OIL Joins the Hunt for Shale Gas
Oil India Limited ("OIL") hopes to drill its first shale gas well by this year-end in case surveys confirm prolific reserves of clean gas in eastern sedimentary basin.
“OIL has started a pilot project to identify shale gas resources in Upper Assam,” said an official privy to the development. A research and development (R&D) unit for working on shale gas has also been set up at the company’s headquarters in Duliajan.
The state owned explorer is in process of selecting an international consultant to carry out the preliminary survey, the official said. The tender for selection of global consultants for finding shale gas was closed on January 25. The contract will be signed within the next few weeks, he added.
If the initial finds are prolific, the explorer plans to drill the first shale gas well by end of 2011. “Drilling shale gas well is expensive when compared to crude oil. So, first we will review the reserves. If the project seems to be commercially viable, OIL will start exploratory drilling,” said another company official associated with shale gas initiative.
There are also environmental issues while drilling for shale gas, he added. A horizontal well needs to be drilled and large volume of water is required in the process. The proper disposal of water after it is used inside the well is one of the main concerns.
OIL chairman N M Borah confirmed that the explorer has started shale gas hunt in India. Asked about the estimated resources in the country, he said it is not possible to come at a conclusion as no explorer has ever commercially produced shale gas in India.
OIL is also hunting for shale gas blocks overseas. Borah revealed during OIL’s last investor conference call that company is looking for good merger and acquisition opportunities, including shale gas, in Canada.
Recently, Canada’s Americas Petrogas Inc (API) and cooperative fertilisers giant, Iffco have invited OIL to join hands for exploring shale gas in Neuquen Basin of Argentina. API has discovered potential of unconventional shale gas resource of 100 trillion cubic feet (tcf) in nine blocks of the Neuquen Basin.
Similar to crude oil, natural gas and CBM blocks, India also plans to auction shale gas blocks for exploration by this year-end. “Resource assessment, policy framework and legislative changes are in progress (for the auction),” commented S K Srivastava, head of oil regulator, Directorate General of Hydrocarbons.