Slide 1

Iindia infrastrucure Nov2014

Dr. V K Rao Shale Gas potential of Indian BasinsAndPolicy imperatives to explore and Develop 11

Concept TransformationIn pursuit of conventional Oil and Gas exploration over the years, Geologists regarded Shales as: Source Rocks by virtue of the richness of organic material content, its thermal maturity, hydrocarbon generation potential and geographic spread over large areasCap Rocks by virtue of their impermeable nature and compactness thus acting as good seal

Methane in Shales is generated from the transformation of Organic material by bacterial (biogenic) and geo chemical (thermogenic) processesThe gas so generated gets stored by multiple mechanisms as free gas in micropores and as sorbed gas on the internal surfaces of organic matterThus Shale Gas is a combination of sorbed gas and micropore gas The challenge in these accumulations is to delineate mature organic rich layers within Shale sequences and then to exploit it commerciallyThus it is more of technological challenge which has been met by innovative multistage hydraulic fracturing and multilateral horizontal drilling techniques developed, tested and perfected by USA

Concept TransformationIn pursuit of conventional Oil and Gas exploration over the years, Geologists regarded Shales as: Source Rocks by virtue of the richness of organic material content, its thermal maturity, hydrocarbon generation potential and geographic spread over large areasCap Rocks by virtue of their impermeable nature and compactness thus acting as good seal

Methane in Shales is generated from the transformation of Organic material by bacterial (biogenic) and geo chemical (thermogenic) processesThe gas so generated gets stored by multiple mechanisms as free gas in micropores and as sorbed gas on the internal surfaces of organic matterThus Shale Gas is a combination of sorbed gas and micropore gas The challenge in these accumulations is to delineate mature organic rich layers within Shale sequences and then to exploit it commerciallyThus it is more of technological challenge which has been met by innovative multistage hydraulic fracturing and multilateral horizontal drilling techniques developed, tested and perfected by USA

3856456925873962566113811069122562410421404396World Shale Gas Potential (Tcf)Rogner,HH ModifiedTotal: 22,016 Tcf GIP

Middle East, ,Former Soviet Union &Asia Pacific are excludedRecoverable: 5760 Tcf

Recoverable Shale Gas Resources (Tcf) based on EIA Study (48 Basins in 32 countries)Russia, Central Asia, Middle East, SE Asia,Central Africa not includedOnly 4 basinsNow revised to120Tcf

NOCs to explore Shale Gas in their Nominated blocks(CBM & SHALE GAS Journey)

Demand and Import Projections ( MMSCMD)Potential Shale Gas Basins1. Cambay Basin2. Gondwana Basin3. Assam-Arakan Basin4. Krishna-Godavari Basin5. Cauvery Basin6. Vindhyan Basin7. Bengal Basin8. Rajasthan Basin9. Ganga Basin

Acreage Evaluation & Delineation AppraisalInitial DevelopmentFinall development & Commercial Prodn:Pilot drilling&Exploration2 to 5 Years2 to 5 Years

10 to 15 Years

Data assimilation , analysis & study Delineate Focus areas Land acquisitionDrill parametric wells Pilot testingEvaluate Resource potential & extent of playDrill appraisal horizontal wells Hydrofrac and test viabilityOptimise well design and testing parametersDrill Initial dev. Wells Delineate Development areaOptimise well spacing ,well design etcBring in Rigs and frac to developStart commercial productionContinue developmentAcreage Evaluation & delineationTypical Shale Gas Exploration and Development PhasesUnique challenges Low permeability-nanno darcyHeterogenous and anisotropic Clay mineralogy complexitiesDelineation of organically rich layers within thick stratigraphic columnsResource Assessment is different and difficult - Does not follow rules of field size distribution - Essentially technology driven combined with expert Geologic judgementsGas production is relatively low BUT sustain for longer periods

Shale Gas assessment Organic Richness & typingMaturationGas in Place Micro porosity & PermeabilityPore PressureMineralogy & PetrofaciesIdentification of sweet spots & thicknessFracturaion componentsSalient Parameters for Shale Gas AssessmentBrittleness

1515Cambay Shale Resource Play(Isopach)

Cambay Shale Resource Play(TOC)

Cambay Shale Resource Play(Vro)

12345Source:DGH1919

Source: ONGCGIP Estimated: 20 TcfShale Characteristics of Cambay BasinFormationThickness(m)TOC(%)VRo(%)Gas Conc.Bcf/mi2Kerogen TypeOlder Cambay Shale500-12001.5-4.00.75-1.20231 *II & IIIYounger Cambay Shale520-15001.00-4.000.75-0.85231 *II & III* Source: US EIA Report

Discovered oil & Gas Fields and Proven Source Rock Potential

Basinal Area (Sq Kms)No. of Oil & Gas fieldsInplace HC Volumes(MMT)O+OEGSource Rock SequencesDepth Range (m)Prognosticated Resource Potential (TCF)51000>1102050Cambay Shales

Olpad shales1500-2500217Krishna-Godavari BasinPericratonic rift basin located on east coast of India extending onland and offshore

