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Ourview | Tapping trapped natural gas

Ourview | Tapping trapped natural gas
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First Published: Tue, Oct 04 2011. 12 02 AM IST

Photo: Bloomberg
Photo: Bloomberg
Updated: Tue, Oct 04 2011. 12 02 AM IST
New energy sources are sought out with the same fervour witnessed in the discovery of new drug molecules. After all, one fuels machines, while the other keeps the human body “oiled”. The comparison, for most part, ends there. In biosciences, companies rush to get their molecules in the market, wading through elaborate regulatory checks. In the field of energy, there is more to that equation. It’s not enough to discover, what critically matters is the cost of extraction.
For example, last year when natural gas prices in the largest consuming country, the US, plummeted by close to one-third from as high as $13 per million British thermal units only two years before, in 2008, it was not entirely unexpected. For sure, the global slowdown did play its part. But equally importantly, it had to do with exploration efforts that began in the late 1980s to extract gas trapped in shale rocks. These private sector efforts were intensively catalysed by the US government that was aware of rising import dependence. But that alone was not enough. Rising energy prices in the last decade made room for technology advancements and scale of operations in this arena.
Photo: Bloomberg
This “unconventional gas” has got two major Indian companies to put their money on the table. Last week, leading pipelines company GAIL (India) Ltd picked up a 20% stake in a shale gas field in the US. Prior to that, Reliance Industries Ltd acquired stakes in three assets.
There will be lessons for GAIL from that experience and hopefully it will apply these to India when the country puts up shale blocks for exploration in the next few years. But more importantly, the US experience is a reminder that the role of the Union government in promoting energy security has been unsatisfactory.
India launched an attractive exploration policy at the turn of the century. It got off to a flying start—a private operator struck the largest gas block in the country three years later. The momentum did not sustain thereafter. Policy reversals ensued. Explorers can no longer discover the price of gas in an open market; it is now done in a restricted manner. Lethargy is also to blame. The government has failed to implement the “open acreage” system whereby explorers have greater choice through the year in selecting the area to scour for oil and gas. That is where it needs to get its act together.
Can India exploit its shale gas potential? Tell us at views@livemint.com
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First Published: Tue, Oct 04 2011. 12 02 AM IST
More Topics: Ourviews | Gas | Energy | India | Views |