By Abhishek Gupta
The production of shale oil and gas, aided by improved technology, has opened a door of opportunities for the mammoth energy needs of the world. Speaking at the 8th Asia Gas Partnership Summit 2013, on December 3, 2013, Prime Minister Manmohan Singh very aptly pointed out that the recent technological breakthroughs in drilling for shale gas had brought about a sea change in the situation, as can be seen in the changing patterns of global trade. India, though not endowed with sufficient shale gas reserves, is looking forward to enhance its energy security prospects by exploration in its domestic territory and acquisition of assets abroad. However, just like many other sources of energy, this too is not without its share of concerns.
Natural gas is broadly divided into two types-conventional and unconventional. The former is extracted easily by drilling in a sedimentary basin rich in gas. The gas migrates through porous rocks and flows freely to the surface, where it is collected, treated and piped for various users. Unconventional gas includes tight gas, coal bed methane and shale gas. Shale gas is located in rocks with low permeability, and does not flow easily. To extract it, we drill vertical and horizontal wells, and inject a mixture of water, sand and chemical at very high pressure to create fissures that release the gas. This process of using water to break up the rock is called hydrofracturing or fracking.
The environmental benefit of the above process for shale gas extraction is that it is better than coal, as it has half its carbon footprint. But there are major unwanted consequences that may undo this advantage. First, it requires enormous quantities of water, which being a scare resource itself, leads to conflicting aims. Though the industry lobbyists claim that almost 80% of water used can be recovered, there are concerns regarding the disposal of the resulting wastewater. Second, the toxic chemicals used in fracking can seep into groundwater acquifers, contaminating clean water that we use for our daily needs. Third, methane, the chief component of natural gas, may be leaked into the atmosphere when the gas is fracked, piped and stored. Since methane is many times more damaging to the ecology than carbon, sloppy production may boost greenhouse gas emissions. Lastly, there are studies that show small earthquakes being triggered by fracking, though it may require more credible sources to raise a strong voice. Environmentally conscious (but developed) countries like France and the Netherlands have banned fracking. Though enviormental concerns will not be an obstacle in the pursuit of energy security in India, we might do ourselves a favour by trying to mitigate the adverse effects to the best possible extent, and not giving up on renewable sources.
Global Impact
The most visible beneficiary of shale gas boom has been the US, which will supposedly attain self sufficiency in the near future. 2012 data shows that shale gas production resulted in more jobs, increased tax revenues and declining LNG imports. Infact, US is no longer importing LNG, and those supplies are going to Europe, resulting in decreasing gas prices. Russian grip on European gas markets is being challenged as can be seen by the renegotiation of contracts between European states and Gazprom (Russian natural gas giant). The US is also benefitting from natural gas fuelled manufacturing revival, which has made it more competitive vis-à-vis Europe, which is already reeling under high unemployment.
Europe has been hesitant on shale gas, because of its dense population, high local environmental standards and legal frameworks concerning land ownership. Shale gas production requires larger land as compared to conventional natural gas. Also, in Europe, the land under which resources lie, belongs to the state, unlike US, where it belongs to the citizens. Americans gladly trade the ownership rights for monetary gains, but Europeans who have nothing to gain on a personal basis, oppose the environmentally degrading process of fracking. Europe is now eyeing cheaper coal from the US to remain competitive, especially Germany, where it may soon provide half of Germanys electricity supply. Europe is thus ironically poised for increased pollution and greenhouse gas emissions by adopting the dirty fuel instead of shale, which it is partly refusing because of environmental concerns.
China, which has the largest expected reserves of shale gas, is far away from matching the US status with regard to shale. The US shale boom is based on an efficient gas market and technological superiority. Government capped prices, limited technology, high population and lack of pipelines will be a challenge for China, as also for India.
Indian reaction
The Government of India, after two years of deliberations, cleared the shale gas policy in September 2013. Initially, two public sector units-ONGC and OIL will be allowed to explore and produce shale oil and gas. In the later stages, private and other public companies will also be allowed. ONGC has already tied up with ConocoPhilips to explore the Cambay, Krishna-Godavari, Cauvery and Bengal basins.
Although there are widespread environmental concerns relating to shale gas, and TERI warning with a resounding NO to shale gas, it will not be right for India to abandon shale gas altogether. The ever increasing gap between energy demand and supply requires us to take immediate steps to enhance our energy supplies. We need to tackle the issues of coal allocation, nuclear safety, natural gas pricing and promote renewable energy vigorously even as we continue to import crude oil. Adding shale gas to our energy mix will further boost our supplies. Ideally, we should spend more time in exploration research, and try to minimize the adverse environmental impacts. But considering the scare shale reserves we have, and even limited technological abilities compared to the US, it is not possible to do so. Having allowed state companies to involve in shale gas exploration and securing imports from the US is a good, balanced strategy on shale. Given the environmental costs of shale, especially huge amounts of water, it will not be prudent to spend too much on domestic exploration.
Shale gas boom in the US has again shown how control over energy resources can affect ones bargaining power. India has huge energy requirements but very little resources. We are dependent on others for almost every aspect of energy-be it crude oil, natural gas or nuclear energy. Though we have sufficient coal supplies, but it is a polluting source that we must try to do without. A long term plan should envisage giving a big boost to science and technology that will try to develop new and better technologies to harness natural resources, both renewable and non-renewable, and make us truly self-sufficient. That will not only raise our international status, but more importantly, it will lead to better quality of life for our citizens.
Abhishek Gupta is a final year undergraduate student at IIT Delhi. He is an ardent cricket and tennis fan who also likes to deliberate upon issues that shape the world around us, ranging from politics to economics to international developments. You are invited to comment on his views at abhishekgupta92@yahoo.co.in.