Cabinet approves Policy Framework for exploration and exploitation of Unconventional Hydrocarbons

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has approved the policy to permit exploration and exploitation of unconventional hydrocarbons such as Shale oil/gas, Coal Bed Methane (CBM) etc. It will be carried out under the existing Production Sharing Contracts (PSCs), CBM contracts and Nomination fields to encourage the existing Contractors in the licensed/leased area to unlock the potential of unconventional hydrocarbons in the existing acreages.

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.

Benefits:

This policy will enable the realization of prospective hydrocarbon reserves in the existing Contract Areas which otherwise would remain unexplored and unexploited.

With this policy dispensation, new investment in Exploration and Production (E&P) activities and chances of finding new hydrocarbon discoveries and resultant increased domestic production thereof are expected.

Exploration and exploitation of additional hydrocarbon resources are expected to spur new investment, impetus to economic activities, additional employment generation and thus benefitting various sections of society.

This will lead to the induction of new, innovative and cutting-edge technology and forging new technological collaboration to exploit unconventional hydrocarbons.

As per existing contractual regime of 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) in nomination regime constitute a significant part of India’s sedimentary basin.

What is Coal Bed Methane?

Coal Bed Methane (CBM) is an unconventional form of natural gas found in coal deposits or coal seams. CBM is formed during the process of coalification, the transformation of plant material into coal. It is considered a valuable energy resource with reserves and production has grown nearly every year since 1989. Varied methods of recovery make CBM a stable source of energy.

Shale gas is a natural gas formed from being trapped within shale formations. It is an unconventional source of methane, like coal-bed gas (in coal seams) and tight gas (trapped in rock formations). It is a colorless, odorless gas, lighter than air. It is cheaper than natural gas, releases 50% less CO2, hence better source for generating electricity. It also provides feedstock for the petrochemicals industry, which is turned into fertilizer, plastics, and other useful stuff.

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