Understanding the newly approved policy by the centre for exploration and exploitation of unconventional hydrocarbons such as Shale oil/gas, Coal Bed Methane (CBM), amongst others, is crucial. This will now be undertaken under the existing Production Sharing Contracts (PSCs), CBM contracts and Nomination fields. The primary aim here is to encourage the current Contractors in the licensed/leased area to unlock the potential of unconventional hydrocarbons present in the existing acreages.
Background of the Policy
Previously, the policy did not permit existing contractors to explore and exploit CBM, shale gas and other unconventional hydrocarbons from the allotted licensed area. Similarly, contractors possessing CBM fields were prohibited from exploiting any hydrocarbons apart from CBM. Of note though, India possesses around 100-200 Trillion Cubic Feet (TCF) of shale gas reserves in five sedimentary basins. There’s also a strong likelihood of shale reserves in the Cambay basin, Krishna-Godavari Basin and Cauvery basin among others. Now with this policy’s approval, there will be a complete transformation from ‘One hydrocarbon Resource Type’ to ‘Uniform Licensing Policy’. Currently, this is applicable in Hydrocarbon Exploration & Licensing Policy (HELP) and Discovered Small Field (DSF) Policy.
Benefits of the Policy
The policy has several advantages. Firstly, it will facilitate the uncovering of potential hydrocarbon reserves in the existing Contract Areas. Secondly, it will lead to increased investment and production from new Exploration and Production (E&P) activities and new hydrocarbon discoveries, resulting in augmented domestic production. Thirdly, the policy will create new employment opportunities as the exploration and exploitation of additional hydrocarbon resources will stimulate economic activities. Lastly, the policy will foster the induction of new, innovative and cutting-edge technology to exploit unconventional hydrocarbons.
Coal Bed Methane
Coalbed methane (CBM) is simply methane found in coal seams. To extract this gas, after drilling into the seam, it is necessary to pump large quantities of water out of the coal seam to lower the pressure. CBM is either generated from a biological process due to microbial action or from a thermal process as a result of increasing heat with the depth of the coal. CBM typically contains very little heavier hydrocarbons such as propane or butane and no natural gas condensate. It often contains up to a few per cent of carbon dioxide.
Shale Gas/oil
Shale gas refers to natural gas that is trapped within shale formations. Shales are fine-grained sedimentary rocks that can be rich sources of petroleum and natural gas. Gas-prone shale may also be associated with other resources, such as tight gas and coalbed methane (CBM), in areas where shale is inter-bedded with coal.
Hydrocarbon Exploration & Licensing Policy
The Hydrocarbon Exploration and Licensing Policy (HELP) is adopted by the Government of India. It provides a new contractual and fiscal model for the award of hydrocarbon acreages towards exploration and production (E&P). HELP replaces the present policy regime for exploration and production of oil and gas, known as New Exploration Licensing Policy (NELP), which has been in existence for 18 years.