dIndia – Energy ScenarioPre‐NELP era of Indian E&P sectorNELP overviewNELP overviewUnconventional Energy in India & its commercializationShale Gas – Indian scenarioShale Gas extraction challengesUS experience in shale gasWay forward – GOI’s Shale Gas PolicyWay forward GOI s Shale Gas Policy
P i E Mi f I di (2012)India is the 4th largest oil and gas Primary Energy Mix of India (2012)consumer in the world after USA, China and Japan Share of crude Oil and Gas in primary energy consumption is about 40%energy consumption is about 40% To deliver a sustained growth rate of 9% through 2031‐32 with energy supply growth of around 5.8% per year, it estimated that,India’s energy supply will need to increase by 4 to 5 times I l i i i i b 6Its electricity generation capacity by 6 to 7 times(over its 2003‐04 levels)
I t t 76% il & 19%Import component: 76% oil & 19% natural gas. These percentages are projected to rise to 80% and 28% respectively, by 2016‐17 p y yNatural gas constitutes around 10% of Indias total primary energy basket, which is well below the world average of 23 7% in 2011world average of 23.7% in 2011.Increase in demand driven by Increasing population, economic activity and rising income levels
During the period of 1980 to 1995, nine rounds of bidding took placel k id ifi d f ff i l i i h O & O G h hBlocks were identified for offer in consultation with OIL & ONGC who were the licenseesThe main evaluation criteria was technical & financial capability and terms offered to the govt. which was evaluated by ONGC & OIL.g ySuccessful bidder after getting CCEA(Cabinet committee of economic affairs) had to sign PSCs with Govt, OIL or ONGCIn the ninth round which was JV round in which PSUs were to have participating interest of 2 5 to 40% in the JV th s sharing e ploration costinterest of 2.5 to 40% in the JV, thus sharing exploration cost
T t th i t t N E l ti & Li i P li (NELP) i t d dTo step‐up the investment, New Exploration & Licensing Policy (NELP) was introducedby GOI in 1998 with following features,Private & public sector companies will be treated at par & all acreage will be given p p p g gmarket driven price for oil & natural gas producedFiscal stability in the contract was provided along with Petroleum Tax guide to facilitate investorsFinalization of contract on basis of Model Production Sharing Contract (MPSC)Finalization of contract on basis of Model Production Sharing Contract (MPSC)Freedom sell crude oil & natural gas in the domestic market at market related pricesNo customs duty on imports for petroleum operations & No cess of crude oil production7 yrs tax holiday & option to amortize exploration & drilling expenditures over a period of 10 yrs from the commencement of production Royalty Payment for crude oil & natural gas on ad‐valorem basisRoyalty Payment for crude oil & natural gas on ad valorem basis
India has typically three major sources of non conventional energyIndia 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 of R&D initiatives are undertaken to develop technology &Good amount of R&D initiatives are undertaken to develop technology & commercialize it. However, it looks difficult to commence production as per Govt’sdeadline of 2015CBM: Coal bed Methane (CBM), is an eco‐friendly natural gas, stored in coal seams, ( ), y g , ,generated during the process of the coalification. Having the 3rd largest proven coal reserves, India has significant prospects for commercial recovery of CBM. Indian CBM policy, which was implemented in 2001, is one of the most investor friendly policies in the world with four rounds of successful bidding till dateShale Oil & Gas: Oil Shales are usually fine‐grained sedimentary rocks containing relatively large amounts of organic matter from which significant quantities of shale il d b ibl b d b d i di ill ioil and combustible gas can be extracted by destructive distillation.
As per the EIA these basins have shale gas resource of the order of 290 tcfofAs per the EIA, these basins have shale gas resource of the order of 290 tcfofwhich 63 tcfis technically recoverable.Phase‐I (Sept.2007 to October 2009) : The contract was signed for project envisaging assessment of oil shale resourcesThe contract was signed for project envisaging assessment of oil shale resources in three discrete adjacent blocks in Assam and Arunachal Pradesh.The project scope included geological mapping, sampling and geochemical analysis of oil shale, shallow geophysical survey, shallow drilling for characterizing th il h l d l t f 3 D d l d li i i t l t dithe oil shales, development of 3‐D model and preliminary environmental studies.Phase‐II (November 2009 to October 2011)Techno‐economic feasibility study for extraction along with environment impact t d ti f d l PSC & l f M EFstudy, preparation of model PSCs & necessary clearances from MoEF.Framing of legislation for simultaneous extraction of coal and oil shale depositsPhase‐III (November 2011 to 2013)Sh l G P liShale Gas Policy
Mit h ll E d i 1980 1990 d d h l d tiMitchell Energy during 1980s‐1990s made deep shale gas production a commercial reality in Barnett Shale. By 2005, Barnett Shale alone produced shale gas over ½ tcf/yr, which increased to over 5 tcfin 2011‐(22% of gas production) ( g p )Technically recoverable U.S. shale gas resources estimated at 862 tcf, which is 34 % of the domestic natural gas resource base. US drilled over 40,000 wells in different shales. Currently, operators in US deploy over 1500 rigs for shale gasover 1500 rigs for shale gasA close network of pipelines measuring over 600,000 km exists for off‐taking of the gas to the market.
Technical SkillsI f t tInfrastructureLand AcquisitionWater ManagementWater ManagementEnvironmental AspectsPipeline InfrastructurePipeline Infrastructure
Govt of India is going to release Shale Gas Policy in 2013 The proposed policy will haveGovt of India is going to release Shale Gas Policy in 2013. The proposed policy will have following features,The offer of acreages under this policy would be made through an open International Competitive Bidding (ICB) processCompetitive Bidding (ICB) process. The successful bidders would be required to enter into a contract with the Government, which will be negotiated based on the Model Contract (MC). Simultaneous Exploration of conventional Oil and Natural Gas, Coal Bed Methane (CBM), tight gas and Shale Oil and Gas from the same contract area by same/ different ( ), g g y /operators will be governed by the relevant policy of the Government of India. All areas which are already allotted and where operations have entered the development phase shall be excluded from area to be offered for shale gas exploration. As financial and contractual regime for conventional oil and gas and shale oil and gas are different, in case of the same contractor operating both the blocks, the policy will be to adequately ring fence the two so that two distinct accounts are maintained, without affecting each other. All data gathered during the course of operation shall be the property of the GOI. G f I di ill ll l d i l b i dGovt. of India will ensure all statutory, regulatory and security clearances are obtained before bidding.