The government today permitted simultaneous exploitation of unconventional hydrocarbon resources like coal-bed methane (CBM) and shale and conventional oil and natural gas to boost domestic output and spur investments by firms like Essar and ONGC.
This permission would, however, be subject to payment of an additional 10 per cent profit petroleum or production level payment.
Currently, a permit for exploration and production of conventional crude oil and natural gas does not allow exploitation of shale oil and gas and CBM. The vice versa is also true.
The Union Cabinet headed by Prime Minister Narendra Modi approved the policy to permit exploration and exploitation of unconventional hydrocarbons, Finance Minister Piyush Goyal told reporters here.
"This policy will enable the realisation of prospective hydrocarbon reserves in the existing Contract Areas which otherwise would remain unexplored and unexploited," he said.
With this policy dispensation, new investment in exploration and production (E&P) activities and chances of finding new hydrocarbon and resultant increased domestic production thereof is expected.
Commenting on the decision, Vilas Tawde, Director & CEO, Essar Oil & Gas Exploration and Production, said this will open up hereto untapped hydrocarbon resources and boost domestic output to meet energy needs of the world's fastest growing economy.
Essar, he said has as much as 7 trillion cubic feet of shale reserves in its Raniganj CBM block in West Bengal. Of this 1.5 Tcf is recoverable. Similarly, its Mehsana block has 0.5 Tcf of recoverable CBM resources. "These resources can now be produced," he said.
As per existing contractual regime of Production Sharing Contracts (PSCs), existing contractors are not allowed to explore and exploit CBM or other unconventional hydrocarbons in already allotted licensed/leased area. Similarly, CBM contractors are not allowed to exploit any other hydrocarbon except CBM.
Acreages held at present by various contractors in PSCs and CBM blocks and national oil companies (NOCs) like ONGC in nomination regime constitute a significant part of India's sedimentary basin.
"In preliminary studies, in-place probable shale gas resources in the range of 100-200 Tcf in 5 Indian sedimentary basins have been assessed by various international agencies," an official statement issued after the Cabinet meeting said.
Presence of shale oil/gas has a strong possibility in basins such as Cambay, Krishna Godavari (KG) and Cauvery where mature organic-rich Shale exist.
"An area of 72,027 square kilometers held under PSCs of pre-NELP (New Exploration Licensing Policy)/NELP regime and 5269 sq km area under CBM contracts has been opened up for simultaneous exploration and exploitation of conventional or unconventional hydrocarbons.
"With the approval of this policy, there will be a complete shift from 'One hydrocarbon Resource Type' to 'Uniform Licensing Policy' which is presently applicable in Hydrocarbon Exploration & Licensing Policy (HELP) and Discovered Small Field (DSF) Policy," the statement said.
Exploration and exploitation of additional hydrocarbon resources is expected to spur new investment, the impetus to economic activities and generate additional employment.
"Additional 10 per cent rate of Profit Petroleum/ Production Level Payment (PLP) in case of CBM contract, over and above the existing rate of Profit Petroleum/PLP is to be shared with Government on new discoveries. For nomination blocks, NOCs will be allowed to explore and exploit unconventional hydrocarbons under the existing fiscal and contractual terms of exploration/lease license," the statement said.
Tawde said Essar would expedite the exploration and development of 0.5 Tcf of recoverable CBM prospects in Mehsana block.
"We heartily welcome the move since it will open up exploration of all unconventional hydrocarbon resources in existing fields to meet the energy needs of the economy," he said. "Essar is looking forward to expediting the potential of 2 Tcf of recoverable CBM/Shale gas from its operational Mehsana and Raniganj blocks."
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)