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College of Management and Economic Studies (CMES) University of Petroleum and Energy Studies (UPES) Dehradun, Uttrakhand (UK) India (UK) 2011-13
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Mohit Sharma R590211017 MBA Energy Trading (2011-13) University of Petroleum & Energy Studies Dehradun
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Table of Contents
Part
1 1.1 1.2 1.3 1.4 1.5 2
Topic
Research Methodology Research Design Objective of Study Data Collection Significance of Study Review of Literature Indian Energy Scenario Background and Introduction Resource Exploration and Categorization Energy Security and Related Aspects Research and Development in Energy Sector Indian Geography Coal Bed Methane Introduction Indian and Global Scenario Gas Hydrates History & Introduction Gas Hydrates in India National Gas Hydrates Program Tight Sand Gas Shale Gas Introduction Characteristics Shale Gas in India General Methodology for Exploration Draft Policy for Exploration and Exploitation of Shale Gas Conclusion and Recommendations Bibliography and References
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7 7 7 8 8 9 10 10 24 33 41 43 47 47 49 57 57 60 62 74 76 76 79 82 87
7.5 8 9
91 97 98
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Description
Primary Energy Sources (India) Preferential Fuel Table Environment Indicators Table Health & Safety Indicators Table CBM Resources : Global Perspective Major Coal Fields in India CBM Blocks in India Stratigraphic Horizons (Coal) Gas Hydrates Reserves (World) Gas Hydrates Reserves (India) Tight Sand Gas Exploration Shale Gas in India
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9 19 28 29 46 47 48 50 54 60 71 81
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1.1 Research Design The research is analytical and descriptive in nature. Main purpose of descriptive research is the description of state of affairs as they exist at present and tracing the the course of their history. The feature of this method is that the researcher has no control over the variables and the researcher can only project what has happened or what is happening. The research is analytical in nature because the usage of data, facts and information already available has been done and an analysis has been done to the available data with the help of various interpretational and statistical tools.
To study the various unconventional resources of natural gas in India. To analyze the various exploration techniques, methods and movements. To suggest a legal framework suiting the specific needs related to unconventional gas resources. The study of the shale gas extraction and production technology used by the various countries so as to focus on the Indian scenario of shale extraction.
To understand the existing processes and techniques for Shale Gas, CBM, Gas Hydrates Production. To analyze the historical trend of such resources of natural gas & explore the leading factors for the same. Page | 7
To study the factors those affect the production, transportation and use of such resources of gas
1.3 Data Collection Data for the research has been collected from both primary and secondary sources. Primary data has been obtained from Industry professionals, Working class and the Business class of the society through a questionnaire. Semi-structural questions were asked from the executives i.e., Delphi Method. Secondary data is further cross-referenced to primary data in order to process triangulation and from different articles & reviews of current academic literature & information gleaned from published industry sources. Secondary Data has been collected from various sources such as Reports, Journals, Newspapers, Magazines and Internet etc.
1.4 Significance of the Study Significance of the study is that it will provide an in depth understanding about various aspects of Coal Bed Methane, Gas Hydrates, Tight Sand Gas and Shale Gas which includes initial surveys, how the natural gas is extracted from the different formations lying underneath the earths surface, production techniques, governmental policies and future predictions. The study will be helpful in understanding the impact of different kinds of natural gas in the India s energy portfolio, change in Indian energy usage pie and hurdles faced in the production and development of shale gas, CBM, Gas Hydrates and how it can be avoided. The study would look upon the policies and regulations that should be adapted by India. And the study will help in finding the potential of shale gas in India. 1.5 Literature Review The basic overview of Tight Sand Gas is provided by Chandra, Avinash, 2009, Tight Sand Gas : Potential and Prospects. Gas Hydrates policies, extraction, potential reserves and related activities are listed in, P.M., 2010, Methods of Estimation of Gas Hydrates, Coal Bed Methane Concentration, GUPTA, H.K. and SAIN, K. (2011) Gas-hydrates: Natural Hazard. In: P. Bobrowsky (Ed.), Encyclopedia of Natural Hazards. The challenges and regulatory
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Indias Combined Installed Capacity 215 GW (which is fifth largest in world) Indias energy pie is largely dependent on thermal power plants and non -renewable sources of energy and for sustainable development it is essential to increase the share of renewable sources of energy. The per capita avg. annual domestic electricity consumption in India was 95 (year - 2009) kWh in rural areas and 287 kWh in urban areas for those with access to electricity, in contrast to the worldwide per capita annual average of 2650 kWh and 6250 kWh in the European Union. India's total domestic, agricultural and industrial (all primary, secondary as
well as tertiary sectors) per capita energy consumption estimate varies depending on the source. Two sources place it between 400 to 700 kWh in 20082009. As of January 2012, one report found the per capita total consumption in India to be 778 kWh.
Installed Capacity Non-Renewable Sources 87.5% (7/8) Renewable Sources 12.5% (1/8)
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However, energy exists in many forms such as electricity, thermal/heat/chemical energy, potential energy, kinetic energy, etc. Power is the most coveted form of energy since it is simple to convert in to other energy forms at very high-conversion efficiency and least effects on environment with the help of motors, furnaces, etc. Also transmitting electricity by cables / conductors is comparatively simple and clean method. All the primary energy resources are used to produce power as an intermediate energy before converting in to final power requirements. The major drawback of power is that it cannot be stored in bulk for using in mobile/transport applications. So the liquid fuels are predominantly used in transport sector. The countries which are endowed with crude oil (considered source of liquid fuels) reserves are
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These power fuels are not uniformly distributed on earth to meet their demand. Exploration, extraction and transportation along with final conversion of fuels to ultimate energy is a very highly capital intensive. They also emit pollutants such as dust, SOx, NOx and various green house gases which are harmful to human beings health and long survival. All fossil or biomass fuels contain carbon and hydrogen elements which are mainly contributing to heat energy when burnt or oxidized. The carbon present in the solid/liquid form in these fuels is converted in to gaseous form carbon dioxide. Continuous use of these carbonaceous fuels for meeting ever increasing global energy consumption is gradually increasing the CO2 in the earth atmosphere. Higher concentrations of Carbon di Oxide in the earth atmosphere will aid the green house phenomenon or global warming. So carbon derived energy is gradually discouraged. Coal emits 95% of heat energy from its carbon content whereas natural gas (NG), petroleum fuels & bio mass emit less than 50% of heat energy. Global warming point of view, coal is considered as main culprit. India is endowed with vast coal reserves though other conventional fuels are not adequately available. India is also endowed with abundant non conventional energy resources such as Thorium nuclear fuel and solar energy but commercially viable technologies are not available to harness these resources on large scale. The various energy resources used in India are given below Petroleum products: These are derived from crude oil which India imports 80% of its requirements. Diesel, petrol, etc are used in transport sector as motive fuel for road vehicles, locomotives and ships. Many of these products are also used as raw material in the manufacture of organic chemicals, synthetic fibers, synthetic rubbers, plastics, fertilizers, etc. which have wide application in present day civilization. When other fuels are not available, these petroleum products are also used for electricity generation, heating and lighting purposes as alternative fuels. The major advantage of these fuels is their transportability by the transport networks such as roads, railways and ships. They can also be stored easily for mobile and stationary applications. Due to these advantages, petroleum products are extensively and intensively used to power all mobile vehicles covering road, rail, marine and air transport sectors. Natural gas: This is a gaseous fuel and relatively less polluting fuel. Unlike liquid fuels, its inland transportability is possible by pipeline network only and maritime transport is possible by refrigerating in to liquid below minus 160C temperature. In maritime transport of Liquefied
