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India is at a stage when people are looking for a magic wand to solve all of the country's seemingly insurmountable problems. One of the biggest is powering the 1.2 billion population 24x7.
A 2012 report by the US International Energy Agency (IEA) estimated that nearly 25 per cent of India's population lacks basic access to electricity, while electrified areas suffer from rolling electricity blackouts.
The Government seeks to balance the need for electricity with environmental concerns from the use of coal and other energy sources used to produce that electricity. Coal is a hot topic in India today as, with huge reserves, the country still is fending off private and foreign investors from accessing the lucrative sector. So, the next available and clean resource that can help keep power plants running is natural gas.
Surprisingly, despite the country reeling under a power crisis, gas power stations are idling for lack of feedstock. Power stations using gas accounted for nearly 10 per cent of India's 225 gigawatts (GW) of electricity generated in June, while coal's share was nearly 60 per cent.
India has 64 gas-fired power stations, according to the Global Energy Observatory website. The Government has frozen the construction of new gas plants until 2015-16 because of gas shortages, and existing plants are operating below capacity on expensive imported liquefied natural gas (LNG).
"Approximately 22,000 MW (megawatts) of gas-based power generation plants are at present idling," said Amulya Charan, an independent adviser on energy infrastructure and finance in a Reuters interview recently.
Importing expensive LNG from countries such as Qatar and then subsidising power for households and agriculture is obviously not a sustainable model.
So what can the country do apart from turning to coal at this crucial growth phase? Will shale gas save the economy like it did in the US?
Many reports in the last month have suggested having an investor-friendly regime to invite international players to look for shale in India. But is it going to be worth our while, or are we wasting our time here? India's shale reserves, according to the EIA (US Energy Information Administration), stands at 96 trillion feet, estimated to translate into around 26 years of the country's gas demand.
Gas demand in the country is expected to jump to 473 million cubic metres a day (mmscmd) by 2016-17 from 286 mmscmd in 2012-13. But shale gas can only be explored by state-owned oil and gas exploration agencies, who haven't demonstrated any particular technical expertise in drilling for shale. Shale gas exploration requires advanced technical expertise in hydraulic fracking, the most commonly used method for recovery of the gas.
The technology was developed in the 1940s and has since helped produce more than 600 trillion cubic feet of natural gas and 7 billion barrels of oil. The technique is used to create spaces in the rock pores deep underground to release oil and natural gas so it can be brought to the surface.
Hydraulic fracking has been greatly successful in the USt mainly for two reasons.
One, in the US, the natural gas department is exempt from scrutiny for chemical injection in the ground (it exempts companies from disclosing the chemicals used during hydraulic fracturing) and two, the citizen or resident owns the resources that lie beneath the ground.
The US is a special case because in no other country is a citizen allowed to own the minerals that lie beneath the ground.
These favourable `loopholes' make it easy for companies to frack even close to residential localities, which could explain the stupendous success shale gas operators in the US have found.
Other countries such as the UK and Saudi Arabia are pushing ahead with shale exploration but have had little or no success so far. This is despite technology majors such as Halliburton and Schlumberger setting up technology centres in Saudi Arabia. China, another power hungry nation, is struggling to commercialise its shale reserves.
Shale may have been a game-changer in the US but the technology and method for recovery are highly complex and, at times, questionable.
What lies beneath
Hydraulic fracking, as the name suggests, requires millions of gallons of water for gas recovery. India's environmental agencies may not allow the usage of such large quantities of water. Besides, companies need expertise in the technology to be able to recover shale gas profitably.
In India, if the legislation over the next couple of months does allow for hydraulic fracking, how is it going to done?
Where exactly are the shale gas deposits in India is the first obvious question to ask. There is not much publicly available information on this.
It is only the EIA that throws some light on this: it says most shale gas could be in the basins of the Cambay and the Cauvery.
Overall, in upstream exploration, the Oil & Natural Gas Corp (ONGC) and Oil India Limited hold 356 blocks, of which 176 possibly could have shale gas deposits.
Are these companies going to invest in their own technology to look for shale? Are international oil majors who have had limited success with shale in other countries barring the US going to show interest in India's rather difficult shale terrain?
These are issues that require a lot of discussion over the next couple of months.
Given India's rising energy demands, it seems a little naive to wait around for a shale gas boom when abundant coal reserves lie literally beneath the ground.
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