8/28/2015

Production Storage Ref. & Distr.

Drilling V VI VII

IV
II
Surveys

Geology
I

III
Petroleum System
1 2

What is Upstream ?
Oil and Gas Sector Also known as the E & P or Exploration
& Production sector.
This segment of Oil and Gas deals with:

Upstream Searching the Oil/Gas resources (offshore

Mid Stream Down Stream and onshore blocks) i.e. Exploration
Activities.
Drilling of exploratory and production wells.
Oil and Gas Field Development.
Oil and Gas Production operations to
recover and bring the petroleum crude oil
Segment-1 Segment-2 Segment-3 and/or gas to the surface economically.

Midstream Downstream
This Segment of Oil and Gas deals
This Segment of Oil and Gas deals with :
with :
Refining Of Crude Oil Into value
Separating Out Liquids out of added products Like Gasoline,
the Gas produced from oil or gas Aviation Fuels, Kerosene, Naptha,
Field and Marketing of Gas and Lubricating Oils, Chemicals etc.
Liquids.
Transportation and Marketing.

1
 8/28/2015

FIELD LIFE CYCLE

1 : GAINING ACCESS PHASE

2 : EXPLORATION PHASE

What are the general stages in the 3 : APPRAISAL PHASE

Upstream sector ?
4 : DEVELOPMENT PHASE

5 : PRODUCTION PHASE

6 : DECOMMISSIONING PHASE

7 8

FIELD LIFE CYCLE FIELD LIFE CYCLE

Step 1 : GAINING ACCESS PHASE
Step 1 : GAINING ACCESS PHASE (Cont)
The first step where an oil company undertakes
in HC exploration and production, is to decide Technical aspects
what regions of the world are of interest.
includes
This involves evaluation of technical, political,
economic, social and environmental aspects of The potential size of HCs to be found and
regions under consideration. produced in the region involves scouting
studies using publicly available
The investment made in terms of time & money
during the Gaining Access phase may be information and also consideration of the
considerable , but takes a decade of setting up the technical challenges. eg. in very deep
groundwork before any tangible results are seen. offshore waters.
9 10

FIELD LIFE CYCLE FIELD LIFE CYCLE

Step 1 : GAINING ACCESS PHASE (Cont..) Step 1 : GAINING ACCESS PHASE (Cont..)

Social Considerations Environmental Considerations

Includes
Includes
The precautions needed to protect the
Any threat of civil disorder. environment from the harm that will be
The availability of local skilled workforce. caused during E & P Activities.
Local training required.
Setting up a local presence and positively engage
the indigenous people.

11 12

2

FIELD LIFE CYCLE
Step 1 : GAINING ACCESS PHASE (Cont..)
During this phase , it need to be studied
that whether doing business in a country whose
political or social regime meet with the approval of
the Co.s Home Govt. / Shareholders or not..
Finally, an analysis of all aspects is done to
indicate whether the company is ready for the
challenge.
13
FIELD LIFE CYCLE
Step 2 : EXPLORATION PHASE
For more than a century petroleum geologists
have been looking for oil (World's first
commercial oil well was drilled in 1859
Titusville in Pennsylvania, USA & in 1890 in
Digboi , India).
Since then major discoveries have been made
in many parts of the world. However, it is more
likely that most of the giant and easy fields
have already been discovered and that future
finds are likely to be smaller, more complex
fields. 19
FIELD LIFE CYCLE
Step 2 : EXPLORATION PHASE (CONT)
Traditionally, investments in exploration are made
many years before there is any opportunity of
producing the oil. In such situations companies
must have at least one scenario which can give
potential return.
Fig: Phasing and
expenditure of a
typical exploration
programme.
21
8/28/2015
FIELD LIFE CYCLE
Step 1 : GAINING ACCESS PHASE (Cont..)
Some 90% of the worlds O &G reserves are
owned and operated by National Oil
Companies (NOCs), such as ONGC, OIL,
Saudi Aramco (Saudi Arabia), Petronas
(Malaysia), Pemex (Mexico).
For an independent oil company to take a
direct share of E & P activities in a country,
it first needs to develop a suitable
agreement with the Government, often
represented by the NOC.
16
FIELD LIFE CYCLE
Step 2 : EXPLORATION PHASE (CONT)
Fortunately, with the development of
new exploration techniques although
targets are getting smaller, exploration
wells can now be sited more accurately
and with greater chance of success.
20
FIELD LIFE CYCLE
Step 3: APRAISAL PHASE
Once an exploration well has encountered HCs, it
is required to accurately assess the potential of
the find.
The amount of data acquired so far does not yet
provide a precise picture of the size, shape and
producibility of the accumulation.
23
3

