Bharat Rakshak

Acharya wrote:What is the total estimate, value

Today we have a situation where we are more energy insecure today than we were 10 years ago. We have a confirmed discovery of gas in [Krishna-Godavari] KG basin D-6 by Reliance Industries but that is from over seven years back. Since then, not even the private sector has discovered any new find. If our own exploration is going to stagger in both oil and gas and if we do not put in enormous resources that are required in research and development to deal with the peculiar geographical problems found only in India, then the future seems insecure.

R and D is simply not taking place. No determined effort is being made for knowledge networking around the world. We are not really looking for our own oil and gas. We are still evolving a policy for shale gas when China has made huge strides in this field. The oil majors of Asia have converted the Asian premium into Asian discount. No effort is being made to bring Asian oil producers and consumers together. There is very active energy diplomacy called for to secure the full advantage of the Asian discount. Energy security has to be one of the focal points of our diplomacy at least till the mid-fifties of this century.

Instead of focusing on West Asia and the extended South Asia, which is a repository of hydrocarbons, we are keen on crossing “two oceans” to secure our energy needs. The government's present integrated policies would not be able to secure energy for India in the 21st Century. The ground reality is that thorium- based energy would not be useful till the middle of the century. There is a need to competitively access oil and gas instead of finding ourselves stranded in a sellers' market.

Our failure has been to recognise that though we ourselves have a hydrocarbon deficiency, our immediate and proximate neighbourhood is simply soaked in hydrocarbons. The largest availability of natural gas in the world is in Qatar.

We are geographically fortunate in being able to potentially access by pipeline the gas resources of not only Turkmenistan and Afghanistan but also Uzbekistan, Russia and other Commonwealth of Independent States (CIS) countries. To the East of us, gas is available in Myanmar, which it supplies to Thailand. We have made no arrangement to pipe this gas through a network of pipelines and bring it to India.

No progress has been made in talks to arrive at a deal with South Korea to supply gas from Sakhalin where we have a commercial interest on the basis of a switch deal to get gas into India from Sumatra.

Australia is emerging as a major supplier of gas; we have done nothing to secure gas assets there. Sitting as a terribly gas deficient nation, sitting in the centre of what would be a multiple sources of natural gas supply and to do nothing to access it shows the absence of recognition of importance of energy diplomacy.

Prem wrote:We should think of something on the line that what if we dont need to import gas from ME India dont need to rush into making such long term commitment. Let PRC not be a factor in this.

Theo_Fidel wrote: This sort of quaking at the knees in front of Panda, which is often expressed on this board, is unseemly.

The big problem with the middle east gas is that they want to sell it to us at European $10 per MBTU vs the local supply at $2.5-$4 per MBTU.

SSridhar wrote:The gas prices have been fluctuating and LNG price will always be higher because of the extra efforts needed at liquefaction. The local KG does not include liquefaction costs. In India, we have Administered Pricing Mechanism (APM) where the Government decides the prices and yet the gas prices were more than doubled six months back to $4.2 per mmBTU. RIL is asking for increasing gas price to $5.2. The $4.2 by APM is linked to a crude price of $ 60 bbl and RIL says crude prices have gone up. I do not know which ME country demanded $10.00 and when. Again, spot prices will be considerably costlier than long-term contractual prices. At long distances, pipelines become cheaper. The Oman-India pipeline was not dropped 15 years back because of price reasons.

The government plans to invite bids for shale gas exploration by 2011-12, he said. India has huge shale deposits in Assam, Gujarat, Rajasthan, the Gangetic plain, the Cambay basin and the Gondwana basin.

This comes at a time when the first well for producing shale gas has been drilled by the national oil company ONGC. “The first (shale gas) well was drilled at Ichapur near Durgapur in Damodar valley on Tuesday,” ONGC chairman & managing director RS Sharma said.

Theo_Fidel wrote:$10 was the the price Iran wanted for its gas supply, that too pegged to oil prices. . . .$10 is also the price Qatar wants for its gas.

I repeat we have plenty of gas at home.

