US is the only country to have achieved commercial success in shale gas production. The share of non-conventional energy in US consumption has risen fast over the past few years, significantly reducing that country's dependence on imported LNG.
The US was a big importer of LNG. Prices in the world LNG market have fallen drastically after the US started commercial production of shale gas.
Although India is believed to have good potential in shale gas production, there is no estimate available on its reserves as yet. India has neither technology nor expertise in this area.
According to the memorandum of understanding signed by the two countries, the US will help India in key areas like assessment of shale gas reserves, technical studies to start exploration and training of personnel.
The peculiarity of shale gas exploration is that it requires specialised technology for horizontal drilling and hydro-fracturing. US is the only country to have started commercial production of shale gas and its exploration technologies are very well-developed, says Kalpana Jain, senior director, Deloitte Touche.
Shale gas exploration in other countries is still at an experimental stage. Apart from technology, good geologists are also required to succeed in shale gas.
High-quality geologists are required to undertake geological and geochemical survey for exploration and 3D seismic surveys for the evaluation of reservoirs. Besides, a good technology partner is also required to do shale gas reservoir modelling, Jain said.
Skills in well-completion and stimulation for recovery of gas and expertise in process engineering for cleaning up gas production are also required.
Besides, expertise in treating and recycling used water is critical for doing shale gas exploration. India's success will critically depend on the size of exploration areas. Only basin areas with the size of above 200 square miles are commercially viable.
In the US, the cost of shale gas production varies from $3.3 per mmbtu to $6.4 per mmbtu, which is lower than the price of imported LNG. India too will have to establish cost economics of shale gas for commercial-scale production.
Shale gas production requires horizontal drilling which is costly. Drilling cost varies with the thickness of rock formation between the shale gas play and the bottom of treatable water. If the rock is too thick, the cost economics of shale gas cannot be established, Jain said.