FIELD LIFE CYCLE
Step 3: APRAISAL PHASE (CONT)
Four possible options need to be considered at
this point:
1. To proceed with development: and
thereby generate income within a relatively short
period of time ---------- SO, DELINEATE THE
FIELD.
2. To carry out an appraisal programme:
with the objective of optimizing the technical
development to reduce the uncertainties.
24
FIELD LIFE CYCLE
Step 4: DEVELOPMENT PHASE
Based on the results of the appraisal phase, a
field development plan (FDP) is formulated and
subsequently executed.
The FDP is a key document used for the
development of a new field, or extension to an
existing field for subsurface and surface facilities,
and operational and maintenance philosophy
required to support a proposal for the required
investments.
FIELD LIFE CYCLE
Step 5: PRODUCTION PHASE (Cont)
The production phase commences with
the first commercial quantities of HCs
(first oil) flowing through the wellhead.
This marks the turning point from cash
flow point of view, because from now
on, cash is generated.
8/28/2015
FIELD LIFE CYCLE
Step 3: APRAISAL PHASE (CONT)
3. To sell the discovery : after making the
valuation
Some companies with no intention of investing in
the development phase, they create value for
their company by selling the discovery, and
move on with exploration of a new opportunity.
4. To do nothing: This is always an option,
although a weak one, and may lead to frustration for
the host Government, who may force a
relinquishment if the oil company continues to delay
action. 25
FIELD LIFE CYCLE
Step 4: DEVELOPMENT PHASE (Cont..)
Once the FDP is approved, there follows a
sequence of activities prior to the first production
from the field viz.,
Detailed design of the facilities
Procurement of the materials of construction
Fabrication of the facilities
Installation of the facilities
Commissioning of all plant and equipment.
FIELD LIFE CYCLE
Step 5: PRODUCTION PHASE (Cont.)
Usually characterized by three phases:
1. Build-up period: During this period newly drilled
producers are brought on stream.
2. Plateau period: With the production facilities run
at full capacity a constant production rate is
maintained typically 2 5 years for an oil field, but
longer for a gas field. This constant production
period is called Plateau Period.
3. Decline period: During this final (and usually
longest) period, all producers fields exhibit
declining production.
4
 8/28/2015

FIELD LIFE CYCLE

Step 6: DECOMMISSIONING PHASE

The economic lifetime of a project

normally terminates once its net cash
flow turns permanently negative, and
the field is decommissioned.

At this point, gross income no longer

covers operating costs .

Fig: The field life cycle and a simplified

business model. 31

FIELD LIFE CYCLE FIELD LIFE CYCLE

Step 6: DECOMMISSIONING PHASE (Cont..)
Step 6: DECOMMISSIONING PHASE (Cont..)

