US okay to shale gas export to India

2/1/2013

India is likely to get access to full-fledged shale gas supplies from the US this year as the Barack Obama Administration is learnt to have okayed a third party report on Liquefied Natural Gas (LNG) exports which it had commissioned last year in order to seek views of its domestic energy industry on supplying the environment-friendly hydrocarbon to various countries.

The US does not export shale gas to those countries with which it has not signed free-trade agreements (FTAs) like India. However, in 2012 the US Energy Department had commissioned a third party study to an agency called NERA Economic Consulting to study the long ranging effects of exporting LNG on its domestic energy and manufacturing sectors’ requirements.

According to official sources, the US Government had posted the final report on the website of its Energy Department in December last year and had given 45 days to stakeholders to give their comments on it, which have already been received.

Government sources told The Pioneer that the US Government is “most likely” to accept the report as it has in principle “okayed” it and once this is done, it would open channels for large scale export of shale gas from that country to India.

Shale gas, which is one of the cheapest forms of hydrocarbons, is considered to be a viable alternative of energy and US has the largest reserves of it. With India’s gas demand highly dependent on supplies based on domestic production as well as imports, enhanced supply of shale gas from the US, which is also environmentally friendly apart from being a cheaper source of energy, could prove to be a game changer for the country.

As of now US allows only limited LNG exports through Sabine Pass LNG terminal to those nations with which it has not signed any FTA. However with the Obama Administration apparently having okayed the third party report, full-fledged exports may become a reality by this calendar year itself.

Official sources said that though apparently there were objections from the US’ domestic industry mainly the energy and manufacturing sectors on exporting shale gas to other countries on a full time basis, the move would have long term gains for all as in the few years to come, American companies would stand to benefit from entering into gas sharing agreements with India and other nations.

Shale gas is a form of natural gas which is procured from shale formations between rocks. Gas shales are organic-rich shale formations. In terms of its chemical makeup, shale gas is typically a dry gas primarily composed of methane.

India, too, has shale gas reserves in places like the Gangetic Plan, Assam as well as Rajasthan, however full fledged explorations have not exactly taken place. Though Gas Authority of India Ltd (GAIL) gets its share through America’s Sabine Pass LNG terminal, it has been asking the Government to take up the matter of greater shale gas exports with the US Government.

With hope floating on this aspect from the US, if Washington allows exports to New Delhi, then it would facilitate cheaper supply of gas, as currently GAIL as well as other private entities have to depend on costly shipments from the Middle East nations.

(Daily Pioneer)