Tight oil (Shale Oil)

ECONOMY/ GOVERNANCE

• GS-3: Energy
• GS-2: Government policies and interventions for development in various sectors and issues arising out of their design and implementation. 

Tight oil (Shale Oil)

Context: Cairn Oil & Gas has announced that it is partnering US-based Halliburton to start shale exploration in the Lower Barmer Hill formation, Western Rajasthan. 

• The company is also looking to increase the recoverable reserves at its offshore assets by 10 times via enhanced use of technology, in partnership with Halliburton.

What is shale oil? How does it differ from conventional crude oil?

• The key difference between shale oil, also called ‘tight oil’, and conventional crude is that is found in smaller batches, and deeper than conventional crude deposits. 
• Its extraction requires creation of fractures in oil and gas rich shale to release hydrocarbons through a process called hydraulic fracking.
• Russia and the US are among the largest shale oil producers in the world, with a surge in shale oil production in the US having played a key role in turning the country from an importer of crude to a net exporter in 2019. 
• A number of US shale exploration firms, including Halliburton, have faced litigation from citizens living in areas adjacent to shale production sites who have claimed that hydraulic fracking has contributed to groundwater contamination.

What are the prospects of shale oil exploration in India?

• Currently, there is no large-scale commercial production of shale oil and gas in India. 
• State-owned ONGC had, in 2013, started exploration and, by the end of FY21, assessed shale oil and gas potential in 25 nomination blocks, but has reduced investments over the past few years after only getting limited success in shale exploration efforts. 
• While ONGC’s assessment found prospects of shale oil at the Cambay basin in Gujarat and the Krishna Godavari basin in Andhra Pradesh, the company concluded that “ the quantity of oil flow observed in these basins” did not indicate “commerciality” and that the general characteristics of Indian shales are quite different from North American ones.
• Shale oil and gas exploration faces several challenges other than environmental concerns around massive water requirements for fracking and potential for ground water contamination.

Connecting the dots:

• Oil Price Rise
• Oil Market meltdown 
• India’s GDP fall