ONGC may start commercial production of shale gas next year

Oil and Natural Gas Corporation plans to start commercial production of shale gas sometime next year, company Chairman Sudhir Vasudeva said on Friday.

The Cabinet Committee on Economic Affairs last month allowed ONGC and Oil India Limited to tap shale resources in blocks allotted to them on a nomination basis.

"We are planning to drill 10 wells this year and hope to start commercial production next year," he said at India Oil & Gas Summit organised by Indian Chamber of Commerce in New Delhi.

ONGC plans to start drilling for the unconventional shale hydrocarbon resource in Gujarat sometime this month.

Vasudeva said the company is getting technological support for the venture from ConocoPhillips as it drills first shale gas well in Cambay basin in Gujarat.

Cambay is one of the basins that has been identified as potentially bearing shale resources, which are hydrocarbons trapped in sedimentary rocks.

Shale extraction uses hydraulic fracturing, which involves blasting water, sand and chemicals

underground to release trapped oil and gas.

The CCEA last month approved the long-awaited shale gas and oil exploration programme to boost domestic output.

In the first phase, state-owned ONGC and OIL have been permitted to explore for and produce shale oil and gas from onland blocks that were allotted on a nomination basis before advent of the New Exploration Licensing Policy in 1999.

The government will offer shale oil and gas blocks to other companies through an auction planned after such a policy is taken to the Cabinet for approval in the next few weeks.

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.

Various studies have estimated recoverable reserves of shale gas at between 6 trillion cubic feet and 63 trillion cubic feet.