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Wave energy: Wave power is secondary power from wind power. When the wind is blowing on seas/ water bodies, some of the wind energy gets transmitted to water creating wave energy. Till now wave energy is not harnessed for electricity generation on major scale. However there are possibilities to harness wave and wind energy available on oceans to augment fresh water availability and hydro electricity generation. Due to deference in solar radiation incidence on earth surface, the atmospheric global winds are generated on land as well as on oceans. These winds while passing over the seas pick up moisture and convert in to clouds. These clouds yield most of the fresh water in the form of rains on the land mass. Often, rain fall is not adequate in many regions/countries due to unfavorable conditions in the oceans such as ocean currents, surface temperature, etc though the global wind patterns are not changing. The available wave and wind power on the oceans can be utilized to enrich the winds with moisture irrespective of natures vagaries. The oscillating water surface when waves are formed are used to pump sea water few meters above the surface level and further atomized in to fine droplets / mist by using wind energy. The mist spayed in to the winds would fully vaporize enhancing the humidity of air / winds. The augmented moisture in the winds segregates in to clouds to yield more rain subsequently on land mass. The south west winds and north east winds are the sources of monsoon rains on Indian subcontinent. South west monsoon winds come from Arabian Sea and cross the peninsular India yielding rain and pass on Bay of Bengal and blow in to North India yielding rain again. North east monsoon winds enrich with moisture while passing on Bay of Bengal and subsequently yield rain in southern part of India. Though the augmentation of global/monsoon winds with moisture is a gigantic infrastructure building task, it is technically feasible by harnessing a fraction of renewable wind energy available on the territorial oceans. Land mass becomes greener / rich in vegetation acting as carbon sequestration. Many countries face severe water shortage frequently and many more countries are occupied by vast deserts (middle east and north Africa) though sea is located adjacent to these regions. Biomass: In agriculturally developed pockets of India, agro waste such as rice husk, crop waste, baggassi, inedible plants and leaves, wood from old plantations, etc is available. Generally rural masses consume bio mass for their cooking requirements. When it is found in surplus, it is also used in electricity generation and process industry. Bio-mass also can be gasified to produce synthetic gas, liquefied by fast pyrolysis process to produce bio-oil and carbonized by slow
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Soybean: 0.4 tonnes oil/ha.year Rapeseed: 0.8 tonnes oil/ha.year Jathropha: 1-1.5 tonnes oil/ha.year (non edible) Palmoil: 4 tonnes oil/ha.year Koroch / Karanj: 3 4.5 tonnes oil/ha.year (non edible) Algae: 10-25 tonnes oil/ha.year (non edible)
The most promising sources of bio-diesel are Algae and Koroch (Bengali) which need not compete with other crops and natural forests for land, water, sunlight, etc. Algae: Algae (pond scum) are tiny cellular plants suspending in water (fresh, brackish and sea water) which absorb dissolved carbon dioxide in water to produce biomass by photosynthesis with the help of sun light. Algae grow fast and many species of algae contain up to 60% of its dry mass as Bio-diesel (lipids / fats). The de-oiled algae cake is rich in proteins and is good source to augment proteins in cattle and poultry feed. Extensive research has taken place on
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Animal draught power: Animal power is extensively used in agriculture and transport in rural areas. The draught animals such as bullocks and he-buffaloes can be used for generating commercially viable electricity for meeting daily peak load demand. It will boost the rural employment and income by using the idle time of the cattle for electricity generation. The installation cost and time are comparatively low. In many countries & few parts of India also, cows & she-buffaloes are used for draught power and can also be used for electricity generation.
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TABLE PREFERENTIAL FUEL Purposes Preferred fuels Next preferred fuels Least preferred fuels -
*Mobile military Diesel, petrol hardware *Air transport Marine transport bio-diesel Bio-oil / pyrolysis oil
Ethanol, bio-diesel
Ethanol
ATF, HSK
LDO, HFO, bunker fuel, Nuclear fuel, LNG Battery power/electricity Diesel / petrol
Pyrolysis oil, Electricity, Bio LPG diesel Electricity, Koroch / bio Natural gas, LPG diesel Natural Gas, Koroch / bio LPG, Electricity diesel, charcoal
Diesel
Kerosene
Kerosene
Domestic - space & Pyrolysis oil, charcoal, LPG water heating Solar energy, Natural Gas Domestic - other Electricity appliances Commercialcooking Natural Gas, bio-char Battery power
oil, Kerosene
Commercial- space Solar energy, Natural Gas, LPG & water heating Pyrolysis-oil Commercial- other Electricity, bio-diesel, appliances Battery power
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Naphtha
Industrialmaterials
Agriculture- water Pyrolysis-oil, pumping Electricity Agricultureheating & drying Agriculturetransport Agricultureappliances Electricity
bio-diesel, LPG
Diesel / petrol
Bio-mass, Pyrolysis-oil,
LPG, bio-gas
Diesel / petrol
Bio-diesel, LPG
CNG, bio-gas
Diesel / petrol
Bio-diesel, Electricity
LPG, bio-gas
Diesel / petrol
Local coal, bio-char, lignite, Natural gas (peaking Petrol, Diesel, NGL, nuclear, bio mass, pyrolysis power) LPG, LDO, HFO, Naptha oil, bio-gas, gobar gas, hydro, wind, (As per economical cost at user locations)
Coal and lignite: These are mainly used to generate electricity, to fire boilers in process industry, to produce cement, etc. Coking coal is used as raw material in Iron manufacturing which is in shortage in India. India imports most of its coking coal requirements. India is blessed with 200 billon tons coal reserves which will last for 400 years at the present rate of consumption. The coal reserves will last for 40 years even the consumption is increased by 10 folds. These reserves are estimated based on coal found up to 600 meters depth. The reserves
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The preferred fuels for various requirements are indicated in Table-I. When these preferred fuels are used for each application, the import of petroleum products, LNG, coal and nuclear fuels could be minimized to build self dependent energy sector till the commercially proven technologies are established for using biomass, solar energy and Thorium nuclear fuel. India's network losses exceeded 32% in 2010 including non-technical losses, compared to world average of less than 15%. Both technical and non-technical factors contribute to these losses, but quantifying their proportions is difficult. But the Government pegs the national T&D losses at around 24% for the year 2011 & has set a target of reducing it to 17.1% by 2017 & to 14.1% by 2022. Some experts estimate that technical losses are about 15% to 20%, A high proportion of nontechnical losses are caused by illegal tapping of lines, but faulty electric meters that underestimate actual consumption also contribute to reduced payment collection. A case study in Kerala estimated that replacing faulty meters could reduce distribution losses from 34% to 29%. Key implementation challenges for India's electricity sector include new project management and execution, ensuring availability of fuel quantities and qualities, lack of initiative to develop large coal and natural gas resources present in India, land acquisition, environmental clearances at state and central government level, and training of skilled manpower to prevent talent shortages for operating latest technology plants.
