Shale oil and gas exploration policy to be taken up

The Cabinet is likely to consider on Tuesday a policy for exploration of shale oil and gas, which will initially allow state-owned Oil and Natural Gas Corporation and Oil India to tap the unconventional resource in areas they hold.

The shale gas policy is listed on the agenda of the Cabinet Committee on Economic Affairs meeting, official sources said. The policy will be rolled out in phases.

In the first phase, only Oil and Natural Gas Corporation and Oil India Ltd will be permitted to explore for shale resources in the conventional oil and gas onland blocks that were allotted to the two firms on a nomination basis before the New Exploration Licensing Policy in 1999.

Shale gas, or natural gas trapped in sedimentary rocks (shale formations) below the earth's surface, is the new focus area in the US, Canada and China as an alternative to conventional oil and gas for meeting growing energy needs.

As per available data, six basins -- Cambay (in Gujarat), Assam-Arakan (in the North-East), Gondawana (in central India), KG onshore (in Andhra Pradesh), Cauvery onshore and Indo-Gangetic basins - hold shale gas potential.

In future, the Directorate General of Hydrocarbons, the Oil Ministry's technical arm, has proposed to offer areas for shale gas exploration on royalty and production-linked payments to the government. Various studies have estimated recoverable reserves of shale gas at between 6 trillion cubic feet and 63 trillion cubic feet.