan Foreland

• Ganga

• Vindhyan

• Saurashtra

• Kerala-Konkan-L.dweep

• Mahanadi

• Bengal

Category IV

• Karewa

• Spiti-Zanskar Satpura-Rewa-Damodar

• Narmada

• Deccan Syneclise

• Bhima-Kaladgi

• Cuddapah

• Pranhita-Godavari

• Bastar

• Chattisgarh

Cambay Basin

The Cambay rift Basin is Petroleum rich Provincewith total area of about 53,500 sq. km.

Major transgression during Late Eocene EarlyOligocene was responsible for the deposition of theTarapur Shale in the North Cambay Basin.

Shales at Mehsana-Ahmedabad, Tarapur, Broachand Narmada can be good source of shale gas.

Krishna Godavari Basin

The Krishna Godavari Basin is aproven petroliferous basin located onthe east coast of India.

The basin contains about 5 km thicksediments.

Technically recoverable resources areestimated to be about 27 Tcf.

Shale Gas Exploration

The shale gas exploration has following steps:

1. Selection of basin and seismic study to know the extent and thickness of shale in thegeological formation.

2. Exploration drilling and analysis of core for geochemistry, petro-physical properties.

3. Understanding the extent of shale gas play with the help of pilot wells, seismicinterpretation and log correlation.

4. Quantification of shale gas by studying the adsorption and desorption studies on thecores to measure Langmuir volume and gas content with change of pore pressure.

5. The petro-physical evaluation and reservoir characterization is important to evaluate theshale gas reserve.

6. Geochemical analysis and the study of stress regime help in designing the wellcompletion, drilling horizontal wells and selecting proper perforation technique.

Shale Gas Policy

On 14 October, 2013, the Government of India notified the policy guidelines for explorationand exploitation of shale gas and oil by National Oil Companies (NOCs) in their onlandPetroleum Exploration Lease (PEL) / Petroleum Mining Lease (PML) blocks awarded underthe nomination regimes before the advent of NELP policy in 1999.

As per the policy, the NOCs will undertake a mandatory minimum work programme in afixed time frame for shale gas and oil exploration and exploitation, so that there is optimumaccretion and development of shale gas and oil resources.

Under the first phase of assessment of shale gas and oil, exploration and exploitation, atpresent, 56 PEL/PML blocks (ONGC 50, and OIL 6) have been identified by NOCs.

These blocks are located in the states of Assam (7 blocks), Arunachal Pradesh (1 block),Gujarat (28 blocks), Rajasthan (1 block), Andhra Pradesh (10 blocks) and Tamil Nadu (9blocks).

Status of Shale Gas

ONGC had drilled the first well in Jambusar in the last week of October in 2013 to exploit thenatural gas trapped within the shale formations located in Cambay basin.

According to the Basin Manager, the estimated shale gas potential is 20 TCF.

The data from the first well near Jambusar has given ONGC more leads for furtherexploration that will help the company ascertain parameters in taking up commercialproductions.

Digital Marketing

Research & Consulting

Industry Insights

Information Advantage

Our Serviceshttp://www.energysector.in/services

Information is the key to success!

E-Mail: mail@energysector.in

Energy Sector Information Services2A/3, Third Floor,Asaf Ali RoadDelhi – 110 002 (India)