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Oil and Gas Industry is a wide supply chain industry which constitutes various operations, activities beginning from the extraction, procurement to the transportation of different forms of fuel to the end consumer. The industry is mainly categorized under i) Upstream This category is used to refer to the recovery/searching for and production of natural gas, crude oil. The upstream sector also includes the searching for potential underground or underwater oil and gas fields, drilling of exploratory wells, and subsequently operating the wells that recover and bring the crude oil and/or raw natural gas to the surface. With the advancement in technology and increase in the share of unconventional sources of natural gases in the energy pie in general upstream sector is becoming broader gradually. ii) Midstream
The midstream sector (which is quite flexible term and often used interchangeably for various upstreamdownstream activities) generally involves the transportation, storage and marketing of the various oil and gas products produced by petroleum crude oil refineries and by natural gas processing plants.
iii) Downstream Downstream sector includes purification-processing of different types of natural gas and refining of crude oil and further marketing-distribution of the products derived. As mentioned above it depends on the companys policy and the host countrys laws whether to assign an activity under midstream or downstream. In India and majority of world, integrated oil and gas companies participate in all of these businesses, smaller companies may have operations in only one, or part of one, of them. In addition, both large and small oil and gas companies may engage in one or more secondary activities that are not typically associated with the oil and gas industry, including:
*) - Power generation *) - Metal Production *) - Natural gas transmission (City Gas Distribution Model implemented in major cities across India.) *) - Coal Mining *) - Renewable energy systems *) - Specialty chemical production
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Reporting
Compared to world average, Indian downstream industry in terms of transport by mode of roadways, railways and pipelines in order to save time, effort and money unofficially discourage their employees in reporting issues especially if the magnitude-volume is relatively low. However, after certain events, accidents some companies are beginning to consider reporting on wider impacts of their activities in the context of a value chain that extends beyond the normal activities within its organizational boundaries. For example, a company may choose to report on how they are influencing emission reductions or improved social responsibility within their supply chain, or in addition on the customer side, companies may choose to report on programs aimed at informing consumers about the efficient use of oil and gas products. An impact may be described as direct when an activity is under the companys control (as owner or operator). When an activity is under anothers control, but the company has some degree of influence over this activity, the resulting impact may be described as indirect. By separately addressing relevant indirect impacts, the company is extending the scope of its reporting within its value chain. Key factors related to reporting are also missing in the companies under Indian downstream industry which are *) - Transparency An important factor which takes a backseat in India because of corruption, favorism and greed along with petty politics which puts many lives on the line. Information should be reported in a clear, understandable, factual and coherent manner, and facilitate independent review. Transparency relates to the degree to which information on the processes, procedures, assumptions and limitations in report preparation are disclosed.
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Performance Benchmarking
Earlier to reduce the money, time and efforts the standardization in terms of measurements, records was not preferred. Many oil and gas companies actively engage in HSE benchmarking initiatives and are increasingly involved in sustainability and other non-financial indicator benchmarking. Benchmarking provides an effective tool to improve performance, because it can provide a systematic approach to identify and learn from others about good practices and innovative solutions. Infusing benchmarking helps in long term growth of the company and also improves the goodwill among the consumers. It offers an external view of a companys performance and can help identify what is needed for continual improvement in different aspects. Oil and gas companies often rely on industry groups to facilitate benchmarking processes by developing key performance indicators, and by collecting and analyzing performance information. This document provides a common point of reference that can help support broader engagement in benchmarking studies of sustainability or non-financial indicators among oil and gas companies, and thereby encourage good practice sharing to enhance individual company performance.
Data Aggregation
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Infrastructure
The companys and the Special Economic Zones (SEZs), Export Promotion Areas, Towns of Export Excellence etc infrastructure may suit the downstream activities, but the transport network is not at par with the upstream infrastructure and the industry have to adopt some additional measures to avoid accidents involving internalexternal sources (in the process of distribution and marketing). In Indian context companies have to *) Adapt to increasing share of Inland Waterways in the transport sector especially in the case of rural-remote areas which are connected to a flowing water body compared to road-rail network. *) Regular point check of pipelines at various pumping stations, keeping special measures for leak prone areas. *) Guidelines, specialized roadways and railways routes suiting the downstream activities in Indian states. *) Different measures for different topographies and geographical regions.
Environment
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Indicators such as spills, emissions, wastes and energy use, when expressed as absolute quantities provide a sense of magnitude or scale. Normalization of these quantities facilitates comparisons among organizations of different sizes, and can help express environmental performance in economic terms. Independent records, evaluation, archiving and guideline stabilization is significant to attain optimum level of sustainable growth of the company along with taking care of multiple environmental factors which can differ from one region to another on which a company is operating. Even the additional areas listed here are interdependent to the core areas which proves that a companys priority should be core areas but neglecting additional areas (in different categories) can prove to be hazardous for the company in the longer run.
*) Indicator (H&S-1) :
Indicates the Implementation and coverage of an Occupational Health and Safety Management System. An occupational health and safety management system is a process that applies a disciplined and systematic approach to managing safety and health activities. This approach uses a cyclical process that takes experiences and learning from one cycle and uses them to improve and adjust expectations during the next cycle. Management systems should convey a companys structure, responsibilities, practices, procedures, and resources for implementing occupational health and safety management, including processes to identify root causes of poor performance, prevent recurrences, and drive continuous improvement. A health and safety management system may be integrated into an environmental, health and safety management system or may stand alone. Many companies within the oil and gas industry employ management systems as a principal means to achieve continuous improvement of business performance including performance against health and safety objectives.
*) Indicator (H&S-2)
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*) Indicator (H&S-3)
Programs and practices to understand the general health risks and experiences affecting the local workforce. Describe the processes and programs the company has for identifying the general workforce health problems that are most significant in each location and approaches used to address these health problems. This indicator addresses health problems in the workforce that are both work-related and non work-related. It could include health issues that are prevalent in the communities where businesses are located. Sources of information can include local public health officials, medical absenteeism data, health benefits data, information from company sponsored medical clinics, health impact assessment (HIA) information, knowledge of workrelated incidents and summary data from employee personal health risk and wellness data. The programs to understand work force health issues will vary widely by location. Dialogue with
employees is an effective method of obtaining a good understanding of opportunities for improvement.
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*) Indicator (H&S-4)
Fourth indicator for Records-Archive System for recording occupational injuries and illnesses, and reporting them as the following rates: *) - Total Number of Injury Rate *) - The Lost Time-Injury Rate *) - Fatality Rate *) Miscellaneous Time and Injury Comparative Analysis. Guidance on recordability criteria for occupational injuries and fatalities is given in the References and Supporting Document summary (below). While it appears that OSHA recordkeeping guidance is frequently employed across the industry for global corporate reporting, there is not adequate consensus at this time to recommend this as a standard practice throughout the oil and gas industry. Work-related incident rates (frequencies) for total recordable injuries, total recordable illnesses and lost time injuries are calculated on a basis of number of incidents per 1 million hours worked. The fatality rate is calculated on a basis of number of fatalities per 100 million hours worked. Reporting of total injury, lost time injury and fatality rates should include separate and combined rates for both company employees and contracted workers. The total illness rate should be reported for company employees only.
*) Indicator (H&S-5)
Existence of a process to invest in and act on product-related knowledge, and to communicate results of the risk characterization and management process to customers and the public. Describe processes and programmes that the company has in place for characterizing and managing product health risks, and to make the results available to customers and the public. This process applies to all products sold to customers.
