High Potential

Unconventional resources to cater to growing energy needs

Burgeoning population levels and the attempt by policymakers to boost industrial production have led to an escalation in the country’s demand for energy. In this context, the development of unconventional energy resources – coal bed methane (CBM) and shale gas – could offer some respite, as significant indigenous resources of both remain untapped.

A key move in this direction has been the notification of the new Hydrocarbon Exploration and Licensing Policy (HELP) in March 2016. HELP aims to introduce a unified licensing regime for the exploration of both conventional and unconventional resources and is expected to boost CBM and shale gas production in the country.

Coal bed methane

According to the Ministry of Petroleum and Natural Gas (MoPNG), India has estimated CBM resources of about 2,600 billion cubic metres (bcm) of which 280.3 bcm has been established so far. Geographically, these resources are spread across 11 states, including West Bengal, Jharkhand, Madhya Pradesh, Rajasthan and Chhattisgarh.

Till now 33 blocks, comprising about 64 per cent of the total CBM bearing area (26,000 square km), have been awarded. Of these blocks, only one – Raniganj (South) operated by Great Eastern Energy Corporation Limited (GEECL) – is under production, while three blocks of the Oil and Natural Gas Corporation (ONGC) have been relinquished. The remaining blocks are either in the exploration or development phase or have been relinquished.

According to the MoPNG, during 2015-16, CBM production was 1.1 million metric standard cubic metres per day (mmscmd), a growth of 64 per cent over the previous year. Essar Oil was the highest producer with an output of 0.65 mmscmd. Further, recently, in June 2016, Essar’s production crossed the 1 mmscmd mark. The company taps CBM from its Raniganj (East) block. Meanwhile, GEECL, another important CBM producer, recorded a production of 0.4 mmscmd from its Raniganj (South) block during the year. ONGC’s Jharia block and Reliance Industries Limited’s (RIL) Sohagpur East and Sohagpur West blocks recorded total incidental production of about 7,146 standard cubic metres per day.

Going forward, the MoPNG has estimated that CBM production is expected to reach 5.77 mmscmd by 2017-18. Essar plans to ramp up production of its Raniganj (East) block to 2 mmscmd by 2016-17 and increase it further to 3 mmscmd by the middle of 2017-18, while GEECL intends to drill 144 additional wells at Raniganj (South) to add around 30-35 million cubic feet to its current production level. Moreover, ONGC is expected to start production from two of its blocks – North Karanpura and Bokaro – by the second half of 2017-18. RIL’s Sohagpur East and Sohagpur West blocks are also expected to come online and will take the company’s CBM production to about 3.5 mmscmd. Moreover, the government has identified six new CBM blocks in Gujarat to be offered in the next round of bidding.

Shale gas

India has significant potential to produce shale gas on a commercial basis. Eight basins – Cambay, Krishna-Godavari (KG), Cauvery, Rajasthan, Assam-Arakan, Gondwana, Vindhyan and Damodar – have been identified for shale gas exploration. According to the United States Geological Survey (2013), India has about 6.1 trillion cubic feet of technically recoverable shale gas located in three basins – Cambay onland, KG onland and Cauvery onland. However, other estimates peg shale gas reserves at a higher level.

At present, there is no commercial production of shale gas in the country. However, steps towards tapping it are now being taken. A key development in this regard took place in October 2013, when the government notified policy guidelines for the exploration and exploitation of shale gas and oil by national oil companies ONGC and Oil India Limited (OIL). The policy permitted these players to explore and exploit shale gas and oil in the onland exploration lease/ petroleum mining lease blocks awarded to them under the nomination regime. Each company is permitted three assessment phases of a maximum period of three years each. As such, ONGC will be able to explore 50 blocks in the first phase, 75 blocks in the second and 50 blocks in the third. Meanwhile, OIL will take up five blocks in each of the three phases.

Under the policy, both ONGC and OIL have identified and initiated exploration activities under Phase I. ONGC has completed the drilling of 18 blocks, though at present, drilling has been suspended due to problems in obtaining environment clearances. OIL, too, is undertaking geological and geophysical studies in its blocks to identify perspective locations for drilling wells.

Challenges and the way forward

Though CBM and shale gas are promising sources of energy, their development presents various challenges. The issues pertain primarily to availability of suitable technology, paucity of skilled manpower, delays in securing requisite clearances, inadequate pipeline infrastructure, and huge water requirements. Therefore, policymakers have the twin tasks of giving a policy fillip as well as providing effective solutions to the issues facing the segment to facilitate the development of these resources.


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