Anil Agarwal's Vedanta firms up shale play, to start exploration soon

Anil Agarwal-led Vedanta is likely to initiate exploration related works for shale resources in its Rajasthan block. 

Vedanta will be the first private company to look into the prospects of unconventional hydrocarbon in oil and gas fields, after the government in August allowed operators to explore all unconventional hydrocarbons — including shale, coal bed methane and hydrates — in an area licensed to it. 

The company will kick off the initial testing for shale by December. “We will be starting testing for shale by the end of this year and exploration over the next two quarters,” said Sudhir Mathur, chief executive officer, Cairn Oil & Gas, Vedanta. 

In 2013, Cairn had sought the first right of refusal for shale exploration in its Rajasthan block. The company is believed to be sitting on one of the largest shale reserves in India, among private majors. Based on the new government policy, exploration of unconventional hydrocarbon can be carried out under the existing Production Sharing Contracts (PSCs), CBM contracts and nomination fields. The uniform licensing plan is in line with the new  Hydrocarbon Exploration and Licensing Policy (HELP) and Discovered Small Field (DSF) policies of the government. 

State-run producers in India, like Oil and Natural Gas Corporation (ONGC), Oil India and CBM players like Essar Oil & Gas Exploration and Production (EOGEPL) are expected to benefit from the move, though no major player has so far come out with a firm plan on starting exploration works under the uniform licensing policy.  

The government had announced a shale gas exploration policy for national oil companies in 2013. Though ONGC drilled 22 assessment wells in 18 blocks covering four basins (Assam, Krishna-Godavari, Cauvery and Cambay basins) and Oil India drilled three wells in three blocks covering Assam and Rajasthan, both the companies had limited success.

Shale gas and oil is found trapped within the shale sedimentary formations. According to 2015 estimates if Schlumberger, India has shale gas and oil resources of 300-2,100 trillion cubic feet, while the US Energy Information Administration estimates claim that Cambay, Krishna Godavari, Cauvery and Damodar put together have around 290 tcf of reserves. 

Agarwal had said in a letter to Prime Minister Narendra Modi recently that the company is planning to invest $3-4 billion in oil and gas sector over the next two years. At present, Vedanta is the largest private sector oil producer in India contributing around 27 per cent to the domestic production. Vedanta recently won 41 blocks during the first round of Open Acreage Licensing Policy (OALP). 

Mathur said Vedanta had a meeting with potential partners for seismic surveys, drilling, appraisal and development services in OALP blocks and more than 50 companies have shown interests. He added the company is looking to invest $1 billion in these blocks involving drilling of around 150 wells. 

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