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Pricing of petroleum products, natural gas, and electricity has been the subject of raging debates in recent times. As a general guideline, this paper recommends the following. *) - In an increasingly open economy, the pricing of Primary energy resources must reflect their opportunity cost at the border, when there is the option of international trade. Therefore, trade pricing of crude oil should reflect the cost insurance and freight (CIF) price of crude that India imports, but the free on board (FOB) price of any crude quality that it exports. *) - When a resource is not trade-able, either due to global surpluses or due to quality Considerations, then a rational and rigorous process for domestic discovery of prices should be facilitated. If this requires a restructuring of energy markets (for example, coal), then an expeditious action plan needs to be drawn up for the purpose with necessary amendments to laws and regulatory frameworks. *) - Pricing of secondary energy forms, along the supply chain, must be left to the market, under effective regulatory oversight, and must allow players to benefit from any competitive advantage arising from efficiency investments as they deem fit. *) - Indias energy infrastructurebe it the transmission and distribution networks or the natural gas pipelines or even the energy production/generation/import infrastructure needs major expansion and upgrading. Infrastructure expansion is driven by several factors including projected long-term energy demand and considerations of regional growthit cannot be responding merely to current needs! As such, and in order for a planned development of such infrastructure, the government must pursue its strategy of competitive bidding for both infrastructure expansion and upgrading projects. As we move down the supply chain, the cost of energy would be the sum of the energy infrastructure service cost and the energy resource cost. *) - Where infrastructure needed for energy transport is shared with other beneficiaries (as in the case of railways), the tariff determined for the transport service provided must recognize the implications that it may have for the competitiveness of the energy resource concerned. It is necessary that such tariffs are established in consultation with the institution responsible for energy price oversight, and in accordance with the principle of proportionality. *) - Congestion pricing (time-of-day pricing in case of electricity supply) must
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Energy imports Even with the aggressive push towards efficiency and renewable energy, India would still need to have to import coal at a peak level of ~200 MT and crude oil of ~300 MT between now and 2030. At these significantly higher manageable levels of imports, we need to reevaluate the relative economics of entering into long-term contracts vis--vis making equity investments abroad. Assuming that other major international consumers of fossil fuels would also be moving along similar paths as being defined by India, the global demand for these energy forms could soften substantially. While evaluating this option, the experience of allowing the corporate sector to make such investments as part of competitively bid projects (for example, coal mines acquired by private companies for power-generation purposes) should be borne in mind. Coal After decades of make believe that we had enough coal resources to last us for another 200 years, the Government of India has finally accepted that the life of the resource may be limited to about 45 years. However, recognizing that any countrys ability to rely heavily on this highly polluting energy form would be short lived, India must restrategize its coal development to exhaust its reserves in the next 30 years or so. The new coal-based thermal power generating capacity should be limited at a level that is sustainable with available domestic resources without having to invest in new import infrastructures. The failure of the coal ministry to bring about reforms in the sectorincluding productivity improvements, private participation, and competitionand the vulnerabilities this creates in the power sector, indicate the need to set up a joint commission, comprising government, industry, and representatives of the power sector and the coal sector. The commission would be empowered to revise policy, establish and implement competition policies, and provide the necessary environment for private-sector participation. The GOI strategy to link coal mines to the private power plants would ensure a more efficient production profile from coal mines, which would enhance production levels. Oil Indias oil vulnerability is well documented. At the same time, the country is unable to generate enough interest in exploration and production activities despite various improvements made in the different rounds of the NELP. The NELP programme was started nearly 10 years ago, but only 20% of the countrys sedimentary basins can still be classified as well explored. India needs to quickly move towards the Open Acreage Licensing Policy so as to exploit any potential resources towards alleviating its medium-term energy security challenge. In addition, all efforts must be made to maximize the sustainable flow of oil from existing wells. TERI, in partnership
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Based on projects implemented as on date, the cost of a typical 5 MW unit comes to around Rs 4060 crore, with each MW of electricity consuming 150 tonnes of municipal waste annually. This amounts to an investment of Rs 810 crore per MW, or three to four times the cost of conventional thermal power. While it will be difficult for such plants to compete economically with conventional plants, the incidental benefits in terms of waste management and avoided health damage could make this an attractive option. Favourable power purchase agreements, combined with capital cost-based incentives, could be designed for such projects. The scale of the energy challenge that the country faces compels it to seek aggressive private sector participation. While it is essential and non-negotiable to follow due process when awarding projects to the private sector, a few key points need to be kept in mind. *) - Clear delineation of long-term policy and regulatory framework that would enhance investor confidence. *) - The need to provide a level playing field to all players, including the public sector organizations. *) - The high economic cost of delays .
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*) - Biofuels A second generation biofuels programme needs to be designed and implemented in a mission mode. *) - Solar energy R&D on solar PV and thermal technologies, per se, has advanced significantly at the global level. India would do well to focus its R&D efforts on developing context-specific applications and research on grid interface issues. *) - Wind energy Resource mapping exercises have to be refined to be in line with new technology developments globally, with a particular emphasis on offshore wind resources. *) - SME sector Designing, developing, and demonstrating energy-efficient technologies to suit specific conditions of SME clusters. *) - The Smart grids The increasing share of renewable energy in Indias energy mix and the greater emphasis on energy efficiency could have serious implications onand be limited bythe nature of electricity grids. India needs to implement pilot projects on the concept of smart grids that would prepare us for such large-scale integration of non-firm and distributed energy sources into our energy systems and their management. In line with the general call for an integrated approach to this sector, it may be worthwhile creating an integrated energy R&D fund administered under the guidance of a research advisory committee at the highest level.
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Location: Southern Asia, bordering the Arabian Sea and the Bay of Bengal, between Burma and Pakistan Geographic coordinates: 20 00 N, 77 00 E Map references:
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Depletion of conventional resources, and increasing demand for clean energy, forces India to hunt for alternatives to conventional energy resources. Intense importance has been given for finding out more and more energy resources; specifically non-conventional ones like CBM, shale gas & gas hydrates, as gas is less polluting compared to oil or coal. CBM is considered to be one of the most viable alternatives to combat the situation. With growing demand and rising oil and gas prices, CBM is definitely a feasible alternative supplementary energy source. Coalbed methane is generated during coalification process which gets adsorbed on coal at higher pressure. However, it is a mining hazard. Presence of CBM in underground mine not only makes mining works difficult and risky, but also makes it costly. Even, its ventilation to atmosphere adds green house gas causing global warming. However, CBM is a remarkably clean fuel if utilized efficiently. CBM is a clean gas having heating value of approximately 8500 KCal/kg compared to 9000 KCal/kg of natural gas.
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The Government of India has received overwhelming responses from prospective producers with several big players starting operations on exploration and development of CBM in India and set to become the fourth after US, Australia and China in terms of exploration and production of coal bed methane. However, in order to fully develop India's CBM potential, delineation of prospective CBM blocks is necessary. There are other measures like provision of technical training, promotion of research and development, and transfer of CBM development technologies that can further the growth of the sector. India lacks in CBM related services which delayed the scheduled production. Efficient production of CBM is becoming a real challenge to the E & P companies due to lack in detailed reservoir characterization. So far, the
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India: India is potentially rich in CBM. The Directorate General of Hydrocarbons of India estimates that deposits in major coal fields (in twelve states of India covering an area of 35,400 km2) contain approximately 4.6 TCM of CBM . Coal in these basins ranges from high-volatile to low-volatile bituminous with high ash content (10 to 40 percent), and its gas content is between
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Global: The largest CBM resource bases lie in the former Soviet Union, Canada, China, Australia and the United States. However, much of the worlds CBM recovery potential remains untapped. In 2006 it was estimated that of global resources totaling 143 trillion cubic meters, only 1 trillion cubic metres was actually recovered from reserves. This is due to a lack of incentive in some countries to fully exploit the resource base, particularly in parts of the former Soviet Union where conventional natural gas is abundant. The United States has demonstrated
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-elemental compositions of coal samples were determined using CHNS Analyzer (Elementar Vario EL III- CHNS analyzer). From the results it was observed that the ash content varies from 10.52% to 26.59% except one sample that showed an irregularly high ash content of 45.99%. Proximate analysis of the investigated coal samples reveal that the moisture content (M %) varies from 2.46% to 3.82%, whereas volatile matter ranges from 23.30% to 40.26% and fixed carbon (FC) content varies from 26.01% to 53.21%. From elemental analysis it is seen that the fixed carbon percentages varies from 38% to 71 %. In general it is recognized that the fixed carbon of coal increases with increase in coal depth which is directly proportional to the coal maturity and rank. The value of vitrinite reflectance ( %) gives idea about the coal rank and grade. In the present study, the vitrinite reflectance (Ro%) is calculated by using the formula by Rice using the data from approximate analysis. The formula is as follows:
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From the proximate analysis and value of vitrinite reflectance (Ro) varies from 0.45 to 0.88%. Hence, the coal samples under study belong to sub-bituminus to bituminous rank. Since it is generally true that methane is not adsorbed onto non-coal material, ash and moisture values can be used to make appropriate corrections on the total measured gas contents. Gas content is seen to increase with depth, and bituminous coals are associated with the highest gas contents, followed by sub bituminous coals. Cross plot of Gas Content versus non- coal content (ash + moisture content). Moisture and ash content within the coal reduces the adsorption capacity of methane. Adsorption capacity of methane decreases with increasing ash and moisture percentage within the coal. As little as 1% moisture may reduce the adsorption capacity by 25%, and 5% moisture results in a loss of adsorption capacity of 65%.