Most companies have at least two ways to defer

As decommissioning approaches, EOR
the decommissioning of a field or installation methods are often considered as a
means of recovering a proportion of the
(a) reduce the operating costs (Maintenance and HCs that remain after primary
operating costs represent the major expenditure
late in field life ) production.
or
But, the economic viability of such
(b) increase HC throughput ( How do we do it?) techniques is very sensitive to the oil
price.
32

FIELD LIFE CYCLE Present Scenario: Oil & Gas Industry in India
Step 6: DECOMMISSIONING PHASE (Cont..)
Proved Reserve of Crude Oil : 5.7 Thousand
Ultimately, all economically recoverable reserves million barrels.
will be depleted and the field will be
Proved Reserve of NG : 1.4 trillion cum.
decommissioned with minimum environmental
effects and without incurring excessive cost. Crude oil Production :41.9 m tonnes
Steel platforms may be cut off to an agreed depth Production of NG : 40.2 billion cum.
below sea level or toppled over in deep waters,
Crude oil consumption : 180.7 million tonnes.
whereas concrete structures may be refloated,
towed away and sunk in the deep ocean.
Consumption of NG : 50.6 billion cum.
Pipelines may be flushed and left in place. In
shallow tropical waters decommissioned India is importing around 75% of its oil needs.
platforms and jackets can be used as artificial
reefs in a designated offshore area. 35

5
 8/28/2015

S.No. Country Quantity (in Thousand R/P Ratio

million barrels)
1. Venezuela 298.3 > 100 yrs
2. Saudi Arabia 267.0 63.6
Proved reserves are those
3. Canada 172.9 > 100 yrs quantities of petroleum which, by
4. Iran 157.8 > 100 yrs
5. Iraq 150.0 > 100 yrs analysis of geological and
6
7
Russian Federation
Kuwait
103.2
101.5
26.1
89.0
engineering data, can be estimated
8 United Arab Emirates 97.8 72.2 with a high degree of confidence to
9. US 48.5 11.4
10. Libya 48.4 > 100 yrs
be commercially recoverable from a
11. Nigeria 37.1 43.0 given date forward, from known
12 Kazakhstan 30.0 48.3
13. Qatar 25.7 35.5 reservoirs with the available


India 5.7 17.6
technology and under current
China 18.5 11.9
economic conditions.
BP Statistical Review of World Energy , June 2015

S.No. Country Quantity (in Trillion cubic R/P Ratio

RESERVE TO PRODUCTION RATIO meters)

1. Iran 34.0 >100 yrs

2. Russian Federation 32.6 56.4
R/P Ratio represents the length of 3. Qatar 24.5 >100 yrs
4. Turkmenistan 17.5 >100 yrs
time that those remaining reserves 5. U.S. 9.8 13.4

would last if production were to 6 Saudi Arabia 8.2 75.4

continue at the previous years rate.

7 United Arab Emirates 6.1 >100 yrs
8 Venezuela 5.6 >100 yrs
9. Nigeria 5.1 >100 yrs
10. Algeria 4.5 54.1
It is calculated by dividing 11. Australia 3.7 67.6

remaining reserves at the end of the 12

13
Iraq
China
3.6
3.5
>100 yrs
25.7

year by the production. 14 Indonesia 2.9 39.2
. India 1.4 45.0
BP Statistical Review of World Energy , June 2015

S.No. Country Quantity (in Million S.No. Country Quantity (in Billion Cubic
Tonnes) Metres)
1. Saudi Arabia 543.4 1. US 728.3
2. Russian Federation 534.1 2. Russian Federation 578.7
3. US 519.9 3. Qatar 177.2
4. China 211.4 4. Iran 172.6
5. Canada 209.8 5. Canada 162.0
6. Iran 169.2 6. China 134.5
7. United Arab Emirates 167.3 7. Norway 108.8
8. Iraq 160.3 8. Saudi Arabia 108.2
9 Kuwait 150.8 9 Algeria 83.3
10 Venezuela 139.5 10 Indonesia 73.4
11 Mexico 137.1 11 Turkmenistan 69.3
12 Brazil 122.1 12 Malaysia 66.4
13 Nigeria 113.5 13

Mexico 58.1
.. India 41.9 .. India 40.2
BP Statistical Review of World Energy , June 2015 BP Statistical Review of World Energy , June 2015