Main Tectonic elements are:Bapatla HorstWest Godavari Sub basinTanuku HorstEast Godavari Sub basinEocene Shelf Edge

2222Shales in Stratigraphy-Krishna-Godavari Basin

1232323Geological Section across Krishna-Godavari Basin

Source:DGH2424Raghavapuram Shale Resource Play

Kommugudem Shale Resource Play

Shale Characteristics of Krishna-Godavari BasinFormationThickness(m)TOC(%)VRo(%)Gas Conc.Bcf/mi2Kerogen TypeRaghavapuram200->18001.50-4.200.90-1.30143 *II & IIIKommugudem 300-9001.41-5.301.00-1.30156 *II & IIIDiscovered Oil & Gas Fields and Proven Source Rock Potential

Basinal Area(sq.km)No. of Oil & Gas fieldsInplace HC volumes (MMT)O+OEGSource Rock SequencesDepth Range(m)Prognosticated Resource Potential (TCF)28,000>50120Raghavapuram ShalesKommugudem Shales1500-2000280* Source: US EIA Report

Cauvery Basin Intracratonic rift basin located between two cratonic masses viz: Indian peninsula and Sri Lankan Massif

Main Tectonic elements are:

Ariyalur-Pondicherry sub basin Kumbhkonam-Madnam-Portonovo High Tanjore-Tranquebar sub basinPattukottai-Mannargudi-Karaikal High Nagapattinam sub basin Vedarniyam High Pattukuttai-Manargudi highRamnad-Palk Bay sub basinMandapam Ridge Gulf of Mannar sub basinVedarniyam Tiruchirapally terrace

2828Shales in StratigraphySattapadi Shales in Uttatur GroupKudavasal shales & Portnovo Shales in Ariyalur GroupKomarakshi Shales in Ariyalur GroupKaraikal Shales in Nagore Group

2929Shales in StratigraphySattapadi Shales in Uttatur GroupKudavasal shales & Portnovo Shales in Ariyalur GroupKaraikal Shales in Nagore Group

3030Cretaceous Shales Resource Play(Vro)

SOURCE ROCK MATURITY DISTRIBUTION MAPSattapadi Shale Resource Play

Geological Section across Cauvery basin

Source:DGH3333Shale Characteristics of Cauvery BasinFormationThickness(m)TOC(%)VRo(%)Gas Conc.Bcf/mi2Kerogen TypeKaraikal250-7500.31-2.781.15-1.20143 *II & IIISattapadi300-5001.50-4.760.65-1.15No DataII & IIIDiscovered Oil & Gas Fields and Proven Source Rock Potential

Basinal Area(sq.km)No. of Oil & Gas fieldsInplace HC volumes (MMT)O+OEGSource Rock SequencesDepth Range(m)Prognosticated Resource Potential (TCF)25,000>35185Sattapadi ShalesKaraikal Shales1800-250080* Source: US EIA Report

Gondwana Basins

Lower Permian to Triassic age Gondwana sediments consisting of fluviatile to Lacustrine deposits of sandstones, shales and coal measuresResource play is Barren Measure shales TOC : 4-10% T max : 440-480 VRo : 1-1.2% Kerogen : Type III

Stratigraphy of Gondwana Basins

ONGC Shale Gas Find in Gondwana BasinONGC created an exploration landmark when gas flowed out from the Barren Measure shale at a depth of around 1,700 meters, in its first R&D well RNSG-1 near Durgapur in Gondwana BasinThe Barren Measure Shales are 858 m thick in the well drilledBased on testing results and laboratory investigations, Schlumberger has estimated GIIP of 48 Tcf

Shale Characteristics of Barren Measure FormationSub Basin.Thickness(m)TOC(%)VRo(%)Gas Conc.Bcf/mi2Kerogen TypeSouth Rewa150-8005.06-14.72??0.40-0.60123 * IIIDamodar 900-10004.00-10.001.00-1.20123 * IIIKaranpura450-500ONGC Drilled Pilot wells in Damodar & Karanpura Sub Basins Pranhita Godavari400-5005.00-6.410.67-1.00No Data IIIDiscovered Oil & Gas Fields and Proven Source Rock Potential

Area(sq.km)No. of Oil & Gas fieldsInplace Gas(BCM)Shale Gas Resource SequencesDepth Range(m)Prognosticated Resource Potential (TCF)61,0004 fields in Homotaxial sediments120Barren measures1000-200085*** Source: US EIA Report

** ONGC has established GIIP 48 TCF EasternSchlumberger Resource:600-2000 TcfOther ExpertsResources: 540 Tcf8 Potential basinsRecov:130 TcfNGRI, IndiaResources:527 TcfRecov:260 TcfPetrotech Veteran ForumRecov: 130 Tcf5 BasinsShale Gas EstimatesIHS-CERA ReportResources:744 TcfRecov:211 Tcf