Production Production of gas is controlled by a three step process (i) - Desorption of gas from the coal matrix, (ii) - Diffusion to the cleat system, (iii) - Flow through fractures.
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Many coal reservoirs are water saturated, and water provides the reservoir pressure that holds gas in the adsorbed state. Flow of coalbed methane involves movement of methane molecules along a pressure gradient. The diffusion through the matrix pore structure, and steps include desorption from the micropores, finally fluid flows (Darcy) through the coal fracture (cleat) system. Coal seams have two sets of mode; breaking in tension joints or fractures that run perpendicular to one another. The predominant set, face cleats, is continuous, while the butt cleat often terminates into the face cleats. Cleat systems usually become better developed with increasing rank, and they are typically consistent with local and regional stress fields. The size, spacing, and continuity of the cleat system control the rate of fluid flow once the methane molecules have diffused through the matrix pore structure. These properties of the coal seams vary widely during production as the pressure declines. Coal, being brittle in nature, cannot resist the overburden pressure with reduction in pore pressure during dewatering; and fractures are developed. In addition, hydraulic fracturing is done to increase the permeability of coal. Because, permeability and porosity of coal is extremely low for which production rate is also low. The basic petrophysical properties of coal responsible for production of methane, e.g. porosity, permeability vary widely with change in the pore pressure during dewatering as well as gas
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In India, ONGC Ltd. has implemented multilaterial well technology to increase the drainage area and enhance the production in the Jharia block. But, brittle characteristic of coal restricts the production at the expected rate. Moreover, coal is highly compressible (~as high as 2x10-3) psi1) [13]. Variation of permeability and bottom hole properties during production requires accurate well test analysis using correct model. CBM reservoirs are of dual porosity system, which demands for special models of well test analysis. So, only static adsorption-desorption study can not suffice the analysis of coal bed methane production. As these properties will continuously vary during production, efficient & economic production of methane from coal bed requires constant monitoring and analysis of the system by experienced and proficient persons.The main hurdle associated with the production of CBM is the requirement of long dewatering of coal bed before production. This difficulty may be resolved to some extent with implementing the CO2 sequestration technology. Due to higher adsorption affinity of CO2 to
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made huge projections regarding CBM production in the country, the rate of success has been far from satisfactory. The DGH has already awarded 1.8 trillion cubic metres (tcm) of CBM reserves for exploration and extraction of the 4.4 tcm of identified reserves. However, CMPDI has pointed out that the DGH figure was inflated and the actual identified reserve was 3.4 tcm. CMPDI has tested 75 bore holes across the country to come to the number, the DGH official said. The DGH offered 8 blocks in the first round, 9 in the second round, 10 in the third round and 7 in the fourth round. CBM technology is proceeding with good space to prove itself as a cleaner energy security to India as well as the World. However, production strategy of methane from CBM is very much different from conventional gas reservoir. The study revealed that the coal type, rank, volatile matter and fixed carbon are strongly influence the adsorption capacity of methane into the coal bed. With increasing depth maturation of coal increases and generation of methane gas also increases. Gondwana basin as the most prospective CBM field is being developed now. From the studies, it is observed that Singareni coal field under Gandowana basin contains low gas Hence, presently it is not considered for CBM exctraction. However, in future this field may be considered for methane extraction using advanced technology and in emergency condition. Sequestration of CO2 helps in mitigation of global warming, at the same time helps in recovery of methane gas from coal bed unveiled otherwise. However, detailed and intensive studies are required for efficient and economic production of coal bed methane. India with ~4.6 TCM of methane reserves in coal bed can enrich its per capita energy demand by successful exploitation of CBM.
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*Map indicating discovered Gas Hydrate Reserves-Deposits (Makogan). Presently, in many countries national programs exist for the research and production of natural gas from gas-hydrate deposits. As a result over 220 gas hydrate deposits have been discovered, more than a hundred wells drilled, and kilometers of hydrated cores studied. Properties of the
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Potential of Unconventional Sources of Natural Gas 5.3 - National Gas Hydrate Program
The program is initiated by the Government of India led by Director General of Hydrocarbons and multiple foreign agencies like U.S. Geological Survey. Covering here the first stage of the program. NGHP Expedition 01 logged a significant number of important accomplishments.