SSridhar wrote:My lament therefore was that even when we had huge deficits in gas requirements (with no significant discoveries and with bleak prospects in c. 1995), we were slow in decision-making.

ramana wrote:Theo, Can ONGC or someone build a Natural Gas fertilizer plant in Oman and get the material for India? Looks like the Pipeline is no winner.

Rishirishi wrote:Was with a few of my friends, and discussed Reliance sucess rate in bay of bengal. (it is unnatural high). There is talk about senor ONGC people leaving the company with documents to Reliance. Answers a lot of questions. ONGC has spent billions on exploration, but when the big finds come, it is reliance who makes the discoveries.

vic wrote:Theo then why do we have poor response to Gas/Oil block auctions?

Theo_Fidel wrote:

vic wrote:Theo then why do we have poor response to Gas/Oil block auctions?

One can always trot out the usual mish mash of babudom, weird rules, Oil PSU interference, etc.

But a big one is this. There is only so much of this expertise and equipment in the world.
It is very very expensive. On the order of Rs 2 Crore a day per rig.

In the US and Europe gas is $10 mbtu. The best Indian prices are $4 or so. During the bids the
pricing was in the $2.5 per mbtu range.

Just not profitable enough. Plenty of other places for this equipment.

Even those bidding are looking very long range. 10 year + when the Indian economy can support
$10 mbtu prices. Very few companies think that long range.

rshyam wrote:Thio, just look the profile of a top level geologist in RIL who discovered D-6, that geologist was from ONGC and he was one of the person responsible for exploration in ONGC earlier... Now he has also applied for the post of CMD...

rshyam wrote:Thio, just look the profile of a top level geologist in RIL who discovered D-6, that geologist was from ONGC and he was one of the person responsible for exploration in ONGC earlier... Now he has also applied for the post of CMD...

Oil price jumps $2 as Saudi Arabian energy minister fuels inflation fears
The Saudi Arabian energy minister pushed up oil futures by $2 per barrel, after implying the powerful nation will not do anything to stop prices rising to $90.
The comments will drive further fears of inflation, as transportation costs of consumer goods tends to rise with the oil price.

Brent crude rose $2.06 to $85.21, as any signs about Saudi Arabia's plans for output can have a huge impact on the volatile oil market.

Varoon Shekhar wrote:"that Indian manufacturing is now in China for consumer products, computers, telecom, power, toys, furniture etc."


So Indian companies manufacturing these products have moved their operations to China? Or do they contract the manufacturing to some Chinese interest, and import the components and assemble in India?

ONGC now Asia’s top oil firm
Pips China’s CNOOC; RIL, NTPC, GAIL other top ranking cos
ONGC has pipped China National Offshore Oil Corporation (CNOOC) to become Asia’s top oil and gas exploration and production company, as per Platts Top 250 Global Energy Company Rankings announced in Singapore yesterday.

In the rankings, that rated world’s leading oil and gas, power and coal firms, ONGC climbed to 18th slot from 26th position in 2009 rankings.

Besides, ONGC (Oil and Natural Gas Corporation), Reliance Industries Limited (RIL), National Thermal Power Corporation (NTPC) and Gas Authority of India Limited (GAIL) have been ranked as the number 1 companies in Asia in their respective industries.

The Platts 2010 rankings recognise the 2009 financial performance of publicly held energy companies based on a combination of assets, revenues, profits and return on invested capital.

NEW DELHI: In line with efforts to expand ties with Washington into areas of unconventional and frontier technologies, India has signed an MoU with the US for cooperation in identifying and tapping gas trapped in layers of sedimentary rocks, commonly known as shale gas.Describing US president Barack Obama's visit as "very successful", oil minister Murli Deora called shale gas as the future mantra of the hydrocarbons industry.
"We are trying to usher in a shale gas era. The MoU will help India identify shale gas resource in the country and frame policy regime for exploitation of the resource," he said. His ministry plans to include shale gas acreages in its auction of exploration blocks in 2011. The US is considered a pioneer in the area and has the only commercially viable market for the fuel.
India is waking up to the prospect of the unconventional energy source, with Mukesh Ambani's RIL recently buying stakes in companies in the US. Even ONGC has initiated a pilot project and started drilling in a Bengal village. But lack of technology and know-how remains a hurdle which the US will help overcome.Petroleum secretary S Sundareshan said the US Geological Survey will carry out studies on shale gas resources and will provide a report. Read more: Expanding ties: India signs shale gas MoU with US

