Companies & Sectors
Shale gas exploration: Prevention is better than cure for India

With substantial amounts of coal deposits, which are sitting pretty and not developed well despite fuel shortages, we are talking in terms of spending time, money and energy on items like shale gas. This makes one wonder if the government is really serious about environment issues, which are retarding progress in other areas

The chairman and managing director (CMD) of Central Mine Planning and Design Institute (CMPDI), AK Debnath, is reported to have stated, to the media, at a seminar in Kolkata, that they have handed over a data package for six shale gas blocks to director general, Hydrocarbons (DGH) for study and necessary action.

 

It appears that two blocks in Ranigunj are estimated to have 50 billion cubic metres of gas. The others are located at Jharia, Damodar and Cauvery basins. These blocks may be auctioned in the next few months. The question is: should we go ahead? No, as our conditions—both water resources and technology—are not conclusive, at the moment to enter into this area. Let's take a look at this a little more elaborately.

 

Shale gas refers to natural gas that is trapped within shale formations. Shales are fine-grained sedimentary rocks that can be rich sources of petroleum and natural gas. Two methods are followed to extract shale gas, such as horizontal drilling and hydraulic fracturing.

 

A vertical well is drilled in a targeted area. When it reaches the strategic point of shale gas contact, the drill bit is turned to bore a well that stretches through the reservoir horizontally.  When adequate shale gas has been discovered, in order to tap it, water, chemicals and sand are pumped into the well to unlock the hydrocarbons in these shale formations by opening cracks (also known as fractures) in the rock, permitting the gas to flow from the shale into the well.  This process is called "fraking" or "hydro-fraking".

 

If used with horizontal drilling, gas produced is at reasonable cost, and cannot be produced from shale without these techniques. In USA four companies are following this procedure, reasonably successfully.

 

But what is of serious concern is that drilling and fracturing results in large volume of water containing chemicals and before use, these have to be treated as otherwise, the drinking water in surrounding areas can be contaminated.  This can affect the natural habitat, the environment.

 

In India and Pakistan, guar beans are grown, meeting 80% of world's requirement. Powder made from guar beans can turn water into a quick gel, and the drilling companies who need high viscosity water and extract oil and natural gas from tight rock formations, buy these.  India exported $915 million worth of these guar beans to the US, which happens to be the country's largest agricultural export!

 

Some of the Indian companies have already taken serious interest in the development of shale gas. Reliance Industries Ltd (RIL) is already involved in the US. ONGC has signed an agreement with Conoco Phillips for exploration and development of domestic shale gas resources.  Oil India Ltd and Indian Oil Company have acquired 30% stake in Carrizo's oil rich shale assets in Niobrara in the US.

 

With these in the background, the director general of Hydrocarbons may probably decide if it is worthwhile calling for an international bid to tap this unconventional fuel resource, considering serious water usage implications and the resultant contamination that is most likely to occur, if the water used for fracturing is not purified and certified for reuse.

 

It would be in national interest to postpone the shale gas exploration issue within the country, and interested parties may be encouraged to develop such resources in countries like USA where both technology and water resources are available in plenty.  There is huge shortage of water in the country and our entire agriculture, the mainstay of India, is depend upon monsoon.  We have not yet overcome with environmental issues in most fuel related areas and it does not make sense to add one more to the misery in jumping into exploring the shale formations.

 

Let's spend more time, money, energy and obtain technology to develop our coal resources, followed by oil and gas. Shale can be placed in the back burner, for the time being.

 

(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)

User

COMMENTS

A M Dayal

3 years ago

I would like to ask Mr Ram Das about the economic conditin of the country. The main reason is the power. Industry needs 24x7 hrs power but in our country except few states all have three days power holidays do you think industries can sustain in such atmosphere. Regarding the water use I find our agriculture section using 5 to 10 times more water for the crop as electricity is free I have seen personally in the field area where rice field is full of water and excess water is just draining out. And for his information agriculture sector does not come as the part of industrial growth.I agree that coal and gas is available in plenty but with the corrupt administrator and long term agreement does not allow the industry to go with full production. Shale gas is important to be independent from the import. In the present situation the debt(450 billion USD$) is double of the FE reserve (230 b $) in the country. Do you think economy will improve in such condition.
Anurodh

Unquoted: Warner Multimedia

Stories of price manipulation

Warner Multimedia (Rs3)
You would have never guessed that a company named Warner Multimedia is into the business of financing and not entertainment or IT. The company and its entities were debarred from accessing the securities markets by SEBI for three years, between 2006 and 2009, for artificial market creation and price manipulation. Even the Reserve Bank of India had passed an order against the company for unauthorised collection of public deposits on 29 November 2010. According to the company’s 2012 annual report, it did not conduct any business during FY11-12 and Rural Electrification Corporation (REC) had seized some of its assets for non-repayment of a loan. Its fundamentals are terrible. It made a net profit in just one out of the past eight quarters and earned revenues in just three of those. The total combined sales over the last eight quarters was negligible whereas the total combined losses, for the same period, stood at a whopping Rs17.34 crore.

Yet, its stock price rose 84%, from Rs1.38 to Rs2.54, between 15 October 2012 and 5 September 2013. Neither the BSE nor SEBI seems to be concerned.

User

COMMENTS

Vinayak Bhimrao Mudholkar

3 years ago

Fundamentally good companies like Bosch are trapped in the Periodic Call Auction but companies like the above won't be delisted. This is India !!!

Goodyear India: Cyclical Low?

Tyre companies are struggling. Worth looking at, for the long term

The automobile...

Premium Content
Monthly Digital Access

Subscribe

Already A Subscriber?
Login
Yearly Digital+Print Access

Subscribe

Moneylife Magazine Subscriber or MSSN member?
Login

Yearly Subscriber Login

Enter the mail id that you want to use & click on Go. We will send you a link to your email for verficiation

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)