The crew completed 113.5 days of operations without significant injury or incident, while at the same time achieving a remarkable degree of efficiency; only 1 percent of total operation time could be categorized as down time due to equipment malfunction or weather. The drilling completed during the expedition enabled the examination of 9,250 meters of total sedimentary section from 39 drilling locations across 21 sites located in four geologically-distinct settings. This included the collection of LWD log data in 12 holes spread over 10 sites, wireline log data at 13 sites, and vertical seismic profile data at 6 sites.The coring operation was particularly successful, boasting the collection of 494 conventional cores, encompassing 2,850 meters of sediment, from 21 holes (with a 78 percent overall recovery factor). In addition, scientists collected detailed shallow geochemical profiles at 13 locations and established temperature gradients at 11 locations. The expedition also carried out 97 deployments of advanced pressure coring devices, resulting in the collection of 49 cores (up to 1-meter-long) that contain virtually
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The number and level of expertise of the scientists on board allowed the NGHP Expedition 01 science team to efficiently utilize extensive on-board lab facilities to examine and prepare preliminary reports on the physical properties, geochemistry, and sedimentology of all the samples collected prior to the end of the expedition. Because much of the science was begun while the samples were being obtained and logged, findings and insights should be available relatively early, despite the huge volume of data collected. Preliminary results indicate that this expedition:
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The hydrate formation zone (HFZ) represents the thickness of sediments in which the pressure and the temperature correspond to the thermodynamic conditions of stable existence of gashydrates of a specified composition. These HFZs are found where the earth is cool, such as the Arctic and deep water. With an increase in the salinity of water, the thickness of the HFZ decreases. The thickness and the temperature of the HFZ in the offshore strongly depend on the value of sea bottom temperatures and gradient in the sediments. With an increase in sea bottom temperatures, the size of the HFZ decreases. In the regions where permafrost exists, the thickness of sediment in which gas-hydrate deposits exist can reach 400 to 800 m. The HFZ in the ocean is found in the deepwater shelf and the oceanic slope in depths of water 200 m or deeper for the conditions of in polar oceans, and from 500 to 700 m or deeper for the equatorial regions. The upper boundary of the HFZ offshore is located near the sea floor. GHDs occur in two basic forms: primary and secondary. A primary deposit is one that formed and has never melted. Primary deposits are usually found in deep water, where temperatures do not change rapidly overtime. Primary deposits are formed by the gases dissolved in the reservoir water and are located in sediments near the sea floor, which are characterized by high porosity, low temperature and low rock strength. Frequently, a primary GHD does not have
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This can be done with Vp only and more reliably with both Vp and Vs simultaneously. The hydrate saturation estimation using method 2 can be simply performed by rewriting the velocity modeling equation for Sh. The method 2 can be used with only one velocity (Vp), modeled with either the time-average equation for Vp (equation 2) or the Wood relation for Vp (equation 3). The equations for estimating hydrate saturation (method 2) using the timeaverage equation and the Wood equation are where Vp is the measured P-wave velocity and Sh is the gas hydrate saturation. In both methods 1 and 2, the common requirements are: the matrix properties, the velocity for hydrate-free sediments (background velocity), and calibration of modeled and measured velocities. The calibration of modeled and measured velocities is to make sure that for the background case (hydrate-free sediments) modeled and measured velocities are in agreement. In this paper, in method 1 the modeled velocity is calibrated (say by multiplying with scalar1) before computing velocity error and in method 2 the measured velocity is calibrated (say by multiplying with scalar2). Assuming that the background measured P-wave velocity is VPback, and the modeled P-wave velocity (for Sh = 0) is VPsh0, the scalar1 (=VPback/VPsh0) is the ratio of VPback and VPsh0 and the scalar2 (=VPsh0/VPback) is the ratio of VPsh0 and VPback. The methods 1 and 2 can be simply performed in a Microsoft Excel sheet. Figure 1 shows a data example to compute gas hydrate saturation from Vp alone with both methods 1 and 2. The Vp in this example is modeled with Wyllies time average equation (equation 2) for hydrate bearing sediments in the absence of free gas, and assuming clean sand (quartz as mineral). Data in columns A to C are from a well log, column D is background Vp for hydrate-free sediments, column G is various input parameters, column H is background modeled Vp (VPsh0) using the Timeaverage equation, and columns J to DF is a table of absolute velocity difference (modeled calibrated Vp measured Vp) for various gas hydrate saturations and porosities. The columns M through DE in Figure 1 are hidden. The actual script used to calculate J5 in the table is ABS((1/(C5*$J$3/ $G$7+C5*$J$2/$G$3+C5*$J$4/$G$17+(1-C5)/$G$11))*D5/H5-B5), where
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*Gas hydrate saturation estimated from well logs in KG basin with various resisitivity, density and pressure levels. Note that saturations estimated from methods 1 and 2 are same, and to estimate gas hydrate saturation using method 2 only column H (modeled Vp for Sh=0) is needed and not the velocity error table, however, method 2 can only be used with Vp, and when Vp is either modeled with an equation (the time-average equation or the Woods equation in this article) that can be rewritten for the forward computation of hydrate saturation in terms of Vp, density and porosity. It is recommended to use both Vp and Vs simultaneously if available, and in this case one will have to use method 1 to estimate gas hydrate. It is an example of Microsoft Excel scripts to calculate gas hydrate saturation. The estimated hydrate saturation will be different due to differences in 1) velocity modeling methods, 2) background models and 3) mineral/fluid properties.
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Figures showing locations of seismic profiles (with black lines) along which MCS data have been acquired recently in (a) Mahanadi and (b) KG basins along the eastern Indian margin. The identified BSRs have been marked by white. Red and green lines show the locations of seismic sections that exhibit representative BSRs in second figures.
The National Gas Hydrate Program (NGHP), under the auspices of the Ministry of Petroleum & Natural Gas (MoP&NG), GoI, has also been formulated in which the Oil & Natural Gas Corporation Limited, Oil India Limited, Gas Authority of India Limited, Directorate General of Hydrocarbons, NGRI, NIO, NIOT, Indian Institute of Technology at Kharagpur and Kanpur, and Indian School of Mines are carrying out research for geo-scientific investigation of gas-hydrates along the Indian shelf followed by technology development for production of gas from gashydrates. Gas-hydrates are mainly recognized by seismic experiment with the identification of an anomalous seismic reflector, known as the bottom simulating reflector or BSR, based on its characteristic features. The BSR is a physical boundary between sediments containing gasPage | 72
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The tight gas is considered an established and promising resource because of its inherent association with conventional hydrocarbon systems. Tight Gas is found usually associated with the existing oil fields as missed or bypassed zones or unexplored/unidentified areas in the same field or in a new area which have not been explored at all. It is an unconventional natural gas which is difficult to access because of the nature of the rock and sand surrounding the deposit. Because this gas is so much more difficult to extract than natural gas from other sources, hydraulic fracturing and directional drilling is necessary to produce the well. With permeability of the rock as little as one nanodarcy, reservoir simulation becomes important to optimize the spacing and completion of staged fractures to maximize yield with respect to cost. The term tight gas sands refers to low-permeability sandstone reservoirs that produce primarily dry natural gas. A tight gas reservoir is one that cannot be produced at economic flow rates or recover economic volumes of gas unless the well is stimulated by a large hydraulic fracture treatment and/or produced using horizontal wellbores. This definition also applies to coalbed methane, shale gas, and tight carbonate reservoirs. Tight sands produce about 6 tcf of gas per year in the United States, about 25% of the total gas produced. The Energy Information Administration estimates that 310 tcf of technically recoverable tight gas exists within the US, representing over 17% of the total recoverable gas. Worldwide, more than 7,400 tcf of natural gas is estimated to be contained within tight sands, with some estimates as large as 30,000 TCF.
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Growth of gas-based power plants: Abundant and assured supplies of cheap gas have led to the expansion of gas-based power plants in the country. In the last decade, electricity generated from gas-based plants has increased by more than 50% as power generators substituted coal with gas. Drop in electricity prices: Since 2008, wholesale electricity prices has slumped in excess of 50%, resulting in lower electricity costs for residential and industrial customers. Lower feedstock costs: US-based chemical and petrochemical manufacturers who use gas as a feedstock have amply benefitted from the decline in input costs. This has given them a competitive edge over players from other regions. In the previous decade, high feedstock prices resulted in many companies moving their operations to the Middle East and Asia. However, the trend has now reversed with many companies, including Exxon Mobil, Dow Chemical and Chevron Phillips Chemical, increasing their investments in the US chemical and petrochemical industry. Job creation: The increase in shale gas operations is creating various new job avenues across the country. The shale gas industry is estimated to have provided employment to more than 601,000 workers across the value chain in 2010. Key source of government revenues: The shale gas industry is emerging as an important source of government revenues. In 2010, the industry is estimated to have contributed around US$18.6 billion in taxes, including US$9.6 billion in federal taxes and US$8.8 billion in state and local taxes. This revolution has transformed the countrys outlook for energy supplies and has even dramatically altered the trade flow outlook of the global gas market. By 2030, shale gas is projected to account for
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7.2 - Characteristics
Some of the widely acknowledged truths about the shale gas industry in general and in India in particular are: a) - The current policy allows the oil companies to only produce conventional oil and gas from their authorised blocks. Since shale gas comes under unconventional gas, any testing or exploration of this gas would be impossible as it is not covered under the licence terms. A separate bidding would have to be set up as any unwarranted windfall would mean flouting the terms and the conditions under the license. b) - The Indian exploration and production sector (E&P) is smaller and less mature compared to the North American sector. c) - Production profile of shale gas sector is steeper and shorter than conventional fuels, i.e. the output of gas will be high in the first few years or so and then will fall steeply. Shale wells might have a life of 8-12 years, compared with 30 to 40 years for a conventional gas well. Even this may be overstated. d) - India lacks the technology and the knowledge required to extract gas from shale and would therefore need major foreign investment and investors. e) - It is difficult to estimate the cost of extracting shale gas: coupled with the use of expensive and specialist technology it should be expensive to develop a shale gas field. However, much of the cost also depends on the geology of the shale gas plays and the number of wells in the same play. f) - The shale gas sector in the United States developed at a fast pace due to the easy and lowcost access to the gas transport network, something India would have to work on as well. g) - Shale gas production in the United States developed largely in areas with low population and therefore disruption to the local community was minimal. In India, shale gas production could face opposition not only from landowners but also from local communities. Another important difference between U.S. and India and indeed every country around the world is that while the surface rights remain with the landowner, the sub-surface rights vest in the Government. Therefore, the government would be auctioning (leasing) blocks to the gas producer. Land acquisition is a state subject, so the fiscal policy would have to set out division of revenues between the Central and the State Government to remove political barriers.
