ONGC to put India on shale gas exploration map on Tuesday

State-controlled explorer to acquire 175 blocks in three phases, Oil India 15

India will begin its first commercial exploration of shale gas — natural gas that is found trapped within shale formations below the earth surface — on Tuesday, with state-run Oil and Natural Gas Corporation (ONGC) launching drilling operations at Jambusar near Vadodara in Gujarat.

Petroleum Minister M Veerappa Moily would be present on the occasion, a day after he meets investors in Mumbai.

The policy guidelines on the exploration and exploitation of shale gas and oil by national oil companies under nomination regime is already in place after the cabinet cleared it in September. ONGC would take up 175 blocks and Oil India another 15 blocks in three assessment phases.

“The government has recently announced its shale gas policy for exploitation of this very important non-conventional hydrocarbon resource.  Announcement of the second phase of shale gas policy is being made in the near future. We would be starting exploration on our first well near Vadodara on November 26,” said the minister last week.

The second phase of shale gas policy in which private players can also be a part is still on its way. “A Cabinet note is being prepared in this regard. However, we are yet to finalise the technicalities in this regard on what to do if there is an overlapping of blocks with existing oil and gas players,” said petroleum secretary Vivek Rae.  Earlier, the ministry was planning to give the first right of refusal for existing players after the auction process.

As per the policy, ONGC would get 50 blocks in the first phase, while another 75 blocks in the second and 50 blocks in the third phase. Oil India would take up five blocks each in all three phases.

It was ONGC that first tasted shale gas in a pilot project at Ichhapur in Burdwan, West Bengal.

The company had recently tied up with ConocoPhillips for technical assistance to explore Cambay, KG, Cauvery and Bengal basins for shale gas. Each assessment phase for no-objection certificates would extend up to three years and a company would be allowed to take up the second phase after the first phase is completed.

The companies would get the liberty to select petroleum exploration license or mining lease (PEL/PML) areas, which would be treated as blocks.

According to estimates by the US energy information administration, India has a total reserve of 96 trillion cubic feet (TCF) of recoverable shale gas. ONGC has plans to drill at least four wells this year in Cambay basin in tie up with ConocoPhillips, with an investment of about Rs 200 crore.