6
 8/28/2015

India is the 4th largest consumer of oil in the world S.No. Country Quantity (in Billion
S.No. Country Quantity (in million Cubic Metres)
tonnes) 1. US 759.4

1. US 836.1 2. Russian Federation 409.2

2. China 520.3 3. China 185.5

3. Japan 196.8 4 Iran 170.2

4. India 180.7 5. Japan 112.5

5. Russian Federation 148.1 6. Saudi Arabia 108.2
6. Brazil 142.5 7 Canada 104.2
7. Saudi Arabia 142.0 8 Mexico 85.8
8. Germany 111.5 9 Germany 70.9

9. South Korea 108.0 10 United Arab Emirates 69.3
10. Canada 103.0 11. U.K. 66.7

BP Statistical Review of World Energy , June 2015 . India 50.6

S.No. Country Quantity (in MTOE)

Barrels of Oil Equivalent :
1. China 2972.1
2. US 2298.7
3 Russian Federation 681.9
It is the amount of NG that has the
4. India 637.8
same heat content as an average
5. Japan 456.1
6. Canada 332.7
barrel of oil.
7. Germany 311.0
8. Brazil 296.0
9. S.Korea 273.2 It is about 6000 cf of gas.
10. Iran 252.0
11.
Saudi Arabia 239.5
12 France 237.5

By definition, petroleum is a generic HCs are naturally occurring, yellow to - black,

flammable liquid consisting mainly of complex
name for HCs (includes crude oil & mixture of hydrocarbons.
NG).
Found in geologic formations beneath
the Earth's surface.
The word petroleum originates
from the Latin word petra meaning
rock + oleum meaning oil.

So, petroleum means

rock oil .

7
 8/28/2015

Chemically, Petroleum or HCs is the

chemical compounds of:

Hydrogen and Carbon (hence the

term, Hydrocarbons)
Minor amounts of N, O & S as
impurities
Traces of heavy metals (Vanadium
and Nickel) .

HCs are found in liquid, gaseous, or Oil & Gas sector has a long
solid states:
history in India
In common usage, natural liquid oil
occurring below the surface of the earth
is known as Petroleum.
Petroleum exploration in India dates
The gas that is associated with
back to middle of 19th century in
petroleum , or found separately under
the surface of the earth is known as a difficult terrain of Assam.
Natural Gas.
In Semisolid and Solid state (Heavy
Hydrocarbons like Tar , Bitumen etc.).

Famous Drake Well

World's first commercial oil well was
drilled in 1859, by Col Willam Drake
at Titusville in Pennsylvania, USA

(oil was found at a depth of only

21.2 m. )

8
 8/28/2015

The first well in India was drilled at

Nahorpung, in 1866 in India was drilled
upto 31 m (102 ft), but proved dry. The first commercial oil discovery of
This well was drilled by Assam Oil Digboi Oil Field in 1890 brought the
Co., a subsidiary of Burmah Oil Co. dawn of modern petroleum industry in
Just 7 years after the famous Drake India.
well ( 1859).
The 2nd well was struck in 1867 at
Makum near Margherita, about 8 miles
from Digboi , and found oil.

At the time of independence, Indias

domestic oil production was just
250,000 tonnes/annum (0.25 million
tonnes) and the entire production was
from one state - Assam
(Compare with : 41.9 million tonnes
(BP Statistical Review, 2015)
The foundation of the O & G Industry
in India was laid down in 1954 by the
Industrial Policy Resolution (IPR),
when the Govt. announced that
petroleum would be the core sector
industry.

