Harnessing the Indian Shale Gas Potential Strategic Concerns & Points to ponder

1. Harnessing the Indian Shale Gas Potential Strategic Concerns & Points to ponder Dr.V.K.Rao IUGF2013

2. Disclaimer The views and opinions expressed in the presentation material are of speaker/author only and not necessarily of the Organisation he is working

3. Concept Transformation In pursuit of conventional Oil/Gas Exploration over the years, Geologists regarded Shales as: Source Rock by virtue of the richness of organic material content, its thermal maturity, hydrocarbon generation potential and geographic spread over large areas Cap Rock by virtue of their impermeable nature and compactness thus acting as good seal

4. World Shale Gas Potential (Tcf) 5661 4569 3962 3856 2587 1404 1381 1225 1069 1042 624 396 Total: 22,016 Tcf GIP Rogner,HH Modified

5. Middle East, ,Former Soviet Union &Asia Pacific are excluded

6. Strategic Compulsions Rapidly growing Gas markets Widening Demand-Supply gap India has high Natural Gas prices Increasing dependency on LNG imports Nascent CBM industry Rising Energy Consumption Transnational Pipelines-indecisions & impediments Rising Energy Import bills with alarming consequences

7. In Asia-Pacific Region the gas market rise is around 6.5% p.a. The world average is around 2.5 % only While the India Gas market rise is more than 7% India-Gas Market Rise

8. EXPANDING GAP……. Natural Gas Supply cannot outpace Growing Demand 426 303 MMSCMD 155 136

9. The Indian Energy Scenerio India’s Energy Consumption has been increasing at a rapid rate due to population growth and economic development(GDP Growth rate @8% pa) Coal ,Oil and Gas are Primary Energy sources Although intense efforts are made to increase indigenous Oil/Gas production,we could meet only <30% of our domestic requirement through conventional Reservoirs This widening gap between demand and Supply coupled with volatality of oil prices can be reduced through unconventional gas production as it has huge potential in Indian Context.

10. Natural Gas Demand-Supply Projections for India

11. Source :McKinsey & Co. presentation slide

12. 12-14$ /MMBTU

13. Growing Dependancy on LNG Imports (MMTPA) LNG Imports are estimated to cost US$ 21 billion by 2021

14. CBM- nascent stages A total 33 Blocks are awarded in 4 Bid Rounds Total CBM area covered 18,540 sq kms Prognosticated Resources 65.7 tcf Only 8.39 tcf inplace is established Commercial production of 0.25 MMSCMD only is achieved till date Projected Production of 7.4 MMSCMD by 2014-15

15. Transnational Pipelines

16. Transnational Pipe lines

17. As per working group of Petroleum & Natural Gas ,Govt.of India • the Domestic Gas Production during the period 2016-17 to 2021- 22will not increase significantly • the demand for gas in the country will be met by import of LNG to the tune of 130 MMSCMDi.e. 40% of then demand in 2013-14 and will increase to 184 MMSCMD i.e. 45% of then demand expected in 2016-17. • Thereafter, the country may import both LNG and cross-country piped gas to the tune of 258 MMSCMD or 57% of then demand in 2017-18 to2021-22. • As per World Energy Outlook Report(2009)-India will be the only country in the world investing 6.0% of its GDP on Oil /Gas imports • This is a very serious situation as during the period 2025-2030 the import of Crude Oil may reach 90% and import of Natural Gas can be between 54-60%. • Indian Economy can not sustain the projected Energy imports • This may have disastrous consequences for country’s Security and Foreign Exchange position.

18. Projection of Demand & Import Source: Dr. A. Chandra

19. Points to Ponder Varience in Resource estimates Analogy with US Basins Do we need a separate Shale gas Blocks bid Round and Shale Gas Policy?

20. Varience in Resource Estimates Agencies and Estimates

21. Potential Shale Gas Basins 1. Cambay Basin 2. Gondwana Basin 3. Assam-Arakan Basin 4. Krishna-Godavari Basin 5. Cauvery Basin 6. Vindhyan Basin 7. Bengal Basin 8. Rajasthan Basin

22. Shale Gas Resource Estimates Schlumberger Resource:600-2000 Tcf McKinsey Report Recov:100Tcf Other Experts Resources: 540 Tcf 8 Potential basins Recov:140 Tcf Eastern NGRI, India Resources:527 Tcf Recov:260 Tcf Shale Gas Estimates EIA ,USA Only 4 Basins studied Risked GIP:293Tcf Recov:63 Tcf Petrotech Veteran Forum Recov: 130 Tcf 5 Basins USGS,USA Only 3 basins studied Recov: 6.1 Tcf Damodar Valley Basin(Pilot Wells) :48 Tcf (GIIP)