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a) - The fiscal policy should include either a royalty tax or severance tax, apart from corporate income tax. These earnings should be shared between the State and the Central Government to incentivize the state governments participation in acquiring land. The earnings through tax will also help the Government to improve essential services and infrastructure. However, the Government should also be wary of exceedingly taxing economic rent. Taxes add to the overall cost of doing business and the mind-set of cashing in on the shale gas bonanza could spell doom for investments. b) - Alternatively, the Government could tax corporate income over and above the normal income tax that companies pay for their commercial activities, as has been done in Norway. Norway phased out royalties completely by 2006. In 1996 Norway figured out that it was impossible to get the design of royalty regimes right, when right means fair to both the taxpayers who own the resource and the private investors who put their capital at risk when invest in partnership with the state. Now Norways sovereign wealth fund earns more from the difference in the corporate income tax that oil and gas companies pay than it did from royalties. The fiscal regime in Norway ensures that the taxpayers lose no economic rent compared to the Canadian fiscal regime. c) - The Government should also tread carefully while considering tax exemptions. A front-end and back-end tax exemption together would eliminate the benefits of severance tax or royalty. Further, the shale gas plays are most productive in the first year and then production drops sharply. The government take would decrease if there is a tax holiday in the initial years and the risks in earning adequate revenue would increase.
d) - The government would also need the money to restore the society and the environment to its preshale gas development stage, to the extent possible. Much like the decommissioning fund that has been set up in several countries to avoid the liability shifting to the State after production stops, the Government should set aside a part of the revenues earned against any claims and liability in the future. This fund should also be ring-fenced against any insolvency claims. The fiscal policy could also stipulate provision of financial security if there is any doubt of the gas producer defaulting on its obligations. Page | 81
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India has huge shale deposits across the Gangetic plain, Assam, Gujarat, Rajasthan, and many coastal areas. Gas has long been found in shale across the world, but its extraction has been viewed as uneconomic because of shales low permeability gas does not flow easily through this rock. So, exploration for oil and gas has traditionally focused on limestone and sandstone, which have high permeability. India contains a number of basins with organic-rich shales, mainly the Cambay, Krishna Godavari, Cauvery, and Damodar Valley basins. There are some other potential reserves such as the Upper Assam, Vindhyan, Parinhita- Godavari, and South Rewa, but it was found that either the shales were thermally too immature for gas or the data with which to conduct a resource assessment were not available. Shale basins in India are geologically highly complex. Many of the basins, such as the Cambay and the Cauvery, have horst and graben structures and are extensively faulted. The prospective area for shale gas in these basins is restricted to a series of isolated basin depressions (subbasins). While the shales in these basins are thick, considerable uncertainty exists as to whether (and what interval) of the shale is sufficiently mature for gas generation. Shale basins in the Indian subcontinent are geologically complex. The tectonic settings of these basins vary from thrust belts in the north and northeast to rift basins in western and central India respectively. Shale gas/oil exploration in India is in its infancy, especially when compared to the United States. In India, there are a number of basins with proven shale resource potential that require high-resolution data evaluation to assess their prospectively. Recently, ONGC drilled and completed Indias first shale gas well: RNSG-1 in eastern India. The well was drilled to a depth of 2,000 meters and reportedly had gas shows at the base of the Permian Barren Measure Shale. Recently, ONGC drilled and completed the Indias first shale gas well, in northwest of Calcutta in West Bengal. The well was drilled to a depth of 2,000 meters and reportedly had gas shows at the base of the Permian Barren Measure Shale. Two vertical wells were previously tested in the Cambay Basin and had modest oil and shale gas production in the shallower, 4,300 foot thick intervals of the Cambay Black Shale. Overall, ARI estimates a total of 290 Tcf of risked shale gas in-place for India. The technically recoverable shale gas resource is estimated at 63 Tcf in India. These estimates could increase with collection of additional reservoir information. Cambay Basin, India - The upper Paleocene to middle Eocene Cambay Shale is interpreted to be a major source rock in the Cambay Basin. Cambay Shale was deposited in deltaic and nearshore marine environments in the northern and central parts of the basin, and in deeper marine environments in the southern part of the basin. Therefore, this source rock presumably contains greater amounts of type II kerogen southward in the basin. Thermal maturity increases from north to south across the basin. Although the Cambay Shale is in the oil-generation window in the north, it is in the gas-generation window in the south. At the base of the shale,
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Damodar Valley Basin, India The Damodar Valley Basin is part of a group of basins collectively named the Gondwanas, owing to their similar dispositional environment and Permian-Carboniferious through Triassic stratigraphic fill. The Gondwanas, comprising the Satpura, Pranhita -Godavari, Son-Mahanadi and Damodar Basins, were part of a system of rift channels in the northeast of the Gondwana super continent. Along with the Cambay Basin, the Damodar Valley Basin is a priority basin for shale gas exploration by the Indian government. In late September 2010, Indian National Oil and Gas
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Hydraulic fracturing stimulation is the most extensively accepted tool used for the development of shale gas reservoirs. This is due to the fact that shale reservoirs have a very tight nature with low permeability and to make them flow at an economical rate stimulation by hydraulic fracturing is necessary. The ultimate aim is to increase the productivity index. This method helps to gain vertical connectivity amongst various gas bearing layers and allow easy connectivity. The primary differences between modern shale gas development and conventional natural gas development are the extensive uses of horizontal drilling and high-volume hydraulic fracturing. Although shale gas has been produced for more than 100 years in the United States, the wells were often marginally economical. Higher natural gas prices and the recent advances in hydraulic fracturing and horizontal completions have made shale gas wells more profitable. Shale gas tends to cost more than gas from conventional wells, because of the expense of massive hydraulic fracturing required to produce shale gas, and of horizontal drilling. However, this is often offset by the low risk of shale gas wells. It has been a belief that shale releases fewer greenhouse gas (GHG) emissions than other fossil fuels. However, there is growing evidence that shale gas emits more greenhouse gases than conventional national gas, and may emit as much or more than oil or coal. Methane is a very powerful greenhouse gas, although it stays in the atmosphere for only one tenth as long a period as carbon dioxide. Recent evidence indicates that methane has a global warming potential that is 105-fold greater than carbon dioxide when viewed over a 20-year period and 33-fold greater when viewed over a 100-year period, compared mass-to-mass.