In pursuance of the IPR (Industrial

Policy Resolution), Government-
After its inception, ONGC took up the
owned National Oil Companies were
task of exploration of oil & gas in the
formed viz.
country and started systematic
geological and geophysical studies of
ONGC (1956) sedimentary basins.
OIL (1958)

9
 8/28/2015

1958 - First Gas & Oil pool discovered Between 1970 and mid 1980,
in Jwalamukhi (Punjab) and Cambay. exploratory efforts by ONGC and OIL
yielded discoveries of oil and gas in a
1960 A major oil field was number of structures in:
discovered at Ankleswar followed by
Bassein,
successes in Assam & Tripura.
Tapti,
1974 - Discovery of giant Bombay
Krishna Godavari - Cauvery basins,
High field.
Cachar (Assam),
Nagaland,
Opened up new avenues
of oil exploration in offshore areas. Tripura.

Press Trust of India/ New Delhi, Jun 07, 2011 Regulatory structure
(As per Business Standard, Sept.,25, 2012, ) Governing Ministry: Ministry of Petroleum & Natural
ONGCs Bassein gas field, off the Mumbai Gas (MoPNG)
coast has achieved record production of 200 Legal Framework: The Oil Field Regulation &
billion cubic metres (bcm) and is now being Development Act, 1948
counted among the worlds super giant fields. The Petroleum & Natural Gas
Rules, 1959
The Bassein field which was discovered in
1976 and put into production in September, Regulator : Director General of
1988, produced 20 million standard cubic Hydrocarbons (DGH).
metres (mmscm) per day on May, 6th to take
Policies & Regulation : New Exploration & Licensing
cumulative output since its inception to a Policy (NELP).
record of 200 bcm . Foreign Direct Investment Policy (FDI) : 100%

In order to increase exploration

The greatest challenge for O & G
industry is the domestic oil
production which is able to meet
only about 30% of the domestic
requirement.
activity, the Indian Government
approved:
The New Exploration Licensing
Policy (NELP) in March 1997 to ensure
level playing field in the upstream sector
between private and public sector
companies.

10
 8/28/2015

The NELP, implemented in 1999

provides a framework to award
licenses to companies for undertaking
Since 1999, a total of nine rounds of
E&P activities in India under the PSCs.
acreage awards have been completed
in the last 12 years in which 254
PSCs lay down the bid and block blocks were licensed out to
award procedures, bid evaluation companies.
criteria, fiscal system etc.

Blocks Awarded - NELP Exploration and Production

Under the IXth round of NELP Govt.
has signed 16 PSC on 28th March
2012.
Most of the interest in these assets
came from Indian companies, which
achieved an advantageous position in
the bidding.
International oil companies only
participated to a limited extent.

Faulty production sharing contracts.

In NELP VII - 21 foreign Cos. (2008) Perception about poor quality of reserves.

In NELP VIII 10 (2010) Flip flops in government regulation on gas

prices and marketing terms.
In NELP IX 08 (2011) Lack of clarity on tax and cost implications.

Due to unavailability of Single Window

System
Foreign Participation
decreasing Delays in getting clearances which has
resulted in global giants like BHP Billiton
relinquishing nine blocks late last year.
.WHY????

11
 8/28/2015

NELP Xth Round

Prime Minister Manmohan Singh unveiled the
10th round of NELP on 12th Jan. (Sunday),2014.
MoPNG presented 46 blocks to be offered for
NELP X is likely to be the last round of NELP
competitive bidding under the NELP X on 12
January 2014. as India could soon begin moving towards the
Under NELP X, the blocks are: Open Acerage regime (OALP) where bids can be
17 onshore submitted for blocks at any time following
15 shallow water
requisite procedures.
14 deep-water water blocks.
Cover an area of about 166,053 sq.km. in 13
sedimentary basins.
The no. of blocks on offer could increase as more
blocks receive exploration clearances.

In OALP,
Although NELP has given a big boost to
Any explorer can bid for any unallocated
exploration activity in terms of up
area at any time.
gradation of perceived Indian geology, it
has not achieved its full potential and It will provide great flexibility to operators.
objective in attracting global majors, The regulator will assess the bid made by
cutting edge technology transfer and this operator, call in any competing bids
opening up frontier basins with innovative and, finally, decide whether to grant it or
technologies. not
National Data Repository (NDR) on
Thus it is time to introspect and then move geological, geochemical & geophysical
on to Open Acreage Licensing Policy characteristics is proposed in OALP.
(OALP).