23. EIA study - India Estimates in Jan 2011, quote as stating Indian resources in the range of 600-2100 TCF

24. Shale Characteristics of Cambay Basin Discovered oil & Gas Fields and Proven Source Rock Potential * Source: US EIA Report

25. Shale Charecteristics of Krishna-Godavari Basin * Source: US EIA Report

26. Shale characteristics of Assam-Arakan Basin * Source: US EIA Report

27. Shale Characteristics of Cauvery Basin * Source: US EIA Report

28. Gondwana Basins Lower Permian to Triassic age Gondwana sediments consisting of fluviatile to Lacustrine deposits of sandstones, shales and coal measures Resource play is Barren Measure shales TOC : 4-10% T max : 440-480 VRo : 1-1.2% Kerogen : Type III

29. Shale Characteristics of Barren Measure Fm. * Source: US EIA Report

31. Shales in Stratigraphy Ganorgarh and Sirbu shales Chakaria Olive shales

32. Shale characteristics of Vindhyan Basin

33. Why are they Vary? • Various Agencies have projected the Resources based on their perceptions of Indian Shales. Thus The resource prognostications are varied and are subjective. • Lack of Shale gas specific laboratory investigations/data • Crucial parameters on Indian shales in terms of their heterogeneity, gas content, TOC, VRo, diagenesis, brittleness etc are not available • Shale isopachs, dispositions and TOC ,VRo and Gas concentration maps are not prepared for many potential basins • No pilot wells /parametric wells are drilled to explore shale gas in all our basins

34. Commendatory Factors Thick shale sequences in Sedimentary basinal areas Comparable TOC & VRo values to producing US Basins Proven source rock characteristics for discovered oil& Gas fields in producing Basins Demonstrated case studies of shale gas finds Estimated Resource Potential - Substancial Rapidly growing economy

35. Analogy of USA & Indian Basins KG Bengal Barnett Haynes Vindhya Cambay Cauvery Marcellus Woodford Fayettelle Gondwana Eagle Assam Arakan

37. Shale Gas: Risking Parameters

38. Shale Gas: Risking Parameters

39. Analogy with US Basins

40. Do we require a Separate Shale Gas Policy?(Vertical Operational window) • “Specific Operational window in terms of subsurface vertical depth for shales would be indicated “ (Draft Policy) • The occurrence of geologic Formations in the subsurface are governed by many factors notable among them are: - Dip of the Formation - Fault patterns - Facies changes - Intertonguing features - Erosional aspects - Transgressive &regressive environs • These factors affect the subsurface formations over geographic areas • it is difficult to understand how the vertical operational window for Shales would be defined /delineated in a given block area. • Thus the statement is geologically untenable

41. Do we require a Separate Shale Gas Policy?(Multiple policy regimes) • “Different policy regimes govern different operators for simultaneous exploration & exploitation of conventional & unconventional hydrocarbons in the same block area” (Draft Policy) • Geologic formations can occur intertwined or shale/sand /siltstone alterations within a given interval • It is difficult to foresee how simultaneous operations by different operators can take place under different regulatory & fiscal regimes . • This is technically untenable concept

42. Do we require a Separate Shale Gas Policy?(Focussing priorities) • Major Concerns in Shale Gas Exploration pertain to three significant aspects Viz; - Environmental Externalities - Water management - Land acquisition • Shale Gas exploration can be permitted in any exploration block(NELP or Pre-NELP) subject to strict compliance of environmental externalities and adherence of the laws of land • Innovative policies Viz; Equity to Land owners • It is time that the Policies be focussed on maximising the exploration and attendant discoveries rather than maximising on profits

43. Learning from International Licensing Regimes • No specific federal shale gas extraction policy exists in USA nor in Poland, Germany, France • However various environmental acts exist • The authorities are responsible for regulating oil /Gas exploration activities to oversee many related aspects viz:Well spacing, Hydraulic fracturing, Water management environmental code etc • In many countries exploring shale gas , the authorisation & permit is governed by legislation for E & P activities (conventional & unconventional) • In short, shale Gas exploration need not have any separate Policy or bid round, as it is an integral activity of hydrocarbon exploration

44. Closing Remarks India has strategic compulsion to explore and develop shale gas dictated by its widening gap between supply and demand due to rising energy consumption and economic development The thick shale sequences with proven source rock characteristics in many sedimentary basinal areas is indicative of huge shale gas potential. The Resource estimates vary based on different perceptions of Indian Shales contributed by lack of sufficient shale gas specific data .This data gap needs to be filled up fast The focus should be to accelerate Shale gas exploration in the country by forging partnership with technologically advanced explorers Separate shale gas exploration policy may not be needed as shale gas exploration is an integral part of hydrocarbon exploration. Strict regulatory and environmental legislations can govern the activities Let us focus on maximising the Exploration and discoveries rather than maximising the Profits

45. Thank you…..