DGH finds shale oil prospects in N-E states

Will begin a feasibility study in Assam, Arunachal Pradesh

India plans to embark on a programme to tap the shale oil reserves in the country after the directorate general of hydrocarbons (DGH) found substantial reserves of the gas in Assam and Arunachal Pradesh.

Hydrocarbon found in the form of shale gas has over the past few years transformed the energy scenario for the world’s biggest consumer, the US.

Oil shales are usually fine-grained sedimentary rocks containing large amount of organic matter from which significant volume of shale oil and combustible gas can be extracted by destructive distillation.

DGH prepares to begin a techno-economic feasibility study for extraction of shale oil. “We had initiated a study in 2007 to evaluate the reserves along with government-owned Mineral Exploration Corporation Ltd (MECL) and France-based BRGM. The report has been submitted to us and we are assessing it. The report points to substantial reserves,” said a DGH official, who declined to comment on the detail of reserves.

Earlier estimates had put the shale oil reserves in the north-eastern states at 137 billion tonnes with a recovery factor of 10-20 per cent.

Indian energy companies have shown interest in developing this resource. While Reliance Industries Ltd (RIL) recently acquired a 40 per cent stake in Atlas Energy’s Marcellus Shale acreage in the US, the Y K Modi-promoted Great Eastern Energy Corporation Ltd is keen to take part in the shale business.

Shale gas accounts for 15 per cent of the US’ gas production. Companies worldwide are increasingly looking at investing in shale gas, which they consider as a lucrative business.

DGH has an agreement with oil refining and marketing company Indian Oil Corporation, under which the latter will carry out detailed characterisation of shale oil, and assess its feasibility for further processing. “We have drawn samples from the DGH and they are being characterised. The shale oil needs to be upgraded for processing. We are working to find a route for recovering oil,” said Anand Kumar, director (research and development), Indian Oil.

After recovered from the shale, the product is called synthetic crude, or more simply, syncrude. In the two north-eastern states, shale oil is found along with coal.

Currently, coal mining is actively pursued in this area. The associated shale is dumped as waste. “Once the techno-economic feasibility is done, there will be framing of legislation for simultaneous extraction of coal and oil shale deposits. Since the oil shale occurs inter-bedded with the coal deposits, it follows that the oil shale industry will be supplementary and complementary to the coal mining industry. An environmental impact assessment of such extraction is also needed,” the DGH official said.

A model production-sharing contract will also be required before delineation and auction of the shale oil blocks.

Oil shales are widely distributed around the world — more than 600 deposits are known, with proved resources of the associated shale oil totaling almost 500 billion tonnes, or approximately 3.2 trillion barrels. Two-thirds of the world’s oil shale resources are located in North America alone.