Lack of uniformity in clearance of proposals hurting shale explorers

Investment of over $2 bn by Great Eastern rejected, despite Cabinet giving nod to uniform licensing

Lack of clarity on shale gas, despite the Cabinet clearing the uniform licensing policy for oil and gas exploration, seems to be hurting investors in the country.

A shale gas exploration plan, with Investment to the tune of $2 billion over a period of 10 years by London Stock Exchange-listed Great Eastern Energy Corporation (GEECL), has now been rejected by the ministry of environment and forests (MoEF).
 

The company is expected to have estimated gas reserves of around 9.25 trillion cubic feet (tcf) – including 6.63 tcf of shale and 2.62 tcf of coal bed methane (CBM) – in its Raniganj (South) block.
 

However, its proposal to explore shale has been rejected by the MoEF on July 2, citing that the production of CBM gas and shale gas drilling are technologically different activities. This is despite the proposal being cleared by the environment appraisal committee (EAC). But a similar proposal for simultaneously exploring shale and CBM by Essar Oil and Gas Exploration and Production (EOGEPL) was cleared by the ministry in May 2019. Essar is also expected to have shale gas potential of around 1.6 tcf, for which the company may invest around Rs 7,000 crore.
 

Interestingly, the Union Cabinet had allowed oil and gas producers to explore shale oil and gas and CBM under existing contracts, as a step towards unlocking the unconventional hydrocarbon potential in the country.

 

"There should be some uniformity in terms of clearance of proposals. The environment ministry should not be a roadblock for such investments when the Cabinet has already cleared the uniform licensing policy,” said a person aware about the development. An official told Business Standard that the government may reconsider the proposal by GEECL. The environment clearance for the GEECL block was given in November 2011. The company’s current request is seeking an amendment in the environment clearance for drilling 20 exploratory wells of shale up to a depth of 3,000 metres, out of the total 200 approved wells.
 

The EAC cleared this proposal in October last year. If the ministry does not reconsider the proposal, the company will have to approach the state governments, as such projects are treated as B2 projects (where states can give the approval) since January 2020, said a person close to the development.
 

On the other hand, as per the plan lined up by Essar, it wanted to drill 20 wells for shale exploration up to a depth of 3,000 metres, out of the total 650 approved wells. With the amendment of the shale exploration, the Essar proposal was given an extension for three years by the same ministry.
 

In preliminary studies by the government, ‘in place’ probable shale gas resources in India is in the range of 100-200 tcf in five sedimentary basins.