So far India’s relentless efforts during the last 25 years to build pipelines to bring gas from Turkmenistan, Iran, Qatar, Bangladesh and Myanmar have remained pipe dreams. Renewable energy sources like ethanol and bio diesel, wind and solar are high on the national agenda. Thanks to Indo-US nuclear pact, India may succeed in increasing the contribution of nuclear energy.
But a recent phenomenon of shale gas — which has brought about seismic changes in the natural gas scene — has not been given the importance it deserves. Energy economists all over the world have started to admire with awe the great achievement of oil companies in the US in developing shale gas resources on a large scale during the last decade.
As recently as three years back conventional wisdom was that US will have a huge gas deficit and it has to import increasing quantity of LNG. In less than two years, the US supply has changed from one of deficit to surplus. The sudden and unexpected development of shale gas has been a game changer. World renowned energy economist Daniel Yergin, chairman of Cambridge Consulting Group has referred to shale gas development as “the biggest energy innovation of the decade.”
It is not that we in India are not familiar with this development. In an article few months back, columnist Anklesaria Aiyar had urged the government to bring about policy changes to promote shale gas. In India, shale deposits are found across the Gangetic plain, Assam, Rajasthan and many coastal areas, but neither the government nor the corporate sector has carried out any exploration or estimation. Recently, ONGC announced plans to start a pilot project in 2011 when most oil companies in Europe and the US are racing to master the technology of shale gas from those companies who have already succeeded in the US.
Shale gas is natural gas produced from shale formations. Gas shales are organic-rich shale formations. In terms of its chemical makeup, shale gas is typically a dry gas primarily composed of methane. Three factors have contributed to its rapid development of US gas shales: advances in horizontal drilling, advances in hydraulic fracturing, and, perhaps most importantly, rapid increases in natural gas prices in the last several years as a result of significant supply and demand pressures.
The primary differences between modern shale gas development and conventional natural gas development are the extensive uses of horizontal drilling and high-volume hydraulic fracturing. According to a recent DOE report, the use of horizontal drilling has not introduced any new environmental problems.
While unconventional gas sources like gas shales reserves are plentiful, cost to produce is more than the conventional gas production of yesteryears. The shale gas cost has been estimated to be between $6 per mmbtu (Million British Thermal Units) to $9 to 10

"First gas production is planned in less than a year's time from now," Oilex Managing Director Bruce McCarthy said here. Inplace reserves in the Cambay basin block near the town of Khambat (160-km south of Ahmedabad in Gujarat) is 16-21 Trillion cubic feet (Tcf). Of these, 10 per cent or at least 1.6 Tcf are recoverable. Initial gas production could be 5 million standard cubic feet per day, rising up to 50 mmscfd by 2012-13.

The inplace reserves are almost equivalent to what RIL had found in the Krishna-Godavari basin deep sea KG-D6. But KG-D6 fields have a higher recovery factor with almost 12 Tcf of gas likely to be produced over life of the field, while in Oilex's case only 1.5 Tcf can be produced as the reservoir is 'tight' with low permeability.

the recent Petrotech 2010 oil and gas conference held in New Delhi. Even as experts spoke about the prospect of shale gas exploration in the five basins identified by the India's ONGC -- the Gondwana Basin, Krishna Godavari Basin, Cauvery Basin, Cambay Basin and the Indo-Gangetic Basin -- there were voices of caution from the audience and the speakers themselves.

One thing that many speakers emphasized was that drilling for shale gas needs a lot of land. Unlike in the US, where land is not an issue, it can become almost insurmountable in India with its high density of population. And acquiring land for drilling is not easy. Even where the exploration is underway, in the Damodar Valley where ONGC is working with Schlumberger, it was possible because the land was already available as part of hydropower and coalbed methane projects.

