Bloomberg News

First India Shale Gas Seen in 4 Years, China Output Nears

May 17, 2012

Oil & Natural Gas Corp. (ONGC) of India and competitors may drill for at least four years before producing the first commercial shale gas in the nation as China expects to commence output next month and Australia boosts reserves.

ONGC, India’s biggest explorer, is studying data for shale- gas deposits and awaiting a government policy on commercial drilling for gas trapped in shale rock, Sudhir Vasudeva, chairman of the state-run company, said in a telephone interview yesterday. China Petrochemical Corp. will start pumping the nation’s first shale gas from a project in Sichuan province next month, according to a report on Caixin’s website on May 15, citing the company.

“We’re studying data, but it’s still early days and may be four to five years before commercial drilling starts,” New Delhi-based Vasudeva, 58, said. “If China and Australia can talk more about their reserves and production, it’s because they’ve been working on this for a while now.”

Companies from France’s Total SA to Australian mining giant BHP Billion Ltd. began shale-gas projects around the world after a surge of production in the U.S. turned that fuel-importing nation into the world’s biggest producer of natural gas. The U.S. produced 96 billion cubic meters in 2009, overtaking Russia as the largest provider of the fuel.

ONGC shares fell 0.8 percent to 246.05 rupees, the fifth day of declines. The stock has decreased 4.1 percent this year, compared with a 4 percent gain in the benchmark Sensitive Index. (SENSEX)

Australia Resources

Australia’s energy minister, Martin Ferguson, said this week that nation is likely to possess enough shale gas to double its total gas resources and add to 184 years of output, while China is estimated to hold the world’s largest deposit of the unconventional fuel.

India holds 6.1 trillion cubic feet of technically recoverable shale gas reserves in three basins, the U.S. Geological Survey estimated in a report in January. That was less than 10 percent of the 63 trillion cubic feet estimate made the previous year, in April, by the U.S. Energy Information Administration in a report.

“The U.S. estimates are just estimates, and we’ll have to survey the geology and deposits and drill wells before we know how much shale gas we have,” Vasudeva said. “What we do know is that India does have shale-gas reserves.”

ONGC found shale gas at a well in India’s West Bengal state, according to a Jan. 27, 2011, statement. The company signed an agreement with ConocoPhillips (COP:US) on March 30 for developing shale resources in India and North America.

India Auction

India has started mapping its shale resources and will have exploration rules in place by 2013, Prime Minister Manmohan Singh said March 23. Blocks will be auctioned next year after the policy is published, G.C. Chaturvedi, the top bureaucrat in the oil ministry, said Dec. 21.

ConocoPhillips, BG Group Plc (BG/), Hess Corp. (HES:US) and Mitsubishi Corp. (8058) have already agreed to fund shale exploration campaigns through ventures in Australia. With an estimated 400 trillion cubic feet of recoverable shale-gas resources, Australia is poised to commercialize its holdings on a “large scale,” according to a report last year by the U.S. Energy Information Administration.

China has 25.08 trillion cubic meters (886 trillion cubic feet) of exploitable onshore shale-gas reserves, the country’s land ministry said March 1. The world’s biggest energy consumer aims to produce 6.5 billion cubic meters of shale gas by 2015 and set a target of 60 billion to 100 billion cubic meters by 2020, the National Development and Reform Commission said.

China Shale

China drilled 50 shale-gas wells in the past year, compared with 1,300 a month in the U.S., Chris Faulkner, chief executive officer of Breitling Oil and Gas Corp., said April 23. It takes “three to five years” for a shale-gas discovery to start commercial production and an extensive pipeline network is needed to transport the fuel to consumers.

“A lot of work has yet to be done for us, getting land and water, disposing of the water used in drilling, creating infrastructure like pipelines,” Vasudeva said. “We’re only just starting.”

To contact the reporter on this story: Rakteem Katakey in New Delhi at rkatakey@bloomberg.net

To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net


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    (ConocoPhillips)
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  • HES
    (Hess Corp)
    • $82.35 USD
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