Indian companies have made

significant overseas investments in
all parts of the HC value chain with
bulk of the investments dollars being
pumped into the E&P sector.
Indias global foray

12
 8/28/2015

ONGC Videsh Limited (OVL) is a wholly OVL has stakes in oil and gas fields in:
- owned subsidiary of ONGC. Russia
Sudan
Over a period of time, OVL has grown Iran
to become the 2nd largest E&P company Vietnam
in India both in terms of oil production Myanmar
and oil and gas reserve holdings. Sweden
U.K.
Currently it operates 33 projects in 14 Netherland
countries. Bermuda
Cuba
Out of 33 projects, OVL is operator in Columbia
11 projects and joint operaton in 6 Brazil
Nigeria
projects. Syria
Cyprus etc.

Essar Oil is part of the diversified

RIL has 13 blocks in its international Essar Group and has interests in
portfolio, amounting to a total acreage both upstream and downstream
of over 99,145 km . hydrocarbon sector.
Essar Group has invested in 5
RIL has invested in Gulf Africa overseas E&P assets.
Petroleum Corporation (GAPCO),
which owns and operates storage In the refining sector, it has taken
facilities and a retail distribution 50% stake in the Kenya Petroleum
network. Refineries Ltd (KPRL).

Other companies which have invested

in overseas E&P assets include:
GAIL,

Gujarat State Petroleum Corporation

(GSPC).
Videocon Industries Ltd.,
Bharat Petro Resources Ltd, which is
a wholly-owned subsidiary of BPCL.

Ref: www.dghindia.org

13
 8/28/2015

Sedimentary Basins Covered

India, like many other developing

countries, is a net importer of crude
oil.

Currently India's domestic production

of oil can meet only 20 30%of the The rising oil import bill has been
demand, rest 80% comes from imports the focus of serious concerns on
which is set to cross 90% by 2031. foreign exchange resources.

Indias Rising Oil Import Bill

India, like many other developing
countries, is a net importer of crude oil. 180
$157 billion $164 billion

160
$140 billion
The rising oil import bill has been the 140
120
focus of serious concerns on foreign $100 billion
100
exchange resources.
80
60
Currently India's domestic production of 40

oil can meet only 20 30%of the demand, 20

0
rest 80% comes from imports which is 2010-11 2011-12 2012-13 2013-14
set to cross 90% by 2031.
Note: Fallen Oil Price may cut import bill by $8 billion

14

The main reason accounted for this:
Increase in Consumption
Volatile crude oil prices which soar
from $90 per barrel in 2010-11 to
$115 per barrel in 2011-12.
Depreciation in Indian rupee
(> 15%) in comparison with US
dollar $.
The Energy Mix
NG is emerging as one of the
fastest - growing fuels.
Currently, it accounts for 8 - 9 %
of the total primary energy mix.
8/28/2015
Ref: Energy outlook
Over the last two decades (1990-
2011), Indias primary energy mix
has not changed much.
India continues to depend, for
most of its energy needs, on coal
(> 50%) and oil (~30%).
Other renewable segments (solar,
geothermal, hydro, wind energy,
etc.) and nuclear energy have not
registered an impressive share in
energy mix.
15
 8/28/2015

Petroleum to continue play a crucial part

Current Energy Mix Projected Energy Mix -2025

Gas
8%
20 % Gas
Coal
Oil Petroleum 53% Coal 50% Petroleum
33% 41% 45%
25 % Oil

Hydro 5% Nuclear 1% Nuclear 3% Hydro 2%

Source: GAIL, Citigroup Source: GAIL, Citigroup

Gas & Oil mix may see a change in coming 20 years

Demand supply gap for Oil may rise from current ~

70% to well over 80% levels, in next 20 years
Demand supply gap for Gas may climb up from ~
50% to over 60%
Oil Projections Natural Gas Projections
400

