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Shale gas in India - an excellent news in the midst of shameful scandals  

India’s first natural gas well targeted at shale has been drilled by ONGC and the whisper numbers are already in. The well was a success and geologists and engineers are already pegging the country’s resources at somewhere between 600 and 2,000 trillion cu ft (tcf) of potential gas. That is equal to about two centuries’ worth of gas at the country’s current consumption rate. Platts has been covering the shale ‘revolution’ for more than five years in the US.

If India’s experience parallels that of the US, a few things would happen quickly in the next five years. The first is psychological: like the US, India would transform its ‘gas state of mind’ from thinking that it is chronically short of natural gas resources to seeing itself as a natural gas powerhouse. The first part of this change will most likely be seen in the estimates of India’s natural gas resources, just as occurred in the US. In 2007, Platts editors were sitting in a conference room in a Pittsburgh, Pennsylvania, hotel when Terry Engelder, a Pennsylvania State University professor and the socalled ‘father’ of the Marcellus Shale field — now thought to be the world’s second-largest gas basin behind Iran’s Pars field — surprised everyone.

He said that after looking at early drilling results from independent producers, he was going to change his estimate of the field’s gas in place. Dr Engelder, who spent his career studying the geology of the Marcellus, had originally estimated that the Marcellus contained 15 tcf of gas in a field stretching diagonally southwest across the US states of New York, Pennsylvania , West Virginia and Ohio. That afternoon, he changed the game: the Marcellus, he said, had 500 tcf of gas ready to be recovered. And with that announcement, the race was on.

Landsmen patrolled the farms and villages of rural Pennsylvania , signing farmers to cheap leases of $50 per acre, leases that now sell for thousands of dollars as ‘supermajors’ such as ExxonMobil, Chevron and Royal Dutch Shell buy into plays they neglected in the last decade.

First lesson learnt:

The gas reserve numbers will get larger, not smaller. Shale rock is fairly common but the countries that can capitalise on the resource , which requires an industrial scale of drilling, are not Poland or Germany, but rather continent-sized countries with legal and environmental regimes that cover hundreds of square miles of territory. In other words: India, China and the US. Only those countries have feasible ability to scale up shale gas production and its thousands of wells.

Second lesson learnt:

Decades-long pipeline projects, originally designed to bring gas from huge resources to countries chronically short of gas pale by comparison and fade to the background or die. In other words, most likely, the India-Pakistan-Iran pipeline will die. Based on the US experience , it would appear to make no sense when India has plenty of gas. For example, the US parallel, the Alaskan Gas Pipeline — designed to bring natural gas from Alaska’s North Slope to the lower 48 states — is now dead in its tracks.

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