EIA ,USAOnly 4 Basins studiedRisked GIP:584TcfShale Oil :87 Bn BBlsRecov:120Tcf **USGS,USAOnly 3 basins studiedRecov: 6.1 TcfShale Gas Resource EstimatesWhy do they vary?Damodar Valley Basin(Pilot Wells) :48 Tcf (GIIP) ** Revised Estimates Apr2013 McKinsey Report Rec: 100 TCFShale Gas Resource Estimates GIP and Recoverable Component (Tcf)??Shale Gas assessment Organic Richness & typingMaturationGas in Place Micro porosity & PermeabilityPore PressureMineralogy & PetrofaciesIdentification of sweet spots & thicknessFracturaion componentsSalient Parameters for Shale Gas AssessmentBrittlenessBasinCambayKrishna GodavariCauveryAssam-ArakanGondwanaVindhyanTOC (%)1.5-4.01.4-5.30.31-4.760.64-1.004.0-10.00.40-6.04VRo(%)0.75-1.200.9-1.30.65-1.200.57-1.940.40-1.20No DataThickness(M)500-1200300-1500300-750400-1000500-1000>350Kerogen TypeII & IIIII & IIIII & IIIII & IIIIIIII&IIIGas ConcentartionBcf/sq mile **231143143120123No DataDepth (M)1200-2000>20002000-3000>2500>2000>1800Prognosticated Resources(Tcf)217280805585Not estimatedParametersCharacteristics of Shale Units in potential Basins** Source: EIA ReportDRAFT POLICYKey Features & Policy ImperativesComparison of Proposed policy vis--vis existing policy-IExisting Policy100% Cost recovery admissableProduction sharing Contract (PSC)Declaration of Commerciality (DOC) to be approvedFDP requires to be approved by Govt.MC constituted DGH/MoPNG and Consortium membersProposed Uniform Licensing PolicyNo cost recovery provisionProduction Linked payment regime (PLP) for different tranchesDOC not required However PLP to be applicable from Day 1 of production Although no FDP to be approved, but prod.profiles & Recoverable components to be defined.MC would consist of Officials from MOEF, MOPNG, Defence, Finance, Law and Coal Ministry alongwith Consortium membersComparison of Proposed policy vis--vis existing policy- IIExisting PolicyExploration & exploitation of Conventional reservoirs onlyControversy on Tax holiday for gas blocks (Mineral oil)Royalty @ 10% for Gas and 12.5% for oilApplication of Gas utilisation policy for Gas discoveries (pricing, allocation & prioritisation etc)Proposed Draft PolicyExploration & exploitation of ALL types of reservoirs-both Conventional & Unconventional7 year Tax holiday for onland, shallow water blocks10 year tax holiday for Deep water blocks of >1500m water Depth.No Royalty for offshore blocksSilent on these aspects of Gas Utilisation Policy ??Current scenerioOil India LtdOIL proposes to drill 10-12 Shale gas wells in next 3 years Jaisalmer blockJairampur blockChabua blockDumduma blockDibrugarh blockDeomali blockONGCONGC proposes to drill 50 Shale gas wells in next 5 yearsCambay Basin, K G Basin, Cauvery Basin, Ganga Basin and Assam -Arakan BasinPilot wellls are already drilled - Well RNSG#1 in Damodar Valley of Gondwana - produced Shale gas ( GIP Estimated: 48Tcf) - Well jambusar#55 in Cambay basin-produced Shale gas (GIP Estimated: 20Tcf)ChallengesIdentification of prospective intervals within the thick shale sequences and delineation of sweet spot areas in potential basins.Highly cost intensive exploration programme with attendant development & production operations vis--vis prevailing regime of regulated gas pricingForging relationships and adopting customised innovative technologies to suit to Indian modelsDesigning policy and contractual regimes to incentivise technologically advanced global explorers to invest in Indian shale gas exploration programmeLand acquisition and related environmental issues in a populated country like India.Need of deliberations & Introspection No Cost recovery mechanism? Will it work/incentivise for such an cost intensive Shale Gas Exploration programme?Coupled with regulated gas pricing regime !!Lack of Subsurface G & G data on shales specific to Shale Gas exploration.- will it attract global investors?Why not permit current NELP block holders to explore Shale gas in their blocks with requisite modifications in PSCHas the govt decision to allow NOCs only to explore Shale gas in their nominated areas sent any wrong signals to global community??

Closing Remarks India has sedimentary basins with proven mature organically rich source rock indicative of significant shale gas potentialBased on preliminary data analysis and geologic assumptions significant resource potential to the tune of 540 tcf is prognosed of which recoverable component could be around 120 tcf.However, in order to arrive not only at realistic estimates but also to develop and exploit Shale gas, specific G & G studies/investigations on Shale samples and seismic and other data analysis is required to be carried out .This can be achieved by drilling parametric wells by NOCs (ONGC & OIL) in their nominated blocks at an accelerated pace and then to carry out the detailed specific Laboratory investigations and seismic data acquistion & processing .Finally , I may say that Shale Gas exploration need not have any separate policy or bid round, as it is an integral activity of hydrocarbon exploration.At this juncture,our Policies should focus on maximising exploration & discoveries rather than on concentrating on maximising profits.

Thank you..

Shale Gas Recov. Reserves (Tcf)
EIA World Shale Gas Resources (Assessment of 14 Regions)
Tcf

Shale Gas Potential in six Continents
Tcf