350
Production
368
16000

14000
Supply 13807 Fossil fuels are expected to
continue fuelling countrys economic
Demand Demand

300 12000 11053

million tones

250 10000
MMSCFD

200
195
8000
5332
8158
growth.
150 6000 4979 4979
110 4273
96
100 4000
60 2472
45
50 2000
32 33

0 0
2001-02 2002-03 2011-12 2024-25 2001-02 2007-08 2011-12 2024-25

Source: ORF Energy Monitor, 23-29 Nov, 05 Source: ORF Energy Monitor, 23-29 Nov, 05 and Reliance

Demand & Supply Side measures to create Interim Petroleum Security

Basins are the depressions in the crust

of the earth that host the accumulation
of sediments transported by the
agents like wind, water, glacier etc.
Indias Sedimentary Basins
The sediments deposited in the basin,
subsequently undergo lithification.

16
 8/28/2015

Sedimentary Basins Covered by Exploration

Activity

India has an estimated sedimentary

area of 3.14 million km2, comprising
26 sedimentary basins.

Ref: www.dghindia.org

Bikaner - Karewa
Nagaur
As per the statistics of the Directorate Jaisalmer
General of Hydrocarbons (DGH), at Cambay Assam
the end of FY 2010-11 about 34% of Shelf

Kutch
the total sedimentary area was either Bengal
IV
unexplored or poorly explored. Saurashtra
Deccan

Cauvery

17
 8/28/2015

CATEGORY I:
Proved petroliferous basins with commercial
production Assam Shelf, Mumbai offshore, ,
Krishna Godavari , Rajasthan basin, Cambay,
Cauvery and Mahanadi offshore basin.
CATEGORY III:
Basins with no significant oils & gas shows
But geologically considered prospective-
Saurashtra, Kerala Lakshadweep, Bengal etc.

CATEGORY II: CATEGORY IV:

Basins with known occurrences of oil and gas Basins with uncertain prospects which require
(Commercial production yet to be established) basic data to be generated Deccan, Karewa
Kutch, Andaman -Nicobar etc.

The Indian sedimentary basins are

Opportunities in the Indian largely unexplored or poorly explored,
(34%) which indicates that there is a
hydrocarbon sector potential for large hydrocarbon
discoveries.

The Coal Bed Methane (CBM)

The deepwater areas remain
untapped owing to technological
challenges. The CBM policy introduced by the
This creates opportunities for Govt. encourages investment and
foreign investors possessing provides favourable investment
relevant technical expertise to climate.
invest in the country through
partnerships with local public and
private sector companies.

18
 8/28/2015

CBM exploration and exploitation

has an important bearing on: Extraction of the CBM through
degassing of the coal seams prior to
reducing the green house effect mining of coal is a maintaining safe
and methane level in working mines.
in preventing the direct emission of
methane gas from operating mines
to the atmosphere.

Having the 3rd largest proven The CBM policy was formulated by the
coal reserves and being the 4th Ministry of Petroleum and Natural Gas
largest coal producer in the (MoPNG) in consultation with the
Ministry of Coal to offer coal rich blocks
world, India holds significant for exploitation of coal bed methane in
prospects for commercial 1997.
recovery of CBM. From its commencement in 2001, four
rounds of bidding under the CBM policy
have been concluded by the government
The total coal resource of India and a total of 33 CBM blocks have been
is about 248BT. awarded.

For CBM,
The total area for CBM Exploration: 26,000 sq. km

Total CBM Resources : 92 TCF Ministry of Petroleum & Natural Gas

(MOP&NG) is the Administrative Ministry.
Blocks Awarded : 33

CBM Wells drilled : More than 400 Directorate General of Hydrocarbons

(DGH) is the implementing agency for
Production Potential in Awarded Blocks: 47 CBM policy.
MMSCMD (Million metric standard cubic meter per
day)

The current level of CBM production stands at just

8.5 MMcf/d

19
 8/28/2015

Shale Gas
The E&P of shale gas in the US has been
a game changer, making the country self-
sufficient in natural gas over the last few
years.
This has created considerable excitement
globally, particularly in Europe.
India is also looking at exploring shale
gas domestically to fill in the supply
demand gap.

