Fracking Abroad
Can India Unlock Its Shale?

An Indian oil company hopes it can do what, to this point, only American firms have been able to do: profitably tap shale reserves. Bloomberg reports:

Essar Oil Ltd. has approached the government for permission to further explore shale formations in its eastern India coal-bed methane block as part of its effort to maximize the production of unconventional resources.

The company’s current production of coal-bed methane, which generates a large volume of water, can complement shale gas exploration, which involves blasting water, sand and chemicals underground to release fuel, according to Manish Maheshwari, chief executive officer of Essar Oil’s exploration and production business. […]

Essar Oil’s optimism about shale production from its Raniganj block in West Bengal has been further boosted by a streamlined government hydrocarbon policy announced in March that allows companies to explore and produce for all forms of hydrocarbons in a designated area under a single license.

The U.S. Energy Information Administration (EIA) estimates that India has 96.4 trillion cubic feet (tcf) of unproven, technically recoverable shale gas—a far cry from America’s estimated 622.5 tcf, but still a massive and as yet untapped resource. The block that Essar Oil is targeting is believed to contain 1 tcf of shale gas, and by combining fracking operations (a water intensive process) with coal-bed methane projects (that produce plenty of water) already underway, the company hopes that some natural energy extraction synergy could make Indian shale production viable even during a time of relatively low hydrocarbon prices.

But India still has alot to do if it wants to follow America’s sterling example. If we’ve learned anything over the past few years about the U.S. shale boom, it’s that it’s terribly difficult to replicate. The United States had a unique combination of so many different necessary variables for fracking to take off: mineral rights gave property owners incentives to sign off on drilling; favorable “wedding cake” geology made it easier to drill horizontally; a deep pool of capital investors was willing to take risks on highly uncertain projects; and low population density made NIMBY concerns less problematic. Over the past two years we’ve learned of another advantage the U.S. shale industry had: it came up at a time when oil prices were consistently above $100 per barrel.

Shale oil and gas deposits exist all over the world, but to date the U.S. is the only big commercial producer of these hydrocarbons. That won’t be the case forever, but it won’t be easy replicating the American experience. That won’t stop companies like India’s Essar Oil from trying.

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