Reliance Industries, the only Indian company to have ventured into shale gas investments, is already looking at India's Cambay Basin where it prospects now for oil and gas. In April, RIL acquired a 40% interest in Atlas Energy's Marcellus position (120,000 net acres) in southwestern Pennsylvania for $1.07 billion. In July, it entered into a $1.35 billion joint venture in the Eagle Ford shale with Pioneer Natural Resources and its partner Newpek, under which it obtained a 45% stake in about 212,000 net acres. In August, it formed a 60:40 JV with Carrizo Oil & Gas in the Marcellus Shale for $392 million.So it is ready to jump into the Indian shale gas scene whenever the Director General of Hydrocarbons offers blocks, which the DGH hopes to do by the end of 2011. Confident of its experience in shale plays, RIL expects to technology to help it overcome all the other problems such as water availability. "Maybe we will build in-house expertise so that no water will be need for fracturing," says RIL geoscientist Sudipto Basu. How that plays out only time will tell.

Theo_Fidel wrote:Klaus,

That doesn't sound very workable. You are trying to create yet another dinosaur PSU.
If the rewards are there people will take the enormous financial risks needed to find this gas.

There have been over 30,000 wells dug in the gulf of Mexico. Only a few thousand have paid off.
Our strike rate is unlikely to be much better. We need a 100,000 wells dug off our East coast.

The field, in the Krishna Godavari basin, off the east coast, was discovered in June 2005 and awarded to GSPC under the third round of the New Exploration Licensing Policy. The field represents almost all of its gas reserves and most of its oil reserves, according to the company. “We may, however, be a little delayed in completing the development of the project and commence commercial gas production by our estimated commencement date in June 2012,” the GSPC official added.

The company had invested around Rs 5,922 crore as of September 30, 2009 (including exploratory costs prior to formulation of the Field Development Programme) in the KG block.

“The development costs and our estimated operational costs, as well as our current target of June 2012 for first commercial production from DDW, are subject to risks of raw material and equipment shortages, price increases above those anticipated and risks in inability to procure or design the engineering services required. The field development plan estimates that DDW will cost a total of approximately Rs 8,000 crore ($1,801.04 mn), of which Rs 5,649 crore ($1,270.61 mn) would be required by FY 2013. We expect to commence commercial gas production by then,” GSPC had stated in the draft red herring prospectus filed with Securities and Exchange Board of India this April.

Friday, 12 June 2009, 12:11
S E C R E T SECTION 01 OF 03 BAKU 000478 ...............................

Projected Problems in Iranian Gas Links
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¶9. (C) The annual Baku Oil and Gas Show, held June 2-5, brought a variety of energy company executives and pundits to Baku, though no senior officials from Iran. An American interlocutor told Baku Iran Watcher on the side of the show that a [Source removed] had confided to him in a private conversation on June 4 that he viewed near-term implementation of the Iranian-Pakistani gas link project as “very unlikely.” The downbeat comment by the [Source removed] was made despite the recent signing in Istanbul by President Ahmadinejad and President Zardari of an Iranian-Pakistani MOU committing to the gas project. According to this source, [Source removed] indicated that he had several reasons for this opinion, but the only one he elaborated was that “the Pakistanis don’t have the money to pay for either the pipeline, or the gas.”

¶10. (C) Meanwhile, during a panel discussion at the conference on the future prospects of Caspian gas, several commentators noted the difficulty of doing business in “unpredictable, overly bureaucratic” Iran, and the alleged historical “unreliability” of Iranian gas supply contracts previously reached with Turkey and Turkmenistan. For example, panelists recounted that, after long negotiations, Iran has four times failed to sign separate Liquid national Gas contracts at the last minute. Two panelists claimed that Iran has repeatedly diverted gas supplies to meet domestic needs, thereby interrupting its contractual gas exports - and has not paid contractual penalties for these violations.

¶11. (C) A [Source removed] asserted bluntly that Iranian political leaders are totally focused on domestic needs and personal jockeying, and are simply not interested in hearing about the value of optimizing foreign gas exports. The only exception, he claimed, is their interest in the notional prospect of annually exporting ten billion cubic meters (bcms) of gas to Europe. He attributed this interest to a conviction that such a deal will significantly increase Iran’s political leverage in Europe and substantially insulate it from future European pressure - a perception he characterized as revealing, and “typically” unrealistic.
DERSE

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