India approves the long-awaited

shale gas policy in Sept., 2013
But what works for the US, will it also
work for India? But, the process of extracting shale
gas has many possible
environmental and technological
challenges which has led to several
protests against exploitation of this
resource.

20

The Govt. policy initially permits
state-run ONGC and OIL to explore
shale resources from onland blocks
that were already allotted to them
(conventional O&G blocks).
In the next phase, the government
will offer shale oil and gas blocks to
other companies through Cabinet
approval.
Challenges
To release natural gas from shale, energy
companies inject a mixture of water, sand
and chemicals deep underground at high
pressure.
The technology, known as hydro
fracturing or simply fracking.
Only one controversial draft study in 2011
by the US Environmental Protection
Agency found evidence of ground-water
contamination linked to fracking in the
town of Pavillion, Wyoming.
8/28/2015
The Ministry of Petroleum and Natural Gas
(MoPNG) has identified six basins as
potentially shale gas bearing:
1. Cambay
2. Assam-Arakan,
3. Gondwana
4. Krishna-Godavari
5. Kaveri,
6. Indo-Gangetic plain.
The US Energy Information Administration
(EIA) estimates Indias total recoverable
shale gas reserve at 96 trillion cubic feet
(TCF).
Environmentalists have warned gas,
mostly methane, or some of the remaining
injected mix can eventually rise toward
the surface on its own, polluting fresh-
water supplies.
But geologists downplayed that risk,
saying the cracks formed by fracking are
generally more than 1,000m below the
water table, with thick layers of rock in
between keeping aquifers safe.
Fracking also takes a big toll on local water
supplies.
Every shale-gas well needs about 10 to 20
million litres (2.64 million to 5.28 million
gallons) of water, plus 500 tonnes of sand
and 50 tonnes of chemicals.
About 60 to 80% of that mixture eventually
comes back to the surface, and the rest stays
underground.
21

TERIs (The Energy and Resources
Institute) study in 2010, Looking Back to
Think Ahead, demonstrates that India is
already a water - stressed country and is
fast approaching the scarcity benchmark
of 1,000 m3 per capita with unabated
growth in the irrigation sector and even
more rapid growth in industrial an
domestic water demand.
The treatment of the produced water
before discharge to surface/subsurface
water needs to be in line with the
Central/State Ground Water Authority
regulations.
Possibility of contamination of Aquifer
(both surface and subsurface) from
hydro-fracturing and fracturing fluid
disposal and the need for safeguarding
the Aquifer. Multiple casing programme
(at least 2 casings) will be a mandatory
requirement across all sub-surface fresh
water aquifers.
There is need to have a favorable
regulatory framework, which will offer
incentives companies to invest in shale
gas activities.
A liberal fiscal regime can be considered
for shale gas operations as the industry is
still in its infancy stage of development.
The cost of operations are expected to be
higher than conventional oil and gas
operations.
8/28/2015
Earthquakes and methane
Some are of the opinion that fracking
can trigger earthquakes.
But, Geologists say the water injected
into "waste wells" can, in fact, provoke
increased seismic activity, but only
trigger significant tremors when an active
fault is hit.
In order to replicate the shale gas
experience of the US, the country will
need strong service and infrastructure
capabilities along with a favorable
regulatory regime, which not only
promotes E&P activities, but also
addresses environmental and social
concerns.
Considering the countrys energy security
agenda and the need to boost domestic
hydrocarbon supplies, India offers a
plethora of opportunities to the services
industry and to equipment suppliers of the
E&P industry but at the same time, its
dealing with some fundamental issues
which can hinder its progress.
22
 8/28/2015

142

23