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Non-Technical Challenges Many companies operating in the upstream gas industry in Asia and Middle East are interested in the outstanding success achieved by the USA and Canadian tight and shale gas producers. It seems almost miraculous that companies can obtain economic gas production rates from rocks with permeability measured in nanodarcies - so low in fact that it is impossible to determine it accurately The companies in this region have now realized that they may be sitting on top of huge untapped gas reserves that had previously been evaluated as sub-economic. But there exist certain non technical issues or regulations which bound them to produce gas from these areas. Some of the vital issues are as follows: 1. Cost of field development operations. Cost of drilling and completing in Asian countries is 2.5 to 5 times higher than similar operations in USA and Canada. This may be due to less infrastructure and government support in terms of subsidies. 2. Lack of fiscal incentives and infrastructure. Unlike the USA and Canada, most countries have so far not offered significant fiscal incentives. 3. Inability to experiment with wellbores. Reservoir development in western countries is built around the need to experiment with the wellbore - a process of trial and error. But Asian based companies find this concept difficult to grasp. Here much of the engineering is done retroactively, based on the actual performance of the well bore, rather than up-front before the well is drilled.
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7.5 - Draft Policy for Exploration and Exploitation of Shale Oil and Shale Gas in India
*) - India has several Shale formations indicating the presence of Shale Oil/Gas. Preliminary estimates suggest that fairly thick sequences with high shale gas potential are extensively present in the oil, gas and coal sedimentary basins such as Cambay, Gondwana, KrishaGodawari on land and Cauvery on-land. Directorate General of Hydrocarbons (DGH) has initiated steps to identify prospective area for Shale Gas exploration and acquisition of additional geo-scientific data. With new exploration technologies, such as multistage hydraulic fracturing or fracking combines with horizontal drilling, Production of shale gas has become easier and economic, contrary to the different countries has the potential to bring about drastic changes in composition of their energy basket. *) - A recent study (April 2011) by Energy Information Administration (EIA), USA indicates that there is a significant potential for Shale Gas that could play an increasingly important role in global natural gas markets. The Report assessed 48 Shale Gas basins in 32 countries. India is one of the countries covered in this Report along with Canada, Mexico, China, Australia Libya, Brazil etc. The initial estimate of technically recoverable shale gas resource in these countries (5,760 TCF ), and USA (862 TCF) put together works out to 6,622 TCF. This study has assessed risked gas-in-place of 290 TCF with technically recoverable resource of 63 TCF for 4 out of 26 sedimentary basins in India. In view of the advances made by the USA in exploration and recovery of shale oil and gas resources, MoP&NG has entered into and MOU with the United States Geological survey (USGS). In a study conducted by the USGS in 2011-12, technically recoverable resource of 6.1 TCF has been estimated in 3 out of 26 sedimentary basins in India. The study also indicates potential for shale oil in Indian basins. Further, process of identification of potential shale oil/gas resources in 11 other basins has also been initiated. *) Certain issues related to I. Optimal Exploitation of Shale Gas/ Oil requires Horizontal and Multilateral wells and Multistage Hydraulic fracturing treatments of stimulate oil and gas production from shale.
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National environment policy 2006 para 5.2.5 (ii) Point (i) action plan states as under: Suitable sites for dumping the toxic waste material may be identified and remedial measures may be taken to prevent the movement of the toxic waste in the ground water. Proposed Policy *) - In line with the policy of the Government of India attracting private investment to move towards self reliance in the indigenous production of oil and gas sector, it is important to have a framework to facilitate and regulate Shale Oil and Gas Exploration and Exploitation. This initial technical study undertaken in the country has indicated presence of Shale Gas as a hydrocarbons resource that can be commercially explored and exploited.
*) - The offer of acreages under this policy would be made through an open International Competitive 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 and Exploitation of Hydrocarbons i.e. conventional Oil and Natural Gas, Coal Bed Methane (CBM), tight gas and Shale Oil and Gas from the same contract area by same/ different operators will be governed by the relevant policy of the Government of India. As such, in case of acreage an offer for shale oil / gas overlaps or falls within an existing Oil and Gas
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*) - 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.
*) - Assignment of Interest would be permitted, as in NELP. *) - All data gathered during the course of operation shall be the property of the GOI. *) - Safety aspects will be regulated as per existing regulations / OISD guidelines and practices, as in the case of Oil and Gas and CBM operations. New rules / guidelines, whenever notified by competent authority, in this regard, will also become applicable. *) - Ministry of Environment and Forest (MOEF) will prescribed a panel of agencies, competent to carry out the Environment Impact Assessment for the blocks allotted to successful bidder. *) - Govt. of India will seek in-principle approval of the State Governments concerned, for the areas of shale oil / gas blocks, prior to bidding, including facilitation in the matters of land acquisition and water management issues. *) - Govt. of India will ensure all statutory, regulatory and security clearances are obtained before bidding. *) - Exploration of Shale oil / gas will be accordance with the law of the land, including the Water (prevention and control of pollution) act, 1974, Air (prevention and control of pollution) act, 1981 and the overall ambit of environment protection measures.
*) - The fiscal terms to be offered to the investors need to be adequately balanced in terms of risks and rewards associated with the exploration of shale oil/ gas, being unconventional and cost intensive in nature. It should be globally completive and comparable to terms offered for similar operations elsewhere.
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Bidding and Approval System *) - Blocks for shale oil /gas would be identified by the MoPNG and the relevant data package and information docket for each block so identified will be made available for interested companies for inspection and purchase. *) - The size of the blocks and sub-surface operational window of depth will be determined by MoP&NG keeping in view the resources in-place, the prospectively of shale, location of the resource in relation to human habitations and economics of scale in Shale Gas operation along with other relevant factors. *) - The identified blocks will be advertised for international competitive bidding. Participation of the State will not be mandatory. Requisite promotional exercise would be undertaken to apprise the prospective bidders with the proposed fiscal and contractual arrangement.
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The fiscal policy could include either a royalty tax or severance tax, apart from corporate income tax. The earnings should be shared amongst the State and the Central Government to incentivize the state governments role in acquiring land. These earnings through taxes will also help the Government to improve the required services and infrastructure. However, the Government should also be aware of highly taxing economic
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A favorable regulatory framework should also be devised that will invite companies to invest in shale gas activities. A liberal fiscal regime should be considered for shale gas operations as the industry is still in its early stage of development and the cost of operations are going to be higher than conventional oil and gas operations. For low
producing wells over a significant period of time or when the production from any particular field is uneconomical for a producer, then back-end exemption should be followed. If the prices are high, then taxes should be paid to the government. The governments assistance to public and the private sector oil and gas companies in importing the required shale gas technology to India by providing incentives. Along with regulatory framework a catalyst and supporting favorable pricing mechanism for developers of shale gas, CBM, Gas Hydrates and Tight Sand Gas operations are required which would allow them to invest and produce natural gas in India and at the same time earn profits from the region. Cost of production in India is likely to be higher, given the relatively unknown and unexplored geological terrain, water disposal costs, inadequate domestic service industry and other expenses. Gas gathering and processing costs are also likely to be on a higher side. However, operational costs have significantly reduced in the US with the application of new and advanced technology. Lowest royalty burden does not make a jurisdiction more attractive for investment. The timing of when royalties are to be paid to governments and high royalty rates impact the investment decisions. The primary objective of Indias Fiscal regime should be to have competitiveness in the shale gas development.
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As the nature and locations of CBM, Gas Hydrates, Shale Gas and Tight Sand Gas vary separate departments and regional organizations should be framed according to the potential of the resources.
http://www.eia.gov/analysis/studies/worldshalegas/pdf/fullreport.pdf. 8. Dizard, John. "The shale gas fairytale continues". 18 July 2010. Financial Times.http://www.ft.com/cms/s/0/9e6c7b40-9103-11df-b29700144feab49a.html?referrer_id=yahoofinance&ft_ref=yahoo1&segid=03058. 9. Money Control, 29 March 2011 Shale Gas in India Closer to reality.
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